CMA Says Los Angeles City Attorney Lawsuit Against Health Net Sends A Strong Message That Insurers' Anti-Patient Practices Won't Be Tolerated

Main Category: Health Insurance / Medical Insurance
Also Included In: Medical Malpractice / Litigation
Article Date: 22 Feb 2008 - 3:00 PDT

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A Los Angeles City Attorney's lawsuit accusing Health Net Inc. of promising medical coverage, then dropping patients if they needed expensive treatment, sends a strong message to insurers that such mistreatment of patients will not be tolerated.

"This lawsuit is an important step toward holding health insurance companies accountable for their anti-patient practices," said Richard Frankenstein, M.D., president of the California Medical Association. "Health insurance companies may say they are providing coverage, but time after time they do everything they can to avoid paying for health care for their policyholders. They rapidly take people's money and slowly tell them they won't pay their claims."

City Attorney Rocky Delgadillo announced the lawsuit at a news conference in Los Angeles today, accusing the insurer of "unlawful and deceptive business practices." The suit accuses Health Net of engaging in practices that led to denials or delays in authorizing claims, or canceling patients' health coverage after already issuing them insurance policies. The suit also accuses the insurer of intentionally misleading consumers through advertising and marketing of health policies to gain more business, but never actually delivering the coverage promised.

The suit seeks to stop the unlawful practices alleged as well as fines for each violation. The City Attorney also asks in the suit that all wrongfully canceled policies be reinstated and full restitution be made to the patients involved.

The City Attorney also said today that based on evidence gathered in preparing the lawsuit, he is opening a separate criminal investigation into the insurer's practice of paying bonuses to employees who canceled policies of patients who had submitted expensive claims. The state Department of Managed Health Care fined Health Net $1 million for lying to investigators about the practice. Regulators are still investigating that matter.

The Los Angeles City Attorney's Office also recently launched a tipster website seeking information from patients, doctors and hospitals about health insurers in an effort to broaden the practices and insurances companies under scrutiny.

In another effort against unfair cancellation of health insurance, the CMA is sponsoring a bill by Assemblyman Hector De La Torre (D-South Gate) that would require health insurance companies to seek approval from regulators before canceling a patient's policy. If passed into law, Assembly Bill 1945 also would require regulators to revoke the license or otherwise discipline an insurance company for retroactively canceling a policy.

The California Medical Association represents 35,000 California physicians in all specialties and modes of practice.

California Medical Association