On Thursday HealthNet was being sued by the LA City attorney’s office and saying that it was doing nothing wrong and would keep on trucking:
Health Net’s Olson said the company’s application had been approved by regulators and didn’t need to be changed.”There are 110,000 Californians who figured it out and were able to fill out the application in a way that got them low-cost, high-quality coverage,” he said. “It’s fine and it’s working.”
Presumably they had faith that the arbitration process that many health plan policyholders have to go through would mitigate any risk.
What a difference a day makes.
Friday, the arbitrator in the case of the cancer patient whose insurance was retroactively terminated—this was the case which revealed the bonuses paid to staff who cancelled policies— awarded $9 million in punitive damages to the patient. This isn’t quite the $89 million that was awarded against HealthNet in 1993 in the Fox-Hipple case, but the difference is that in arbitration there’s usually no appeal (that $67m was never paid in full).
Jay Gellert, HealthNet’s CEO immediately announced that they would stop retroactive cancellations. But of course with lawyer William Shernoff now smelling blood, and with Blue Shield still fighting for the “right to recission” in the courts, the damage isn’t over.
Hopefully this will eventually mean that the companies will accept real regulation and real reform in the individual market, which essentially means ending it.
(FD I am a HealthNet individual policy holder and they haven’t “recivved” me yet. Then again I haven’t had a claim in 3 years!)