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Press Release
Mar 28, 2006 - 01:00 AM

FTCR Petitions Garamendi & Schwarzenegger to End Illegal Blue Cross "Retro-Active" Insurance Denials, Make Public Secret Documents

Court Cases Filed In Los Angeles, Orange, Riverside and San Bernardino Counties
Santa Monica, CA -- Responding to multiple lawsuits filed against Blue Cross yesterday, the Foundation for Taxpayer and Consumer Rights (FTCR) petitioned Insurance Commissioner John Garamendi and Governor Schwarzenegger's Department of Managed Health Care to end the apparently illegal practice of retroactively denying insurance coverage when patients seek medical care.

According to the lawsuits filed throughout California yesterday, Blue Cross of California and its parent company WellPoint have created a so-called "Retroaction Review Department" whose sole purpose is to terminate policies for patients who had previously been given approval for medical treatments.

FTCR cited secret documents sealed by a court in a previous case providing more detailed information and called on regulators to make the documents public.

In a letter sent today to Insurance Commissioner John Garamendi and Department of Managed Health Care Director Cindy Ehnes, FTCR wrote:

"By making more information about the Retroaction Review Department public, you will help the public ascertain how many patients are affected by the practice, give patients affected by the problem a forum to be heard, and be able to determine the reasonableness of Blue Cross's and WellPoint's tactics."

Read FTCR's letters.

"Californians buy health insurance to protect themselves from financial disaster when they get sick," wrote FTCR. "However, a seemingly illegal practice by Blue Cross of California renders insurance coverage meaningless in what amounts to a 'bait and switch' scheme."

FTCR cited existing state law banning the practice and called on Commissioner Garamendi and the DMHC's Cindy Ehnes to subpoena Blue Cross documents, hold public hearings to discuss the need to permanently dismantle Blue Cross's Retroaction Review Department, and use their regulatory powers to ban the practice.

Specifically:

* HMOs and insurers are prohibited from changing coverage decisions after claims have been filed (Insurance Code Sec. 10384), (Health & Safety Code Sec. 1389.3);

* HMOs and insurers are obligated to pay for authorized services provided by doctors and hospitals in good faith (Insurance Code Sec. 796.04), (Health & Safety Code Sec. 1371.8).
In California, the elected Insurance Commissioner, and the Department of Managed Health Care whose director is appointed by the governor, regulate HMOs, PPOs and all other insurers.

It's scandalous that the nation's largest and most profitable health insurer would have a secret special operations unit that seeks to dump policyholders that cost it too much money," wrote FTCR. "Not only does this practice result in huge unpaid medical bills, collections and bankruptcy for patients when doctors and hospitals try to collect, it increases emotional stress on the patient and the family when they are most vulnerable."




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