Wellpoint Class Action

WellPoint Sued for Illegal Practices

Los Angeles, CA: WellPoint, Inc. and its subsidiaries are facing a class action suit for canceling insurance coverage even after they had authorized medical procedures, leaving patients to pay for their medical expenses. Defendants named in the suit are WellPoint, Inc., Blue Cross of California, and Blue Cross Life and Health.

According to the suit, WellPoint and its subsidiaries regularly violated California state law by retroactively rescinding patients' insurance coverage in order to avoid paying expensive claims, even after the insurance carriers had authorized the medical procedures. Plaintiffs contend that this violates California law which prohibits insurance companies from refusing to pay medical bills when hospital services have been provided based on the authorization of the insurance carrier.

The suit also argues that when claims reach a certain dollar maximum, the insurance carriers review the patient's medical records and look for reasons to revoke the policy, including "any discrepancies in the member's application, no matter how vague or irrelevant."

This leaves sick patients with massive medical bills that many cannot afford to fully pay, including bills for costly medical problems. A spokesperson for the California Hospital Association said insurance payment denials add to the financial strain on hospitals and are ultimately passed on to other patients, taxpayers, investors and lenders.

Unfortunately, hospitals may never know how much money they've lost to retroactively rescinded policies because the WellPoint subsidiaries rarely give an explanation for denying patients' claims. The hospitals may not be informed as to whether or not a policy has been retroactively rescinded.

Spokespeople for the insurance carriers claim that the cancellations are necessary in order to prevent fraud. However consumer advocates argue that in some cases insurance was cancelled as a way to avoid paying for expensive claims.

The class action lawsuit was filed October 13 on behalf of all California hospitals and seeks payment for all treatment that WellPoint and Blue Cross authorized and then rescinded in the past four years. The suit also seeks interest and punitive damages and asks the court to order the insurance companies to cease the illegal practice.

This class action follows a recent $200,000 fine to Blue Cross stemming from improperly rescinding a patient's coverage. In that case, Blue Cross illegally cancelled the patient's coverage claiming that she knowingly withheld information about corrective surgery she had 23 years earlier.

Furthermore, individual policy holders have also filed suit against WellPoint and its subsidiaries claiming their insurance was illegally revoked after they required treatment.

WellPoint, Inc., Blue Cross and Blue Cross Life and Health must pay for care they have authorized, regardless of whether or not coverage is later revoked. Illegally canceling policies leaves sick patients with bills that they cannot afford to pay.

November 1, 2006. By Heidi Turner