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Consumer Watchdog Warns HMO Regulator Not to Side With Insurers Over Illegal Coverage Cancellations

Big 5 Health Insurers Named In Cancellation Lawsuits Contributed $804,600 to Governor

SANTA MONICA, Calif., May 14 /PRNewswire-USNewswire/ -- Consumer Watchdog today said that according to industry insiders the state's top HMO regulator is considering a deal with Kaiser that would allow the company to avoid paying for past medical bills for some patients whose coverage was illegally cancelled when they got sick. The deal is also rumored to include provisions designed to limit Kaiser's legal liability.

After two years of high-profile media coverage of widespread coverage cancellations, the Department of Managed Health Care (DMHC) recently announced plans to require insurers to reinstate coverage, though no formal orders for reinstatement have yet been issued.

Download the letter at:

In the letter, Consumer Watchdog wrote:

"We have heard disturbing rumors that the Department will soon announce a settlement with Kaiser regarding illegal retroactive cancellations of coverage that falls significantly short of your duty to protect patients by allowing Kaiser to continue to refuse to pay past medical bills. What's worse, we understand that the agreement is also aimed at limiting Kaiser's future legal liability to patients who were left uninsured when they got sick and needed coverage the most -- some of whom have lost their jobs and their homes because of Kaiser's malfeasance...

"[A]ll previous rescissions carried out without a showing of willful misrepresentation were premature at best, and therefore wrongful, and patients must be immediately put back in the position that they were in prior to losing coverage. Dragging patients through months of review before reinstatement and/or full payment of past medical bills is simply further unjust punishment.

"Your Department's failure to attend to the interest of the patients forced them to sue for relief. Now, the insurance company defendants that you regulate are counting on you to bail them out. This is an inappropriate role for an agency entrusted with the protection of patients.

"This latest action marks a disturbing trend. Promised regulations are now 18 months overdue. Several company surveys are long overdue. It is not too late for you to put the Department back on track, but you must personally ensure that patients come first -- even if that means upsetting some of the Governor's largest contributors."

The state's largest 5 health insurer's, all named in lawsuits and targeted by regulators for illegal policy cancellations, have contributed $804,600 to Governor Schwarzenegger since 2004:

Blue Cross: $256,000

Health Net: $155,500

Kaiser: $150,000

PacifiCare: $138,500

Blue Shield: $104,600

SOURCE Consumer Watchdog
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