Blue Shield of California Reinstates Insurance for Patients it Dropped

Karen Vincis insurer - Blue Shield

In a bid to put to rest legal troubles over a practice of canceling patients’ health insurance policies after they got sick, Blue Shield of California has agreed to grant coverage again to nearly 700 such patients.

The company will also reimburse them for medical bills they’d paid when they didn’t have coverage. The state of California, in return, dropped its case against the company and stopped its pursuit of $12.6 million in proposed fines, the Los Angeles Times reported this morning.

A number of big California health insurers got into public relations and legal messes over the cancellation of plans after patients get sick, a practice that goes by the medical sounding term “recission.” The insurers claimed the patients weren’t upfront about their medical histories and preexisting conditions when they applied for coverage.

Other companies that have agreed to reinstate patients’ policies include Health Net, WellPoint’s Anthem Blue Cross and Kaiser Permanente.

Blue Shield didn’t admit wrongdoing and, in a prepared statement, said, “With this settlement, we can put these matters to rest and enter 2009 with new procedures in place to clarify the responsibilities of insurers and our customers in the future,” according to LAT.

Some consumer advocates weren’t satisfied. Jerry Flanagan of the advocacy group Consumer Watchdog, told the Times, that the settlement “does not adequately protect against future rescissions — no admission of wrongdoing, no mandatory fines, no clarification of the legal standard” for rescissions