Anthem Blue Cross Pays Fine for Cutting Patients Off

The state's largest for-profit health insurer agreed to reimburse former clients to the tune of $14 million and offer coverage to 2,330 people it dropped after they submitted medical bills, state Insurance Commissioner Steve Poizner said Wednesday.

Anthem Blue Cross also will pay a $1 million fine. The settlement impacts Californians whose coverage was rescinded between January 2004 and December 2008.

"I am pleased that, through this settlement, we have guaranteed reimbursement and restoration of coverage for the more than 2,300 people whose health care insurance was terminated without their consent," said Poizner, who announced the deal in Burbank this morning.

"The settlement is a significant step toward ending illegal rescission practices that can devastate consumers already weakened in their battle against illness. I will continue to take strong action against any insurer that does not honor its agreements with consumers and fails to comply with the law."

In exchange, the state agreed to drop its prosecution of its accusation that the company broke state laws in the way it rescinded members in preferred provider organization (PPO) policies between 2004 and 2008, the Los Angeles Times reported.

"We will be contacting consumers over the course of the next 90 days. At that time, we will provide them with the necessary information on how to participate in this settlement," said Leslie A. Margolin, president and CEO of Anthem Blue Cross Life.

"Under the terms of the settlement, Anthem Blue Cross Life will invite these consumers to purchase coverage on a go-forward basis, regardless of past or present medical conditions. Additionally, these consumers will be eligible to receive reimbursement of prior out-of-pocket medical expenses."


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The settlement follows Anthem's agreement last year to pay a $10 million fine to settle similar charges involving 1,770 members in HMO-type policies overseen by the Department of Managed Health Care, another state regulator.

Anthem, Blue Shield of California and Health Net Inc. all remain targets of individual and class-action lawsuits alleging that they gamed insurance laws to dump sick people and avoid the costs of their care.

Jerry Flanagan, a patient advocate with Consumer Watchdog in Santa Monica, told The Times that Anthem's $1 million fine is "an insult to the people of California, especially those who have lived under the financial destruction caused by rescission."

The fine, he told the newspaper, pales in comparison to what Anthem must have saved by rescinding policies for years.

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