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.