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Largest U.S. Health Insurer Rewarded Employees That Cancelled Coverage of Sick Patients

Consumer Watchdog Calls on Congress to Ban Bonuses For Canceling, Delaying or Denying Medical Care

WASHINGTON, June 16 /PRNewswire-USNewswire/ -- Consumer Watchdog called on Congress to ban any health insurance employee from receiving bonuses for canceling, delaying, or denying necessary medical care to patients based on new evidence made public today.

The evidence released by the House subcommittee on Oversight and Investigations shows that WellPoint, the nation's largest health insurer, rewarded employees for canceling coverage of sick patients. Employees earned high points on "performance reviews" for retroactively canceling policies -- a practice known as "rescission."

Peggy Raddatz testified at the hearing today about her brother, Otto Raddatz, who died of lymphoma after his health insurer cancelled his coverage. Otto's insurer based the rescission on Otto's failure to disclose an aneurysm and gall stones on his application -- conditions that Otto's doctor had never told him about.

All three insurance executives who testified at the House subcommittee hearing today refused to commit to only cancel policies of patients who lie about their health on their insurance application. This shows that insurance companies will continue to look for inappropriate reasons in the fine print of insurance policies and applications to refuse necessary medical treatment, according to Consumer Watchdog.

"The committee's stunning discovery demonstrates both the need for a real public alternative to for-profit insurers and new legal accountability of insurance companies that are willing to lie, cheat and kill to boost profits," said Jerry Flanagan, Health Care Policy Director for Consumer Watchdog. "When asked by the committee chairman, WellPoint and other executives refused to protect innocent patients by only rescinding policies in cases of fraud. That should send a clear message that insurance companies and HMOs cannot be trusted with our health. New accountability and a competitive public alternative to the for-profit insurance market are the only paths to halt insurers from bankrupting, even killing their patients to increase profit."

According to documents obtained by the subcommittee, one employee of Blue Cross, a subsidiary of Wellpoint, received a perfect score of "5" in a company performance review after saving the company nearly $10 million through policy rescissions. Three insurance companies -- WellPoint, Golden Rule (owned by United Health) and Assurant -- rescinded more than 20,000 policies over five years and refused to pay for more than $300 million in medical expenses, according to documents uncovered by the committee.

Download the WellPoint "performance reviews" here:

Review other committee documents here:

Last week Consumer Watchdog called for new legal accountability of health insurers. Download that letter here:

Wittney Horton of Los Angeles, whose own insurance was cancelled after she sought routine medical care, testified at today's hearing, urging lawmakers to stop insurance companies from canceling or downgrading insurance coverage when patients get sick.

In her testimony to the committee today, Wittney Horton said:

"Americans desperately need health care reform. As my experience shows, owning an insurance policy does not necessarily equal access to health care. If insurance companies are not prevented from canceling or restricting coverage after patients get sick, insurance policies are not worth the paper they are printed on. Insurance companies are making record profits by collecting premiums in exchange for the promises they make to be there when people need them. Make them keep that promise."

Download Ms. Horton's complete testimony here:

When Horton applied for coverage with Blue Cross, she filled out the long and confusing application to the best of her ability. She gave Blue Cross permission to review her medical records. Blue Cross accepted her application and sold her coverage. After Horton sought routine medical care, Blue Cross scoured Horton's medical record and retroactively cancelled her coverage. Blue Cross said it would have never sold her a policy if the company had known Horton had "polycystic ovaries," a condition not disclosed on her application. The rescission letter was the first time Horton had ever heard about this condition. Horton's doctor had suspected she had the condition, noted it in Horton's medical file, but never told Horton about it.

In a letter to chairman Henry Waxman (D-CA) last year when the subcommittee began its rescission investigation, Consumer Watchdog urged lawmakers to bar such rescissions unless an insurance company could prove that the patient "intentionally misrepresented" her health condition as required under federal law. Under such an approach, Blue Cross could not cancel Horton's policy since she was not aware of the condition and therefore could not have lied about it on her application. Download Consumer Watchdog's letter to Waxman here:

Consumer Watchdog is a non-partisan consumer advocacy organization with offices in Washington D.C. and Santa Monica, California. Visit us on the web at:

SOURCE Consumer Watchdog
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