[Jul 05, 2007]

      The California Department of Insurance in a report released last week alleged 67 violations of fair-claims handling laws by health insurer BC Life & Health after the company rescinded some members' health insurance coverage, the Los Angeles Times reports. BC Life & Health, owned by WellPoint, canceled 1,880 individual health insurance policies in 2004 and 2005. Insurance regulators reviewed 83 sample cases and issued citations in 49 of the cases for a number of violations, including:

• Thirty-two citations for failing to promptly, fairly and equitably pay claims where liability was reasonably clear;
  
  
• Twenty-seven citations for failing to adopt reasonable standards for the prompt investigation and processing of claims; and
  
  
• Four citations for misrepresenting policy provisions to consumers.
  

The citations could lead to fines of up to $10,000 apiece, if they are upheld, as well as follow-up examinations. The citations come several months after the California Department of Managed Health Care fined Blue Cross of California, which also is owned by WellPoint, $1 million for illegally rescinding individual health care coverage. A spokesperson for WellPoint said that the majority of the citations were for "technical violations of the claims-handling process" and that "in nearly every case, the DOI concluded that the rescission was appropriate."

A spokesperson for the insurance department said officials also are investigating improper policy rescission by Blue Shield of California, HealthNet, Cigna and Aetna (Girion, Los Angeles Times, 7/3).