State Assembly Approves Hayashi Legislation To Protect Consumers From Insurance Policy-Rescission

Main Category: Health Insurance / Medical Insurance
Article Date: 15 May 2009 - 2:00 PDT

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The California State Assembly has approved legislation by Assemblywoman Mary Hayashi (D-Hayward) that would prevent health plans and insurers from canceling a health insurance policy 18 months after the policy was issued. Assembly Bill 108 (Hayashi) passed on a 48-28 vote.

"I applaud the Assembly for passing this very important consumer protection, which ensures consumers don't have their health insurance taken away when they need it most," said Hayashi.

"The California Medical Association applauds Assemblywoman Mary Hayashi for carrying this important legislation," said Dr. Dev A. GnanaDev, CMA president. "AB 108 provides an important consumer protection against health plans unfairly rescinding insurance coverage and gives patients the stability and certainty they deserve."

Rescission is when an insurer retroactively cancels a consumer's policy. In recent years, the press and courts have exposed how insurers will rescind or cancel a consumer's policy after an expensive claim has been submitted. Rescission hits consumers at the worst possible time: when they are receiving treatment for serious medical problems. Suddenly, patients find themselves uninsured. They are also left with tens of thousands of dollars in medical bills for treatments they have already received and believed had been covered.

"The current practice of accepting premium from patients for years and then scrutinizing the original application for micro-deficiencies as a way of avoiding expensive but legitimate claims is unethical and must be stopped," said Thomas C. Bent, President of the California Academy of Family Physicians.

AB 108 now moves to the State Senate where it will next be considered by the Senate Health Committee.

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Hayashi