The Knucklehead of the Day award

Today's winner is insurance company Blue Cross. They get the award for the following.

State regulators said they are fining Blue Cross of California $1 million for "routinely" canceling health insurance policies of individual members who filed claims.

The Department of Managed Health Care based the fine on a survey of 90 policies randomly selected from among 500 that Blue Cross rescinded in 2004 and 2005.

Investigators found in all 90 cases that Blue Cross failed to comply with a state law that allows rescission of coverage only if the insurer proves members intentionally withheld information on pre-existing conditions when they applied. State officials said Blue Cross did not prove the rescissions were warranted.

"The risk needs to be put back on the heath insurer to provide health insurance. The risk need not be placed on the enrollee," said Amy Dobberteen, senior counsel at the state Department of Managed Health Care.

Blue Cross said it disagrees with the department's findings and plans to contest the fine. The insurer, owned by WellPoint Inc., must respond by April 2.

"The vast majority of Blue Cross' rescissions are unquestionably proper under any criteria," the company said in a statement. In a written response to the state, Blue Cross accused state investigators of factual errors in their report and denied the insurer illegally rescinded policies.

Blue Cross is also contesting a $200,000 fine issued by the state in September for illegally dropping a member who failed to disclose surgery performed more than 20 years earlier. Her doctor said her current condition was unrelated to the surgery. Just days before the fine was issued, Blue Cross announced new procedures for handling rescissions.

I believe an insurance company would do exactly what California is accusing Blue Cross of. For in late 1993 I was diagnosed with malignant melanoma and had my employer go out of business at almost the same time. I didn't qualify for Cobra and instead had to pick up a conversion policy.

For almost a year I mailed in monthly premium checks. Always due on the first of the month, Health Options a subsidiary of Blue Cross Blue Shield, sometimes wouldn't even send me a monthly bill. I'd make a copy of an old month's bill and then send the check registered mail about a week before it was due. My premium was due on the 1st but I had a 10 day grace period besides.

Lo and behold in January 1995 as I was about to have surgery for melanoma #4 on me, Health Options sent me a letter saying my insurance would be suspended the next monday(I received it around lunchtime Friday) and cancelled a week after that. The reason- Non payment of premiums going back to Summer 1994!

Well I contacted Health Options, took two hours off from my job to mail or fax them copies of all my cancelled checks plus return receipts. Health Options said my insurance wouldn't be cancelled.

Then in March 1995 I got the same letter again. I went ballistic. This time Health Options got a certified letter from me, a phone call from a lawyer, plus a call from a local television station. You know how fast it was before HO fixed the problem? Minutes and I got a letter of apology too.

Insurance companies, hospitals, medical providers and doctors engage in fraud every day. If you don't believe me, read this post and this. What happened in California was no accident, and that earns Blue Cross today's Knucklehead of the Day.

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