Rescission Lawsuit Burns $11.8 Million Hole In Anthem Blue Cross Pocket

A rescission lawsuit that doctors and hospitals in California together filed in October 2006 against Anthem Blue Cross has proved to be a costly affair for the state’s biggest insurer, with the company agreeing to pay $11.8 million to settle the suit. This amount would be towards resolution of rescissions as far back as 2001.

Anthem Blue Cross will pay the $11.8 million to almost 400 hospitals in the state. The doctors and hospitals had sued the company and also its parent, WellPoint Inc., a company based out of Indianapolis, after patients said the company refused to pay their coverage after they had received their treatment.

Speaking about the new developments, Anthem Blue Cross president Leslie Margolin issued the following statement, “We have reached an understanding with California hospitals on behalf of individuals under which the hospitals will no longer pursue reimbursement from individuals whose policies were previously rescinded.”

The plaintiffs had mentioned in their lawsuit that there had been numerous instances where they had taken care of the bills of patients covered by Anthem Blue Cross, only to be told later on that the company would not be covering the patients.

Speaking about the issue, senior vice president of the California Hospital Association’s managed care and professional services, Ditmar Gellman, said, “Hospitals took care of Blue Cross' patients, got authorizations, and then didn't get paid by Blue Cross for the care they provided.”

This settlement is still deemed inadequate, as it does not ensure that all the hospitals are able to recover all the money they lost as a result of the illegal practice adopted by Anthem Blue Cross. The hospitals have said that they do not intend to approach the patients to recover the remaining amount.

A lawyer for the firm that represents the California Hospital Association, Hooper, Lunday, and Bookman, Glenn Solomon, said, “This settlement does get some relief for the patients who will not be asked to pay for any more.”

The settlement comes at a time when regulators of health insurance in the state of California have said they would be probing seriously canceled patient policies in the state in the hundreds, and also looking at serious punitive fines for anyone found to be in violation of existing laws.

However, the settlement, which came about Monday, is valid only for hospitals that are part of the California Hospital Association. It does not apply for over 30,000 physicians who are part of the California Medical Association. The physicians will continue to pursue the case, according to Ned Wigglesworth, a spokesman for the association.