The LA Times reports that the CA Dept. of Managed Health Care will be reviewing thousands of cancelled individual policies looking for cases where coverage was cancelled after patients have become ill, despite paying premiums for years. The insurers cancel policies citing errors by consumers on insurance applications, often completed years earlier and often honest mistakes answering confusing questions. Policies found to be wrongly terminated will be reinstated and insurers will be responsible for patients’ medical bills. In February, a CA court awarded $9 million to a woman whose coverage was terminated during chemotherapy for breast cancer.
Thanks to the Office of Health Care Advocate, that practice is no longer legal in CT. PA 07-113, effective Oct. 1, 2007, prohibits health insurers from rescinding, limiting or cancelling policies without the Insurance Commissioner’s prior approval, and must be based on a knowing misrepresentation or omission of health facts by the consumer in their application. An insurer’s failure to thoroughly review the application and medical records is not a basis for rescinding, limiting or cancelling the policy. Beyond that, the law prohibits insurers from rescinding, limiting or cancelling any policies after two years. For more on the law, click here.