California's largest for-profit health provider Anthem Blue Cross has agreed to pay a $1 million fine and take back 2,330 people whose insurance was rescinded after they submitted bills for expensive care.
In a settlement with the state scheduled to be announced Wednesday, the company also will reimburse the dropped patients for medical costs they've paid since their policies were terminated, which the company estimates will cost it another $14 million.
The state Department of Insurance agreed to stop pursuing allegations that the company broke state law when it dropped patients with preferred provider organization policies between 2004 and 2008.
"I am pleased that through this settlement, we have guaranteed reimbursement and restoration of coverage for the more than 2,300 people whose healthcare insurance was terminated without their consent," Insurance Commissioner Steve Poizner said. "The settlement is a significant step towards ending rescission practices that can devastate consumers already weakened in their battle against illness."
The settlement was far smaller than the $10 million settlement the company paid last July to a different state regulator, the Department of Managed Care, for another 1,770 members with health maintenance organization policies who were dropped for similar reasons.
Anthem said the consumers would be welcomed back within the next 90 days without strings attached.
"Under the terms of the settlement, Anthem Blue Cross Life will invite these consumers to purchase coverage on a go-forward basis, regardless of past or present medical conditions," said Leslie A. Margolin, president of Anthem Blue Cross Life, the unit involved in the deal.
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Anthem Blue Cross and other major California insurers still face individual and class-action lawsuits from many of those whose insurance was terminated.
Anthem Blue Cross' parent company is Indianapolis-based WellPoint Inc.
