WellPoint Settles L.A. Rescission Lawsuit for $6 Million

WellPoint Inc. (WLP) agreed to pay $6 million to settle a 2008 lawsuit by the city of Los Angeles, which alleged the insurer used illegal rescission methods when individual policyholders filed a claim.

WellPoint denies wrongdoing and has changed its rescission practices, including using a third-party, independent review process, City Attorney Carmen Trutanich said today in a statement. Kristin Binns, a spokeswoman for Indianapolis-based WellPoint, declined to comment further on the settlement.

In its 2008 complaint, the city had alleged that WellPoint’s Anthem Blue Cross of California unit investigated policyholders’ medical histories for inconsistencies with their insurance applications only after they filed claims.

“Patients with health insurance have a right to expect meaningful coverage when they need it most, when they are ill and in need of medical treatment,” Trutanich said. “Health insurance companies must honor their policies and provide coverage to patients in full compliance with the law.”

Last month, WellPoint was selected as one of 13 insurers who can participate in California’s health exchange through which the state’s residents can buy health insurance under the Affordable Care Act.

The case is People of the State of California v. Anthem Blue Cross Life & Health Insurance Co., BC389110, California Superior Court (Los Angeles).

To contact the reporter on this story: Edvard Pettersson in the Los Angeles federal court house at +1- epettersson@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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