Anthem Blue Cross has agreed to pay a $1 million fine, an estimated $14 million in medical reimbursements and will offer new coverage to approximately 2,330 people it had dropped for submitting pricey medical claims. Anthem made the deal with the California Department of Insurance to settle bad faith insurance claims – and it’s just the latest in a string of fines the insurer has agreed to in the past few years.

Details of the current settlement

According to a press release from California Department of Insurance’s Commissioner Steve Poizner:

[T]he California Department of Insurance has reached an agreement with Anthem Blue Cross Life and Health Insurance Company (to offer new health coverage to more than 2,300 consumers whose policies were rescinded between January 1, 2004 and December 31, 2008. Blue Cross will also reimburse these consumers for out-of-pocket medical expenses, estimated to be $14 million, and pay a $1 million fine. The company will also implement significant changes in its underwriting and claims practices…

As part of the settlement, Blue Cross has agreed to make significant changes to its application forms, underwriting process, agent training, notification to consumers and providers of any investigation regarding information in the application and oversight of its claims handling. It has already established an independent third party review process for rescissions which will be subject to the Department's oversight. Blue Cross is subject to up to an additional $2 million penalty if corrective actions are not implemented in the prescribed timeline.

To view the entire press release, please click here.

Although this is a new settlement, it isn’t Anthem’s first. The company, through its parent company Wellpoint Inc., settled a previous action with California’s Department of Managed Health Care (DMHC) for $10 million in 2008 for similar bad faith insurance practices.

Critics say settlement unlikely to stop insurer’s rescission practices

Critics of the current settlement say that although rescinded patients can get new insurance through Anthem, doing so means that they must waive their rights to sue the insurer for previous out of pocket expenses. They also believe that only fining the insurer $1 million doesn’t provide enough incentive for it to stop its rescission practices.

If an insurance company has wrongly rescinded your policy or treated you in bad faith, contact an experienced bad faith insurance attorney to discuss your situation and evaluate your options. Consultations are free, without obligation and are strictly confidential.