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Consumer Watchdog Gives HMO Regulator 10 Days to Order Reinstatement of Patients Whose Policies Have Been Illegally Cancelled

SANTA MONICA, Calif., April 14 /PRNewswire-USNewswire/ -- Consumer Watchdog petitioned the state Department of Managed Health Care to announce within 10 days its plans regarding hundreds of patients who have been left uninsured, uninsurable, and hundreds of thousands of dollars in medical debt when their polices were retroactively cancelled by their health insurance company.

Though DMHC Director Cindy Ehnes acknowledged at a recent Senate Health Committee oversight hearing that the Department has the authority to order reinstatement of health plan contracts, the Department has ordered reinstatement in only one case out of the hundreds of identified illegal retroactive cancellations -- so-called "rescissions."

Read Consumer Watchdog's letter citing the DMHC's legal authority and duty to require immediate reinstatement of coverage:

In the letter sent today, Consumer Watchdog wrote:

"Rescission of a health plan contract is extremely detrimental to the patient. Not only is the rescinded patient left uninsured and often hundreds of thousands of dollars in medical debt, but is also virtually uninsurable in the individual market. Particularly harmful is the fact that a patient rescinded under an allegation of fraud is barred from enrolling in high-risk coverage through the Major Risk Medical Insurance Program (MMRMIP). As result, patients who have been wrongly rescinded are forced to rely on charity care and the state's underfunded health care safety net."

Consumer Watchdog said that reinstatement must be retroactive to the time of cancellation and health insurers must be liable for all health expenses from the date of issuing the contract through the date of reinstatement.

In the letter, Consumer Watchdog wrote:

"Pursuant to Article 1 SS 3 of the California Constitution, I request that you respond in writing as to what actions the Department will make regarding reinstatement. If your decision is to not order immediate reinstatement, please respond by providing specific statutory authority for that decision -- including how such a decision comports with the requirements of SS 1365(b). Given the health threat faced by wrongfully rescinded patients we urge that you respond to this request no later than April 25."

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SOURCE Consumer Watchdog
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