Health Coverage Canceled Lawsuit

Kaiser Permanente to pay $300,000 settlement in insurance lawsuit.

Health Coverage Canceled

San Francisco, CA: (May-15-08) The state Department of Managed Health Care brought a lawsuit against Kaiser Permanente, among others, alleging that the company had the controversial practice of rescinding individual coverage after patients got sick, stating as a cause for denial, that they had pre-existing conditions and therefore did not qualify for coverage. Sources familiar with the negotiations said that the two sides had reached a settlement agreement, in which Kaiser Permanente agreed to offer insurance to 1,092 individuals whose policies were wrongly canceled after they fell ill. The company will also refund money paid to the health plan for medical care.

Terms of the settlement stipulate that Kaiser pay a $300,000 fine against the health plan and a potential fine of $3 million if Kaiser fails to pass a survey of its practices by state regulators within the next 18 months. Kaiser spokespersons said that the company had voluntarily halted the controversial practice, known as "rescission," in October 2006, when federal regulators began to probe about the application survey used. Records show that the Department of Managed Health Care ordered five health plans to immediately reinstate coverage for 26 people whose insurance benefits were wrongly canceled after they filed claims. It also ordered a review of thousands of additional cases. [SAN FRANCISCO BUSINESS TIMES: KAISER AGREES TO OFFER COVERAGE TO 1,000 CANCELED PATIENTS]

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