California insurance regulators are trying to get a health insurer to pay more than $12 million in fines and penalties in connection with allegations that the insurer rescinded policies illegally and violated claim processing rules.
The California Department of Insurance is seeking to collect the money from Blue Shield of California Life & Health Insurance Company, an insurance company unit of Blue Shield of California, San Francisco.
An exam of market conduct for 2004 and 2005 found evidence that California Blue used inadequate evidence to justify rescinding about 600 policies and committed hundreds of other violations of state rules, such as failing to pay claims on a timely basis and failing to provide required information when denying a claim, officials say.
California Blue already has refunded $1 million in claims at the department’s request, officials say.
Earlier this month, a California state appeals court ruled in a case involving California Blue that canceling individual health insurance policies for omissions or mistakes on applications after claims are submitted is prohibited by state law.
California Blue is blasting regulators’ enforcement action and arguing that the California department is changing the rules governing rescissions without going through the appropriate process for drafting regulations.