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CNS - Blue Shield of California unlawfully rescinded hundreds of insurance policies after patients were hospitalized or required major medical procedures, according to a lawsuit filed recently by Los Angeles City Attorney Rocky Delgadillo. The Los Angeles Superior Court lawsuit seeks $1 billion in damages against the nonprofit health insurance company.
“Blue Shield has, since at least 2002, used false and misleading advertising to dupe more than 400,000 California consumers into purchasing health coverage that is, in effect, little more than a mirage,” Delgadillo said.”Blue Shield also illegally delays or denies the payment of thousands of legitimate medical claims.”
A Blue Shield of California spokeswoman said executives had not seen the lawsuit yet and had no comment. The lawsuit is similar to ones filed earlier this year against HealthNet and Blue Cross of California. The complaint alleges that Blue Shield engaged in unlawful, unfair and fraudulent business practices, and false and deceptive advertising in violation of the state’s Unfair Competition and False Advertising laws.
The city attorney used the case of Ana and Gus Simoes to highlight the problem of unlawfully rescinded policies. The couple was insured by Blue Shield in January 2004, and in August of that year, Ana Simoes underwent emergency gallbladder surgery. During surgery, doctors punctured Simoes’ lung, and she developed asthma as a result.
According to Delgadillo, Ana Simoes’ medical claims underwent a “secret” review as Blue Cross employees looked for ways to rescind her policy. When they could not find a reason, Blue Shield reviewed Gus Simoes’ medical history and found that, while he had listed all of his doctors and medications, he failed to specify why he was taking Lipitor.
“This inadvertent omission, which probably wouldn’t have prevented Ana and Gus from getting coverage at the onset, was now being used to rescind their policy,” Delgadillo said.
Jerry Flanagan with Consumer Watchdog said that by filing the lawsuit, Delgadillo has done what “not only the governor and regulators have been unwilling to do, but what the state’s attorney general has been unwilling to do, which is go after the largest insurance companies and take them to task for retroactively canceling patients when they get sick.”