California Doctors and Hospitals Join Blue Cross Rescission - Cancellation Class Actions

Ray Mattison

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The 35,000 member California Medical Association and the 450 hospitals of the California Hospital Association have joined the pending consumer class actions against Blue Cross complaining about the rescission (cancellation) of over 6000 customers by Blue Cross of California and it's subsidiary, Blue Cross Life and Health. "We believe that Blue Cross has failed to pay claims worth hundreds of millions of dollars based on its illegal practices," said Daron Tooch, one of the lead attorneys in this case.

Earlier this year Governor Schwarzenegger joined in the criticism of the rescission - cancellation practices of Blue Cross and other Health Plans, the subject of pending class actions in Los Angeles.

Blue Cross and other California health insurers are accused of doing little investigation (known as "underwriting" in insurane parlance) when the consumer applies for health coverage. Because they have a two year period in which they can rescind coverage if there is fraud in the application, the companies are accused of waiting until someone runs up large bills or becomes very ill and then doing an in depth scrutiny of the patient's medical history looking for reasons to deny coverage. According to the Los Angeles Times an investigation by the Department of Managed care found that "Blue Cross of California 'routinely' violated state law when it canceled individual health insurance coverage after policyholders got pregnant or sick, making no attempt to determine whether they did anything to merit such 'harsh' treatment".

A recent legal victory by Raudel and Maria Rodriguez could spell more trouble for Blue Cross. According to their attorney, Robert S. Gianelli of the Los Angeles firm of Gianelli & Morris, Rodriguez and the other victims of Blue Cross' rescission - cancellation will now be able to present their case to a jury rather than being forced to binding arbitration. According to Gianelli and even the pro business Wall Street Journal, binding arbitration is not only shielded from the public eye, but is generally considered to be an expensive yet unfavorable forum for consumers. Along with the CMA's suit, the Rodriguez class action and others against the Blue Cross companies have been joined together in Los Angeles.

In association with San Luis Obispo attorneys Raymond E. Mattison and Don A. Ernst, current President of the Consumer Attorneys of California, Gianelli has brought a similar class action against Blue Cross Life on behalf of a San Luis Obispo County single mother whose health insurance was cancelled leaving her with unpaid medical expenses. A San Luis Obispo Judge recently certified a class action against Blue Shield brought by a young mother whose health coverage was cancelled after her son was born with a heart defect requiring expensive surgery. Blue Shield is also under investigation by the Deparment of Managed Care.