California Department of Managed Health Care Fines PacifiCare $50,000 for Improper Cancellations

The California Department of Managed Health Care on Wednesday fined the insurer PacifiCare $50,000 as part of an agreement to resolve problems resulting from policy cancellations, the AP/San Francisco Chronicle reports. PacifiCare has agreed to reinstate the coverage of three policyholders whose policies were canceled in the past four years and to reimburse them for past medical claims. PacifiCare also plans to offer coverage to approximately 57 former members, as well as an expedited dispute resolution for claims and prospective health coverage.

According to the AP/Chronicle, this is the third agreement the state has reached in recent months in an investigation of five health insurers who were accused of improperly canceling members' policies. The insurers are accused of searching for errors in members' applications after they become ill as a means of justifying policy cancellations, saying that members misled the insurers when they applied. According to the AP/Chronicle, DMHC "noted PacifiCare's case differed from other insurers because the company did not retroactively cancel policies going back to the beginning of membership but revoked the policy moving forward once fraud was suspected" (Colliver, AP/San Francisco Chronicle, 6/19).