Los Angeles, CABlue Cross of California, a subsidiary of WellPoint insurance, has agreed to settle over 70 lawsuits filed after the insurance company illegally cancelled patients' coverage when they got sick.
Although the amount of the settlement is confidential, much of the money patients receive will likely go to pay their medical bills, some of which were in excess of $100,000.
The suits claimed that the insurance application questionnaires were intentionally confusing in order to trap applicants into erring on their answers; such mistakes would then be used to cancel their coverage. They went on to argue that questionnaires were only assessed after Blue Cross received claims for costly procedures.
However, in order to settle patients had to drop any allegations that Blue Cross terminated their coverage in order to save money, meaning that the insurance company does not have to admit wrongdoing for its actions.
The WellPoint subsidiary has been fined for at least one instance of canceled coverage and could face even more sanctions. In September, Blue Cross was fined $200,000 for illegally canceling a patient's policy. Critics argue that $200,000 is too small a fine for a company as wealthy as WellPoint to pay.
Plaintiffs in the settlement faced a number of hardships in order to pay their medical bills after their insurance coverage was canceled. All plaintiffs were covered by individual health insurance, rather than group coverage through an employer. With individual insurance, the insurance carrier can deny coverage to a person it believes is a risk based on medical history and questionnaire responses.
At dispute is whether or not insurance companies like WellPoint can cancel a patient's coverage due to unintentional errors on a questionnaire. Insurance regulators say they cannot do so because unintentional errors are not the same as intentional fraud. Insurance companies say that canceling coverage for questionnaire inconsistencies helps them to combat fraud.
Although the settlement is a victory for the plaintiffs in the 70 lawsuits brought against Blue Cross, it may not be enough to protect other patients from similar problems. WellPoint and Blue Cross's refusal to admit any wrong-doing indicates that they are likely to make the same choices again in the future, meaning that more sick patients will be denied insurance coverage because they made an honest mistake on a questionnaire.
If you have had your insurance coverage suddenly cancelled by an insurance company, with no valid reason for doing so, you may be eligible for compensation.
If you are a policyholder and have been denied claims and payments for high medical costs, please contact a [WellPoint] lawyer who will evaluate your claim at no charge.