CDI Settles with Anthem Blue Cross Life

California Insurance Commissioner Steve Poizner announced that the California Department of Insurance has reached an agreement with Anthem Blue Cross Life and Health Insurance Company to offer new health coverage to more than 2,300 consumers whose policies were rescinded between Jan. 1, 2004 and Dec. 31, 2008.

Blue Cross will also reimburse these consumers for out-of-pocket medical expenses, estimated to be $14 million, and pay a $1 million fine. The company will also implement significant changes in its underwriting and claims practices.

Under the terms of the settlement covering allegations of unfair claims handling and improper rescission practices, Blue Cross will immediately offer coverage to 2,330 consumers whose individual or family health insurance policies were previously terminated, without subjecting them to medical underwriting or exclusions for pre-existing conditions.

Any medical expenses that would have been covered under the rescinded policies that are not covered by another source will be reimbursed or paid by Blue Cross. An expedited independent arbitration process available at no cost to consumers has been established to resolve any disputes regarding these expenses. Allegations of illegal rescission practices stem from the results of a 2007 CDI market conduct examination.

As part of the settlement, Blue Cross has agreed to make significant changes to its application forms, underwriting process, agent training, notification to consumers and providers of any investigation regarding information in the application and oversight of its claims handling. It has already established an independent third party review process for rescissions which will be subject to the Department's oversight. Blue Cross is subject to up to an additional $2 million penalty if corrective actions are not implemented in the prescribed timeline.

Blue Cross insures 50 percent of all Californians with individual health insurance policies.