Court curbs insurers' ability to rescind medical policies

Here's an interesting article that shows how health insurance payers are under siege...Independent Review Organizations are a perfect solution to helping them do a better job of making benefits decisions, BEFORE a situation like this occurs. Health insurance carriers use IROs to make more informed claims decisions that protect patients and subscribers.

A ruling restricts the ability of California health plans to cancel coverage after patients run up medical bills.
By Lisa Girion
California health insurers have a duty to check the accuracy of applications for coverage before issuing policies -- and should not wait until patients run up big medical bills, a state appeals court ruled Monday.

The court also said insurers could not cancel a medical policy unless they showed that the policyholder willfully misrepresented his health or that the company had investigated the application before it issued coverage.

The unanimous decision by a panel of the 4th District Court of Appeal in Santa Ana is the latest blow to California insurance companies and the way they handle policy cancellations after patients get sick and amass major medical claims.

The insurers' practices are under scrutiny by the state Legislature, the Department of Insurance, the Department of Managed Health Care and the courts. In recent months, state agencies have fined, cited and sued the state's major health insurers for the way they have handled cancellations and treated policyholders.

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