A state appeals court sided with the California Medical Association (CMA) and the Los Angeles Medical Association (LACMA) in a decision today clearing the way for a lawsuit against Blue Cross of California for illegally cancelling health care coverage for patients after they got gravely sick.

The ruling, posted at http://www.courtinfo.ca.gov/opinions/, means a lawsuit filed by the Los Angeles city attorney can move forward in its pursuit of civil penalties, injunctive relief and monetary restitution for patients and providers.

The court rejected the idea that the state has sole authority to enforce the laws governing health maintenance organizations (HMOs) through the Knox-Keene Act, as Blue Cross and the state argued. The case is People v. Blue Cross, Case No. B215035, California Court of Appeals, 2nd Appellate District.

“This is good news because it means thousands of innocent patients who had their health care coverage pulled out from under them may get the restitution they deserve,” said Robert Bitonte, M.D., president of LACMA. “If justice were left solely up to the state, patients would continue to be disappointed.”

CMA and LACMA filed an amicus brief in August supporting the Los Angeles city attorney’s case. At issue was whether public prosecutors, acting on behalf of private citizens, have the right to sue insurers for violations of state law or if the state Department of Managed Health Care (DMHC) has exclusive jurisdiction to enforce violations of the Knox-Keene Act. The DMHC has repeatedly failed to enforce the Knox-Keene Act against HMOs, leaving it up to others to hold insurers accountable.

In 2008, the Los Angeles city attorney filed a lawsuit on behalf of the people of California against Blue Cross for false advertising and unfair business practices. The suit alleges that Blue Cross sold people false promises of coverage while systematically cancelling policies after patients got sick and filed expensive claims. This practice is known as rescission.

“Today’s ruling is another important step in the fight against insurers’ outrageous practice of denying patients coverage just to boost the bottom line,” said Brennan Cassidy, M.D., president of CMA. “California physicians believe it’s essential that patients get the protections they need so they can focus on getting health care, instead of battling insurers.”

A congressional investigation last June found that WellPoint Inc., the parent company for Blue Cross of California, and two other insurers saved more than $300 million over five years by rescinding coverage for 20,000 people.

While challenging rescissions in court, CMA has also sought legislation to clamp down on the practice and protect patients. CMA sponsored AB 2, by Assemblymember Hector De La Torre, D-Southgate. The state Legislature passed the bill in September, but the governor vetoed it.

AB 2 would have required insurers to continue coverage until an independent board could review proposed rescissions and determine whether they were legal. The governor vetoed a similar measure sponsored by CMA – AB 1945, also by De La Torre – in 2008.

The Los Angeles County Medical Association represents physicians from every medical specialty and practice setting as well as medical students, interns and residents. For more than 100 years, LACMA has been at the forefront of current medicine, ensuring that its members are represented in the areas of public policy, government relations and community relations.

Source
California Medical Association