The Los Angeles city attorney has filed a civil lawsuit against Blue Shield of California for allegedly delaying or denying thousands of medical claims to policyholders or revoking coverage after members fall ill, saying penalties could be in excess of $1 billion.
The complaint, filed in Los Angeles Superior Court, alleges that the not-for-profit insurer used false or misleading advertising to dupe more than 400,000 customers and engaged in unlawful and fraudulent business practices such as denying benefits to more than 850 members in individual plans since 2002. City Attorney Rocky Delgadillo is seeking $2,500 per penalty and reinstatement of members whose policies were canceled by Blue Shield. Delgadillo had filed similar lawsuits against Health Net and Anthem Blue Cross of California.
In a written statement, Blue Shield of California called the complaint totally without merit, adding that it has paid nearly $4 billion in claims to policyholders since 2002. In filing this complaint, the City Attorney has seized on a hot topic in an attempt to advance his political future, the insurer said.
California insurance regulators have reached settlements over individual policyholder rescissions with Kaiser Permanente and Health Net. Blue Shield of California and Anthem Blue Cross of California have not yet settled with the state over the issue. Not-for-profit Blues plans around the country, including those in Michigan and the Mid-Atlantic region, are also under increased scrutiny from regulators. -- by Rebecca Vesely