CA Legislature's 'Reform' of Health Insurance Cancellations Resembles Insurance Industry's Own Plan; Insurers, Satisfied With Getting a Legal Edge Against Patients, Drop Opposition to the Bill
AB 1945 by Assemblyman Hector De La Torre, before the Senate Judiciary Committee tomorrow, would allow regulators to outsource oversight of policy cancellations to private companies, even though such companies operate under financial incentives that favor health insurers. Last Wednesday, all health insurers and health plans removed their opposition to the bill. Consumer Watchdog said the bill should be amended to limit rescission to instances where a patient lied about a past medical condition and regulators, not third-party reviewers, should assist patients prior to the rescission being carried out.
Following several years of public and media scrutiny over retroactive policy cancellations -- so called "rescissions" -- that often leave patients uninsured and hundreds of thousands of dollars in medical debt, insurers proposed a model policy solution designed to shield them from future legal liability. That plan closely resembles the De La Torre bill.
The insurer proposal, announced in a white paper in late 2007, would require cancelled patients to appeal to an independent panel without help from an attorney.
Under both the De La Torre bill and health insurer proposals, patients would have to interpret and even try to make complex legal arguments, said Consumer Watchdog. The industry-wide strategy is to promote "reforms" containing complex proposals that favor them in legal proceedings.
"Insurers are lobbying hard in the Legislature and at regulatory agencies for a 'get out jail free' card that allows their financially captive third-party agents to play judge and jury over rescission reviews," said Jerry Flanagan of Consumer Watchdog. "California patients who've lost their health, their credit ratings, even their homes after illegal cancellations of their insurance need tough new rules and criminal prosecutions of insurance executives whose companies boost profits by cutting loose anyone who dares to get sick. Instead, insurers are getting industry-friendly legislation and capitulation by regulators. The industry-backed 'reforms' and settlements give lip service to allowing patients to recover unpaid medical bills and other damages caused by illegal policy cancellations, but actually foist big legal burdens on patients."
A settlement announced Friday by the Department of Managed Health Care (DMHC) would allow insurers in many cases to evade any payment of unpaid medical bills resulting from policy cancellations. Under the settlement, insurers could use closed-door arbitration proceedings where patients would likely not be able to afford legal representation to evade paying up tens of thousands of dollars in medical bills racked up by patients both before and after the policy rescission, no matter how illegal it was. Patients would also be fighting the insurer about the necessity of their medical care in front of arbitration judges with financial ties to the health insurers, not before doctors or medical experts.
Though under the current De La Torre bill, patients who submit to the third-party review could still sue their insurer to recover past medical bills, insurers could use favorable results made by captive third-party reviewers as evidence against patients in subsequent court cases. It was only civil lawsuits that forced regulators to act in the first place. Prior to a wave of lawsuits in 2006, 289 policyholders complained to the DMHC that their in
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