On December 13th, California Insurance Commissioner Steve Poizner announced his intent to seek $12.6 million dollars in fines and penalties against insurer Blue Cross Blue Shield based upon the results of a Market Conduct Examination. The examination revealed extensive violations in claims handling and improper rescissions.
Among these violations, the examination found Blue Cross had not paid claims in a timely manner; failed to maintain all documents and notes in the claim file; failed to pay interest when required to do so; misrepresented the coverage available under a policy by, in some instances, including misleading ERISA language in non-ERISA policies; sought immaterial information or information already in its possession in handling claims; failed to engage in prompt and fair settlement of claims after liability was established; and failed to complete medical underwriting after receiving the application for insurance, among other violations.
Commissioner Poizner took a strong position against these practices, stating, “[l]et this be a message to all health insurers that we will not tolerate irresponsible rescissions and shoddy claims handling. We will target this behavior on an industry-wide basis and continue to take appropriate action as needed.” You can read the Market Conduct Examination here and can read a copy of the California Department of Insurance press release here.
Heather L. Petitmermet