In an attempt to settle a class action patient lawsuit, Blue Cross last week agreed to stop canceling individual health insurance policies unless it has evidence that policyholders intentionally lied on their applications to cover up preexisting medical conditions.

CMA and others are concerned, however, that the agreement does not prevent patients from being hit with huge medical bills or reinstate canceled patients’ insurance coverage. It also fails to address unpaid claims owed to physicians and medical centers. The proposed settlement offer has not yet been approved by the court and the preliminary approval hearing has been put on hold so that these concerns can be considered.

This proposed settlement comes just weeks after CMA joined the class-action consumer lawsuit seeking to stop Blue Cross from engaging in this unfair and illegal business practice.

Blue Cross was also recently fined $1 million by the Department of Managed Health Care (DMHC) for routinely dumping patients after they got sick. DMHC examined 90 randomly selected policy cancelations and found that in each case Blue Cross used computer programs to systematically cancel policies without any indication that the policyholders intentionally lied on their applications to cover up preexisting medical conditions — a standard required by state law.

Not only does this practice put patients at risk, both financially and medically, but it also leaves physicians and hospitals holding the bag for services rendered in good faith, often with prior authorization.

CMA will continue to fight to make sure that patients are adequately protected and physicians are appropriately reimbursed for services provided in good faith to Blue Cross policyholders.

Contact: CMA’s legal information line, 415/882-5144 or legalinfo@cmanet.org.