Healthnet Sued for 9 Million

[Fivethumbs]

I just saw a news story about a 51 year old woman who sued Healthnet and won 9 million because they cancelled her policy when she needed cancer treatment. The reason they gave was because she mis-stated her weight when she first applied for the policy. An investigation found that Healthnet cancelled other policies when benefits were applied for and employees who found reasons to cancel the policies were given bonuses, which is a violation of State law.

Kind of reminds me of the movie Rainmaker with Matt Damon and Danny Devito. I wonder if it will impact the cycling team.

[shinomaster]

Health insurance is MP.

[ada@prorider.or]

The reason they gave was because she mis-stated her weight when she first applied for the policy.


jeeezzz those compagny´s how in the hell is it possible that they exsist in the first place who have the nerve to even think about this.

[saab2000]

Health insurance is MP.

Private health insurance whose sole motive is profit without conscience is MP. Another reason why at the very least there needs to be a shakeup of the US healthcare system.

I am in Austria at the moment and about once per hour we see a helicopter carrying someone down the mountain with a broken leg or something of that sort.

I don't even want to think about how my health insurance would deal with it if I got sick or hurt over here.

[CNY rider]

$9 million?

It's the change left under the seat cushions at the annual bonus party for the CEO and cronies.

[myette10]

terrible set of circumstances...

Consider for a moment the company's POV. I know there is a profit motive but profit doesn't come without servicing a customer. In this case the customer is all of their insureds and potential insureds that they want to attract with a competetive rate. Executives don't get rich just ripping people off hand over fist, well, most of them don't. They go to jail. They get rich building a successful business and in insurance, that is all about knowing and correctly estimating risk. They don't make tires, computers, paper, send emails, bake bread or sing songs. They are in the business of risk.

Healthnet takes a calculated (very precisely calculated) risk on you based on information that you provide. That information tells them exactly what they must charge you to be competetive in the market, profitible in investing the premiums collected, and able to deliver (on the whole) the care that a sick person may need. If they were to allow insureds to apply for coverage by providing any information that they wanted (presumably to get a better rate), their underwriting profiles would be out of whack and they would eventually cease to exist, ultimately servicing no one and making no one at the top rich.

The bonuses paid for employees who seek out reasons to cancel people sounds bad of course and is clearly illegal, but this process isn't much different than the interviews and medical examinations that occurs at the inception of a policy. The company knows it is worth the resources it takes to make sure that they know exactly the risk that they are assuming. They got caught for doing it on the back end, not cool per CA law and certainly something that a jury would be sympathetic too. Bad idea.

I'm not defending their action, just explaining it. It looks real bad when someone gets their cancer treatment cancelled and it is a terrible situation for sure. My money says that as a result of this verdict, Healthnet insureds will be going through an even tighter ringer in the future, and rates may even go up to account for the additional risk that their business process is now exposed to.

good morning everyone!

[CNY rider]

terrible set of circumstances...

Consider for a moment the company's POV. I know there is a profit motive but profit doesn't come without servicing a customer. In this case the customer is all of their insureds and potential insureds that they want to attract with a competetive rate. Executives don't get rich just ripping people off hand over fist, well, most of them don't. They go to jail.
good morning everyone!

Disagree with you here.

The majority of health insurance is purchased by someone other than the end user. Typically that's your employer. They don't need to satisfy you, the insured; they just need to keep your employers business.

In addition there is very little true competition in any given geographical area. There have been so many mergers in the past few years that there are only a few insurance giants left standing. Thus there is little or no competition for business, especially competing on quality of service.

The only meaningful improvement in insurance company behavior comes when some AG like in NY gets after them.

Insurance companies want one of two outcomes for your health: Either stay healthy and don't cost us a lot of money; or get sick and die without costing us a lot of money.

Sorry if the truth is harsh but I live it every day.

[97CSI]

We have, by a significant margin, the most expensive healthcare in the world. And we rank well down the list in many of the critical areas of quality of the healthcare delivered. The reason is that we pay ~$0.45 of every healthcare dollar to these insurance companies. To do what? Medicare/Medicaid, those "horrible" programs (according to some) do the same job for ~$0.09 per healthcare dollar. They would be even more efficient if congress would allow them to spend more $$ on enforcement and prosecution of fraud (same for the IRS). But, that might slow down the flow of $$ congress-folks are given for themselves.

[tiger]

Thus there is little or no competition for business, especially competing on quality of service.

The only meaningful improvement in insurance company behavior comes when some AG like in NY gets after them.

Insurance companies want one of two outcomes for your health: Either stay healthy and don't cost us a lot of money; or get sick and die without costing us a lot of money.

Sorry if the truth is harsh but I live it every day.
CNY speaks the truth.

Once the insurance companies moved away from being mutual benefit organizations to "not for profit" profit-making entities with multimillion dollar CEOs and their names on stadiums it all began to unravel. Now, they just exist to serve the needs of their business leaders, i.e. CEOs and their bonuses and golden parachutes. If you want proof look up "Blue Cross Arena" in Rochester, NY ($3M naming rights) and check out the BILLION + dollar reserve of Excellus Blue Cross. Your premium dollars at work. Meanwhile, we can't attract doctors to this area due to the low reimbursements from the near-monopoly health care plan (Excellus) here.

The government has screwed up many things they have done with health care, but the "not-for-profit" private sector is basically profiting at the expense of sick and needy people. Primary care - the very foundation of healthy communities, is essentially nonexistant in the US because of the reimbursement policies of insurers. Eventually this system will totally collapse. Sadly, it won't be soon...there are too many non-clinicians making fortunes off premium dollars now, and they'll do all they can to protect the status quo. Meanwhile middle class people have a choice between basic needs and health care premiums.

[soulspinner]

$9 million?

It's the change left under the seat cushions at the annual bonus party for the CEO and cronies.

Yeah, can we start at the top with the cost cutting? :p

[Skrawny]

That is unfortunately standard for both health and life insurance.

They refuse and block payment, even for absurd excuses.

They know that although they will likely have to pay out the majority on review (these rarely go to court) but the $ involved is such that if a small percentage don't have the strength, resources, or knowledge to fight it they come out ahead.

Health Net/BTM is a large employer out here, big cycling team, and probably the source of a majority of my salary; but I'm not cheering for 'em
-s


PS- I just finished a 6 month fight with my mother's insurance company (MetLife). She dutifully paid for 15 years without missing a payment. That is except for the LAST payment that was due in her last week of life - she missed that one while on heroic doses of morphine- so they said they weren't going to pay.

[paczki]

PS- I just finished a 6 month fight with my mother's insurance company (MetLife). She dutifully paid for 15 years without missing a payment. That is except for the LAST payment that was due in her last week of life - she missed that one while on heroic doses of morphine- so they said they weren't going to pay.

Good god. Tell me you won and METLife had to pay court costs. Please!

[Skrawny]

Good god. Tell me you won and METLife had to pay court costs. Please!

Never went to court. Took multiple rounds of letter writing (progressively more angry and threatening), many letters from her physicians and medical record submissions. One of the many frustrating things were the obstructive, dismissive, and even accusing letters out of the blue from non-medically trained functionaries. Eventually they gave up the goods.

I don't want to think about how it would have played out if I was a dependant who had no salary of my own and had to wait and fight for 6 months before getting what is owed.

I didn't mean to hijack the thread tho.

-s

[Fivethumbs]

8 million was punative damages. So I guess they were being bad boys.

[paczki]

Glad to hear it. I guess Rock Racing isn't really that bad. :banana:

[shinomaster]

terrible set of circumstances...

Consider for a moment the company's POV. I know there is a profit motive but profit doesn't come without servicing a customer. In this case the customer is all of their insureds and potential insureds that they want to attract with a competetive rate. Executives don't get rich just ripping people off hand over fist, well, most of them don't. They go to jail. They get rich building a successful business and in insurance, that is all about knowing and correctly estimating risk. They don't make tires, computers, paper, send emails, bake bread or sing songs. They are in the business of risk.

Healthnet takes a calculated (very precisely calculated) risk on you based on information that you provide. That information tells them exactly what they must charge you to be competetive in the market, profitible in investing the premiums collected, and able to deliver (on the whole) the care that a sick person may need. If they were to allow insureds to apply for coverage by providing any information that they wanted (presumably to get a better rate), their underwriting profiles would be out of whack and they would eventually cease to exist, ultimately servicing no one and making no one at the top rich.

The bonuses paid for employees who seek out reasons to cancel people sounds bad of course and is clearly illegal, but this process isn't much different than the interviews and medical examinations that occurs at the inception of a policy. The company knows it is worth the resources it takes to make sure that they know exactly the risk that they are assuming. They got caught for doing it on the back end, not cool per CA law and certainly something that a jury would be sympathetic too. Bad idea.

I'm not defending their action, just explaining it. It looks real bad when someone gets their cancer treatment cancelled and it is a terrible situation for sure. My money says that as a result of this verdict, Healthnet insureds will be going through an even tighter ringer in the future, and rates may even go up to account for the additional risk that their business process is now exposed to.

good morning everyone!

Maybe they should have put her on a scale?

[myette10]

Insurance companies want one of two outcomes for your health: Either stay healthy and don't cost us a lot of money; or get sick and die without costing us a lot of money.

Sorry if the truth is harsh but I live it every day.
I don't disagree with anything you say. Of course insurance companies want you to either live or die cheaply, just as GM wants everyone to drive their cars and McDonalds wants 100% of the fast food market... but that isn't going to happen, so they have to operate in the market as is... and work off risks and probabilites of the people they insure. The calculation of those risks is based on information that the insured presents as accurate.

The marketplace is a live entity and there are certainly other elements of business at play (naming rights, mergers, etc) that have been mentioned here. My post was merely to point out that basic model for the insurer is that they assume the risk of insuring you based on the information provided and that every policy I've ever seen has provisions for cancellation if it is discovered that false information was provided.

I'm familiar with insurance but not necessarily a fan of it. I offer my thoughts as an analysis of how insurance works to suggest that they are not simply a result of companies looking to pull the rug out from under every policyholder. Certainly this is sometime the case, and may be here.

[BumbleBeeDave]

. . . but we can't tell. I see no info in the original post about how much she may have "mis-stated" her weight by. 10 pounds? 20 pounds? 150 pounds? We don't know. If you have a link to the original news story I'd be glad to go read it.

Any form you fill out or exam you take to qualify for health insurance must by definition be a snapshot of your health and condition at the time of the exam.

Any cop who wants to pull you over can find an excuse because there are so many laws on the books and good luck arguing with him about that clear plastic cover on your license plate or the 2" kewpie doll hanging from your rear view mirror that's "blocking" your view.

Same goes for health insurance. These companies are in business to avoid paying claims, not to go ahead and pay them. They have whole departments of claims adjusters whose job it is to avoid paying a claim if they can find a defensible reason. The problem is that just about any reason is "defensible" for them because they have a hundred lawyers and millions of dollars and people like this lady who sued don't have either.

BBD

[Wayne]

This is an incredibly interesting post and of course 2 sides to every issue. I am not at all taking sides on this but look at the facts. Insurance is regulated by the insurance commissioner of each state. Most have rules that state if you lie or commit a fraudulent statement on an insurance application and need coverage within 2 years the company doesn't have to pay, and shouldn't. They just have to return the premiums paid. In this case if the need for insurance was within the 2 years the judgement will be appealed and the insurance company will likely win.

Rule, don't lie. Martha Stewart went to jail not for insider trading but for lying. (different issue but the same idea)

That said our system does need changes and luckily I don't have to make the decision I just have to cast my vote.

[myette10]

.These companies are in business to avoid paying claims, not to go ahead and pay them. They have whole departments of claims adjusters whose job it is to avoid paying a claim if they can find a defensible reason.

"Confirming coverage" is what this is called. I'd imagine that the extent of the investigation into any potential coverage "issues" is comensurate with the exposure (auto insurance = narrow investigation, life/health insurance = broad investigation). It is the first and most important thing (in terms of their personal job descriptions) adjusters do when they get a new claim on their desk.

[BumbleBeeDave]

. . . with various news stories about this case and award. I'm gonna lay off shooting my mouth off until I can look at a few of them . . .

BBD

http://www.wikio.com/business/health_industries/health_care_services/health_net

[BumbleBeeDave]

. . . from the above list that seems to have the most info about their alleged practices. The story from San Jose is dated yesterday.

BBD

======================

Health Net sued over insurance cancellations
Silicon Valley / San Jose Business Journal

Health Net Inc. is being sued for allegedly promising medical coverage and then dropping patients if they needed expensive treatment.

In the suit, Los Angeles City Attorney Rocky Delgadillo accused Health Net (NYSE:HNT) of using "misleading information" to gain members in the individual market and then using the information against them to delay coverage.

The suit states that the Woodland Hills-based insurer used untrained salespeople to collect people's medical histories, used purposefully misleading forms and did not review the information until after they filed claims.

"The application is essentially a trap for the unwary that maximizes the possibility that it will contain errors or omissions that defendants can later use as a purported basis for rescission," the suit states.

The city attorney says Health Net went as far as to create a secret unit in its organization to cancel policies, and that it provided benchmarks -- including goals for numbers of rescissions per year and dollars in claims denied -- and bonus payments to employees for reaching company goals.

"The division met or exceeded its goals every year, denying more than $35 million in claims between 2003 and 2006," according to the city attorney's news release.

Delgadillo also said Thursday that in addition to seeking civil penalties, he is initiating a criminal investigation of individuals associated with Health Net's bonus payment program for cancellations, and he is examining statements made to the California Department of Managed Healthcare regarding these payments.

"This is a matter that Health Net takes very seriously," the insurer responded in a prepared statement. "We have a long-standing tradition of providing health care coverage to people in need." The company said it paid nearly $200 million in claims for its 110,000 individual members in 2007 and that state regulators are already reviewing the accusations made by Delgadillo in the filing.

[e-RICHIE]

rayban atmo -

http://img2.timeinc.net/instyle/images/2007/falltrends/ACA/400/083007_rayban_a.jpg