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Golden State Continues To Act Against Rescissions

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The California Department of Insurance will be requiring an insurer in the state to offer new health coverage to 926 consumers whose coverage has been rescinded during the past 4 years.

The department says it has negotiated an agreement with a total value of $25 million with an insurance unit of Health Net Inc., Woodland Hills, Calif.

The settlement is based on consumer complaints and a market conduct exam indicating that the Health Net unit was too quick to take back policies when some insureds filed claims, officials say.

Health Net itself has emphasized that it has not admitted any wrongdoing or liability and is settling to avoid the expense and distractions of litigation.

In addition to offering to give coverage back to some consumers, Health Net has agreed to make up to $14 million in payments for billed medical charges; waive $7.2 million in insurance premiums; and pay $3.6 million in penalties, officials say.

Under the terms of the settlement, Health Net will not subject the 926 consumers whose policies were previously rescinded to medical underwriting or exclusions for pre-existing conditions, officials say.

“During the settlement negotiations, Health Net was highly cooperative, and I believe their broad-based changes to underwriting and rescission practices will serve as a model and example to other health insurers,” California Insurance Commissioner Steve Poizner says in a statement.