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Statement Regarding Los Angeles City Attorney Enforcement Action
Date:7/16/2008

SAN FRANCISCO, July 16 /PRNewswire-USNewswire/ -- The following is a statement by Tom Epstein, Vice President, Public Affairs, Blue Shield of California:

Today's action by the Los Angeles City Attorney is totally without merit.

The issues raised in the complaint are thoroughly regulated by two state agencies that have aggressively defended the interests of consumers. In filing this complaint, the City Attorney has seized on a hot topic in an attempt to advance his political future.

The City Attorney asserts that we have committed unfair practices regarding the payment of claims for 400,000 individual policyholders without a shred of evidence that our actions were improper. He fails to mention that since 2002, we have paid nearly $4 billion in claims for those policyholders. He claims that we used intentionally misleading applications, but our applications were reviewed and approved by two state regulators.

While Mr. Delgadillo consulted extensively with trial lawyers who have a financial interest in rescission cases, he never spoke to anyone in our company or asked for any documents in our files. We had no notice of his announcement and he made certain that we could not obtain a copy of the complaint for hours so it would be difficult for us to make a public response in a timely manner.

We have always been careful in our underwriting of health coverage policies and in our investigations of the rare contracts that are rescinded. This is why we have rescinded a fraction of one percent of individual and family policies.

We have long advocated a system of universal coverage that guarantees coverage for everyone regardless of their health history. But until California achieves that goal, health plans must rely on medical underwriting, which includes the responsibility of applicants to tell the truth. If there were no consequences for applicants who misrepresent significant medical conditions, insurance rates would skyrocket for the vast majority of Californians who complete their applications accurately.

It simply isn't fair for the overwhelming majority who play by the rules to subsidize those who don't. That would be like making motorists who drive safely pay the fines for those who choose to speed.

CONTACT: Tom Epstein, 415-229-5110, tom.epstein@blueshieldca.com


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SOURCE Blue Shield of California
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