Blue Shield of California has agreed to pay $2 million to resolve allegations that it improperly dropped policyholders after they became sick and needed expensive treatment, according to a Los Angeles Times report.
The settlement ends an investigation into more than 1,000 rescissions — or the unwinding of contracts — which resulted in some people losing coverage through no fault of their own, according to the report.
One rescission case went to court when BS canceled a woman’s policy after she was diagnosed with breast cancer. Evidence showed the company then paid employee bonuses based in part on rescission volume, according to the report.
Parts of the Patient Protection and Affordable Care Act were designed to prevent this practice. A ban on rescissions for unintentional application errors was one of the first pieces of PPACA to go into effect in Sept. 2010.
A BS spokesperson has said the rescission process “meets or exceeds all legal and regulatory requirements” and that the company provides immediate notice, ensures multiple layers of review and involves a medical director in the decision.
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