California rescission fight heats up

The California Department of Insurance and California insurers have decided to continue their fight over a batch of 2011 guidance that relates to how health insurers cancel, rescind and non-renew health insurance policies.

California state Superior Court Judge Michael Kenny threw out two of the 13 provisions provisions and kept the others in a December 2012 ruling on Association of California Life & Health Insurance Companies vs. California Department of Insurance et al. (Case Number 34-2011-80000998-CU-WM-GDS). 

Kenny declared a section of the guidance requiring any insurer that cancels, rescinds or non-renews a health policy to send a right-to-a-review notice to the policyholder to be invalid. Kenny also declared a provision relating to the minimum policy payment period grace period to be invalid. Kenny upheld provisions dealing with reinstatment of coverage, continuation of coverage, and procedures an insurer can use to justify the cancellation, rescission or non-renewal of a health policy.

The Association of California Life & Health Insurance Companies (ACLHIC) appealed the ruling, and California Insurance Commissioner Dave Jones has said the California department has filed a cross-appeal.

ACLHIC President Brad Wenger said in a statement that member insurers have no problem with the underlying law on policy rescissions and cancellations but believe that the guidance is unclear in places and difficult to implement in others, and that the court ruling is also unclear.