The California Department of Insurance has targeted Blue Shield of California Life & Health Insurance Co. for improper rescissions and claims handling practices. The story is in today's L.A. Times
. Some hightlights:
*Insurance Commissioner Steve Poizner will assess a $12.6 million fine against Blue Shield.
*The DOI investigation focused only on Blue Shield's 167,000 insureds. The California Department of Managed Health Care is investigating Blue Shield's 2.3 million covered lives in HMOs in a separate action
*The DOI found 1,262 violations of claims handling laws and regulations. These included mishandling consumer appeals, delaying payment on claims and failing to pay interest owed on overdue claims.
*229 policies were improperly cancelled by Blue Shield through wrongful rescission practices.
Blue Shield president Duncan Ross said, "we are outraged by the excessive penalties for nonsubstantive issues." Commissioner Poizner said, "my message to all health insurers in California is that I will not tolerate inappropriate rescissions and shoddy claims handling."
I'm struck by the numbers. If the DOI found this level of problems investigating Blue Shield's practices relating to 167,000 insureds, how many folks is the Department of Managed Health Care going to find have been affected by the same types of practices occuring in connection with 2.3 million lives covered under Blue Shield's HMO products?
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