Blue Shield of California will offer to reinstate health coverage to 678 former customers whose policies were rescinded since 2004 and reimburse medical costs, according to a settlement reached with the California Department of Insurance.
Last July, the San Francisco-based insurer reached a similar agreement involving 450 consumers with the state Department of Managed Health Care, which regulates HMOs. The Department of Insurance oversees preferred provider organizations and other health plans.
Under the terms of the agreement, Blue Shield of California will immediately offer coverage to the 678 people whose individual, family or other policies were revoked improperly after they fell ill. This practice has been a focus of regulators in California for several years.
The not-for-profit insurer also agreed to change its application forms, broker training and underwriting practices and set up a third-party review for rescissions. Failure to make these corrective actions would carry a $5 million fine. The Department of Insurance reached a similar settlement involving nearly 1,000 customers with Health Net in September. -- by Rebecca Vesely
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