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Redding, California

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Todd Slaughter
Todd Slaughter
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Health Net Settlement – Up to $14 Million for Wrongful Recission of Policies

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It seems like just yesterday I posted about the settlement reached by healthcare insurance giant, Anthem Blue Cross, in a California case brought by 2,300 policyholders for wrongful rescission of policies. Oh, it was yesterday? But today, Health Net announced that it too had settled a wrongful rescission case. According to the Los Angeles Times, Health Net, one of the nation’s largest healthcare insurance companies, will pay $2 million in fines to the Los Angeles City Attorney’s office, will restore coverage to 800 former policy holders, and will pay for health care bills incurred by the policy holders after they were wrongfully denied. The total estimated cost of the settlement is as much as $14 million.

It seems like I have already written or heard of this story before. Oh, I have. In September of 2008 I posted on another settlement reached by Health Net with 926 of its policy holders that were wrongfully rescinded. This time the settlement was for $13 million, and was supposed to be accompanied by a moratorium on policy rescisions and cooperation with regulatory agencies.

Oh, and Health Net was also found liable for $9 million by an arbitration judge after it wrongfully rescinded a policy of a Gardena hair salon owner when she had been diagnosed with breast cancer. The woman had to suspend chemotherapy because her coverage was dropped.

What is truly amazing is the fact that the basis for rescission is always a claim of misreporting of prior medical history. Such misrepresentations, if true, would be tantamount to fraud and the carrier should not be bound to afford coverage in those intances. Yet, in the 1000s of cases that we are now hearing about, it does not appear that even one claim of "insurance fraud" could be supported.

These carriers have turned the promise of providing the "best healthcare coverage available" into a horrifying nightmare where policyholders are told that the policy does not even exist, at a time when they are suddenly faced with critical healthcare needs. This is reprehensible and the slap on the hand treatment that these carriers have received thus far is incomprehensible.