Health Net has been ordered to pay $9 million to a Los Angeles-area woman who was dropped by the insurer after being diagnosed with breast cancer. Arbitration Judge Sam Cianchetti called Health Nets conduct reprehensible, and instructed the Woodland Hills, Calif.-based insurer to reimburse $129,800 in unpaid medical bills with interest and pay $750,000 for emotional distress and $8.4 million in punitive damages.
Patsy Bates, a 52-year-old beautician, switched to Health Net from another insurer in September 2003 after being contacted by an insurance broker. A month later, she was diagnosed with breast cancer. Health Net revoked her policy in January 2004. It is hard to imagine a situation more trying than the one Bates had to endure, Cianchetti wrote in his 21-page ruling.
Health Net said it is taking steps to change its processes, including only revoking policies after a third-party review. While we do not agree with all of his conclusions, the arbitrator raised some serious concerns, according to a written statement from the company.
The Los Angeles city attorney has filed a lawsuit against the insurer over individual policy cancellations, and last year California regulators fined Health Net $1 million for lying about an internal program that tied employee bonuses to policy cancellationsa program that was revealed during the Bates case. -- by Rebecca Vesely
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