LA Sues Insurer for Canceling Health Care Coverage

The City of Los Angeles is suing Anthem Blue Cross for unlawfully cancelling health coverage polices and denying and delaying benefits that left thousands of Californians with unpaid medical bills.

Los Angeles City Attorney Rocky Delgadillo filed suit last week in Los Angeles Superior Court, claiming that the insurer’s coverage is “large illusory.” It claims Anthem, its parent WellPoint, Inc. and a subsidiary, denied benefits to more than 6,000 people in “serious and often critical need of care.”

The suit also accuses the insurers of misleading more than 500,000 policyholders into buying coverage based on false advertising and promises. As a result, thousands more policyholders may not be covered for future medical treatment, leaving them with tens of thousand of dollars in medical debt, said Frank Mateljan, a spokesperson for Delgadillo’s office.

“There are people who think they’re insured and (the coverage) is not worth the paper it’s written on,” Mateljan said.

Delgadillo is seeking $2,500 per violation or $5,000 if the policy holder is a senior or disabled. Total fines and restitution could exceed $1 billion.
WellPoint did not return insideARM’s call, but a company spokesperson told the San Francisco Chronicle that WellPoint disagrees with the allegations and will defend itself.

In the suit, Delgadillo claims “Blue Cross collected applications from customers using intentionally misleading forms with little or no meaningful review of the accuracy of responses or informed investigation into the medical history of applicant. In addition, applicants were often assisted by untrained and unsupervised agents in completing the application, further complicating the process.”

The lawsuit claims that it was after members got sick and filed claims that the insurers reviewed the member’s application for minor or inadvertent errors that might justify cancelling coverage.

Delgadillo has also posted to his Web site a letter asking city residents if they have been denied coverage by health insurers.

In February Delgadillo filed a similar suit against Health Net of Sacramento, Calif., and opened a criminal investigation into the company’s alleged $35 million savings in medical expenses after illegally rescinding the policies of at least 1,600 policyholders. “The health insurance industry is not focused on truly improving our care,” he said in a press release. “The industry’s singular focus is on maximizing profits at the expense of patients and their doctors.”