Agreement

Health Net to pay fines, bills for rescissions

One of the state's largest health care insurers has reached a $25 million agreement with regulators, an effort to right the wrong of dropping coverage for nearly a thousand patients when they tried to make use of their policies.

Woodland Hills, Calif.-based Health Net, Inc. has agreed to offer new coverage to 926 customers who were dropped from individual or family policies in the years since 2004.

In a settlement with the California Department of Insurance, the company pledges to repay up to $14.2 million in outstanding medical expenses and waive up to $7.2 million in insurance premiums. The company will also pay a $3.6 million fine.

Insurance Commissioner Steve Poizner praised the health insurance company, saying their broad changes "to underwriting and rescission practices will serve as a model and example to other health insurers."

Rescission is the industry's term for dropping patients from coverage when they try to make claims on their health insurance policies.

In lawsuit filings and previous action from regulators, Health Net, Inc. has been rebuked for allegedly awarding bonuses to analysts in charge of cancellations. Health Net contended that policies were pulled because policyholders failed to properly disclose pre-existing conditions.

Jason Kimbrough, spokesman for the state's department of insurance, said the agreement binds Health Net, Inc. to do a better job of gathering medical information before issuing policies. The insurer has also pledged to notify consumers when the information on their applications is being investigated and provide third-party review for future rescission decisions.

(Published by AP - September 12, 2008)