California Appeals Court Vacates Decision Allowing Class-Action Lawsuit Over Canceled Policies

Main Category: Health Insurance / Medical Insurance
Also Included In: Medical Malpractice / Litigation
Article Date: 08 Jan 2008 - 10:00 PDT

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A California appeals court on Thursday vacated a Dec. 4, 2007, decision that would have allowed people whose health insurance policies were canceled after they submitted claims the right to sue as a class, the Los Angeles Times reports. The court also granted Blue Shield of California a rehearing on the issue (Girion, Los Angeles Times, 1/5).

The California 2nd District Court of Appeal in December 2007 ruled that canceling individual health insurance policies for omissions or mistakes on applications after claims are submitted is "flatly prohibited" under state law. The three-judge panel ruled in favor of policyholders seeking to bring a class-action lawsuit against Blue Shield of California for canceling policies after members submitted treatment claims. The judges added that insurers cannot cancel a member's policy if they do not attach a copy of the application to the policy (Kaiser Daily Health Policy Report, 12/6/07).

The Blue Shield unit involved in the case disagreed with the court's decision, saying that state law allows insurers to cancel a policy if an individual makes omissions or misstatements on applications for coverage, regardless of when they are discovered.

During the rehearing, the court can maintain its original decision or make a new judgment (Los Angeles Times, 1/5).

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