LOS ANGELES, Dec. 29 (UPI) -- Blue Shield in California has agreed to pay $2 million to settle a lawsuit over medical insurance coverage it dropped when clients became sick.
In the industry, it is called rescission.
The Los Angeles Times reported Thursday that Blue Shield's case involved an investigation of more than 1,000 rescission cases.
Blue Shield spokesman Steve Shivinsky said the firm settled to avoid a court battle. "Our process meets or exceeds all legal and regulatory requirements. In every instance, we provide immediate notice, ensure multiple layers of review, involve a medical director in the decision, give members an opportunity to provide additional information before we take any action, and follow the guidance of an independent third party review," he said in a statement.
Dropping insured people without just cause was one of the principle attack points in President Barack Obama's argument for national healthcare reform.
Rescissions for reasons other than intentional fraud have been illegal since September 2010, the Times reported.
Rescission has "all but stopped" in California, the Times said. The case against Blue Shield was filed in 2008 by former Los Angeles city attorney Rocky Delgadillo.
