Cal Blue Shield wins recision case, but it’s very, very strange

So Blue Shield of California wins the first case  it’s fighting over the recission issue. But it’s in very strange circumstances. The plaintiffs (a couple trying to get coverage for a doctor they like that wasn't in their employer’s plan) changed their story and said that they had lied on their application. 

Blue Shield’s lawyer even went after St. Lisa herself!

Blue Shield's lawyer, Jacobs, also complained about "unrelenting negative coverage in the Los Angeles Times." Despite that, he said, "we fought this lawsuit because we knew we had behaved properly and we were confident that the evidence would speak for itself. It has."

So four burning questions remain.

1. Why did the couple who’ve been fighting this all the way, suddenly capitulate when not significantly different circumstances in the only other case to go to arbitration (the Healthnet case) led to a $9m verdict? Something happened here and in the interests of transparency Blue Shield had better tell, or suspicions will be raised.

2. If it’s so sure that it’s legally in the right, why did Blue Shield settle with the state insurance commissioner earlier this year (albeit on pretty favorable terms) and pay the out of pocket expenses and offer insurance to the 678 people with claims against it? If you’re in the right (and legally I think they may be in many of those cases), why be expedient?

3. It’s clear that at least Healthnet and likely Wellpoint/Anthem/California Blue Cross had either special departments looking hard for errors/lies on applications in the individual market that were associated with heavy claims, and in Healthnet’s case were paying bonuses on the cancellations. How did Blue Shield identify its cases? And in a related issue, wasn’t there a better test case for the plaintiff bar among the 600 odd cases?

4. If Blue Shield is right, why aren’t Kaiser Permanente, Wellpoint, Healthnet, United and the rest all fighting their cases too? Are they just really sitting on the sidelines watching? Or were they secretly backing Blue Shield hoping that victory for their competitor would mean that they would be spared expensive settlements in their class action lawsuits.

The irony of course is that (within the limited world of health insurers) Blue Shield (and Kaiser) are the most aggressive proponents of health reform that would do away with the need for (or ability of) insurers to do medical underwriting in the first place. So for that at least they should be applauded.

But there continues to be something very odd about the way this is unfolding.

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7 replies »

  1. read the constituion then make that stupid claim. Start with the second amendment then read up on equal protection and tell me who trashed what. This is even funner as the current president is appointing someone to the SC based on their nationality and empathy for others, that is a mockery of our constituion and the blindness that justice is suppose to show. I also love how they completly ignore bankruptsy law to give subornate creditors preferential treatment.

  2. Taxes are also a function of what you get for them. How come Warren Buffet’s secretary pays a higher tax rate than he does?
    “How come citizens of other countries are lined up to the moon and back to get into the US..”
    And Europe, and Canada. I doubt many well off middle income groups in other countries wish they were here. And those freedoms, would they be before Bush trashed the constitution or after?

  3. why do people in other countries have effective tax rates well north of 50% and not nearly the freedoms we do Peter? How come citizens of other countries are lined up to the moon and back to get into the US while few American’s are desperatly trying to get into Europe?

  4. How come citizens in countries with single-pay have NO recission issues and no apps to fill out and no legal issues related to their pre-existing conditions?

  5. Insurance fraud is still a felony in most states, they take the stand and they might just testify themselves right into jail. Their story didn’t make any sense anyways. The premium for individual policy for husband and spouse for a year in CA probably would have covered the additional OOP to see a non network provider. What sort of doctor are they seeing who would annually bill greater then the cost of individual coverage? He had to have some serious teeatment going on or they are covering up something else.
    If you do some investigation outside the left leaning media you learn facts liek this;
    “It also learned his true weight was 285 pounds not 240 pounds as listed on the contract application.”
    Beyond her argument the app was confusing and she didn’t know she had to provide medical history on all applicants,a stretch, what information she did provide she lied about. Funny how this gets left out of all the reporting.
    #2 why did banks take TARP money they didn’t need? Why did GM bond holders with a legal claim above the Union settle for less then the Union? When your regulator tells you to do something or else sometimes you have to do. This was a very public story where the state had to show they were doing something, even if it wasn’t right. That is not the time to pick a fight with the agency that can shut you down.
    “How did Blue Shield identify its cases?”
    When a supposedly healthy person with the lowest rating possible suddenly shows up in the ER with a chronic condition that tends to raise flags.
    From the same none left leaning media;
    “Hailey’s husband was admitted to the hospital for stomach problems in February, 2001. Blue Shield referred Hailey’s contract to its Underwriting Investigation Unit for investigation of possible fraud on February 8, 2001. Blue Shield obtained medical records that revealed Hailey’s husband had a history of health issues including obesity and gastro esophageal reflux disease.”
    Not exactly something you develope between December and Feb.

  6. 1. Perhaps they got a conscience and decided not to lie about lying?
    2. Like you said, favorable terms. Also, no more uncertainty plus they avoid setting bad precedent in the courts.
    3. Good question.
    4. See #2 about precedents.
    Frankly, I’m not sure what’s weird about all this.

  7. Can I just point out how weird it is that conservatives are opposing health care reform by citing the case of a Canadian woman who is trying get coverage for a doctor she liked that isn’t in her country’s plan?
    I mean, I can’t go to the Mayo Clinic and I’m an insured American. Mayo is out of network for me. (And, of course, I’m assuming my brain tumor wouldn’t be declared a “pre-existing condition,” but that’s a whole other rant)
    Does it really help their case to suggest that it’s awesome for Canadians to sue their government to fix their healthcare system when they get a $96,000 bill for the Mayo Clinic, but Americans should just shut up and tolerate our health care system when we have to pay the exact same $96,000 bill for the Mayo Clinic?
    What exactly is supposed to terrify me about this woman’s story? That if I were Canadian, I’d have to pay out of pocket for the Mayo Clinic? Newsflash: that’s the situation I’m in RIGHT NOW! And it’s even more offensive, because it’s not like the Mayo Clinic is in a foreign country!
    The suggestion that we should just shut up and take it or we’ll wake up Canadian is ridiculous on its face. But you’d think conservative fear-mongers would do a better job of making “waking up Canadian” sound like it’s a worse thing than the situation we’re in right now. Seriously, this woman is pissed because she’s out $96 grand for going to the Mayo Clinic. But I’m supposed to put up with it because I’m an American? Screw that.