Anthem Blue Cross, California's largest for-profit health insurer, has agreed to pay a $1-million fine and offer new coverage -- no questions asked -- to 2,330 people it dropped after they submitted bills for expensive medical care.
As part of the settlement, Anthem also will offer to reimburse those people for medical expenses that they paid out of pocket after they were dropped. The company, a subsidiary of Indianapolis-based WellPoint Inc., estimated that those reimbursements could reach $14 million.
In exchange, the state agreed to drop its prosecution of the company. The settlement follows Anthem's agreement last year to pay a $10-million fine to settle similar charges involving another 1,770 customers. In both cases, Anthem agreed to make substantial changes in the way it sells and manages individual insurance coverage in California. Those changes are expected to reduce the number of people who lose coverage through rescission.
The Anthem deal is the latest in a two-year effort by regulators to crack down on health insurers for dropping sick members on dubious grounds. But insurers 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.
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