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Tilting at Windmills

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April 23, 2010

DEMS HAVE A FEW WORDS FOR WELLPOINT.... A Reuters report yesterday pointed to an insurance company practice that's so awful, it's almost hard to believe. Reporter Murray Waas explained that WellPoint, an insurance powerhouse, apparently developed a policy of targeting customers with breast cancer, and then launching fraud investigations against them so their coverage could be dropped.

The practice is just breathtaking. According to government regulators and investigators, the affected customers had paid all their premiums and had no problems with their insurer, but WellPoint decided their breast cancer treatment would be expensive. It was easier to investigate them, rely on "erroneous or flimsy information," and drop the customers before the medical bills started piling up.

It's "rescission" at its most offensive.

Obama administration officials contacted WellPoint about this today, and White House Communications Director Dan Pfeiffer posted this item:

Just yesterday, we read with great alarm a news report that WellPoint, one of the country's largest health insurers, is routinely dropping coverage for women that are diagnosed with breast cancer.

These are the kinds of scenarios that motivated the President to work so long and so hard to pass health reform. And because of the health reform legislation passed last month, the worst excesses and abuses of the insurance industry -- including what WellPoint is said to have done -- will soon be reined in by new tough consumer protections.

Yesterday, HHS Secretary Kathleen Sebelius wrote a letter to WellPoint's CEO urging her company to immediately end this harmful practice.

House Speaker Nancy Pelosi was outraged, too.

"WellPoint's practice of dropping anyone's coverage when they get sick - whether a woman with breast cancer or any other patient - is exactly the kind of insurance company abuse our new health care law prohibits.

"Soon every American can be secure knowing that their insurance companies cannot cancel their coverage because of an illness.

"And when Republican leaders call for repeal of the health reform law, they are endorsing a return to these abusive policies that have no place in our medical system."

I still occasionally find it hard to believe health care reform was deemed unnecessary by so many.

Steve Benen 1:30 PM Permalink | Trackbacks | Comments (52)

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Comments

Yesterday, HHS Secretary Kathleen Sebelius wrote a letter to WellPoint's CEO urging her company to immediately end this harmful practice.

Yeah, that'll show 'em! And if they keep doing it we'll write an even harsher letter!

Somebody remind me again why we had to allow these bastards to stay in business.

Posted by: jimBOB on April 23, 2010 at 1:33 PM | PERMALINK

How this kind of behavior ever became something other than a crime punishable by severe jail sentences is one of our nation's great and persistent shames.

Posted by: Hank on April 23, 2010 at 1:35 PM | PERMALINK

Since a former WellPoint VP wrote the original senate HCR bill, one wonders how "tough" the new consumer protections will be.

Posted by: cnmne on April 23, 2010 at 1:36 PM | PERMALINK

Folks, Wellpoint launched a fraud investigation against these folks -- looking for false statements by the insured in the applications, mostly. While the WH might want to pretend that this practice will be stopped under the new ACA, they are wrong.
http://trueslant.com/huffpostfund/2010/03/30/will-health-care-bill-ban-rescissions-gaps-in-legislation-raise-doubts/

We really have been sold a bill of goods, I'm afraid. My guess is in 10 years we will still be fighting for something like actual single-payer universal care, as the previous decade will have shown that there is no other alternative that will rein in runaway costs.

Posted by: Jim Pharo on April 23, 2010 at 1:38 PM | PERMALINK

Death panels.

Posted by: Ugly Moe on April 23, 2010 at 1:41 PM | PERMALINK

Well, if all those women stayed in the kitchen, where they belonged, they probably wouldn't have caught breast cancer from all those Democrats working outside their homes. BTW, did I read correctly that the CEO of WellPoint is a woman? What is she doing working outside the kitchen. Maybe there is a kitchen in the HQ and she has her office there. That would solve that problem. Have kitchens in all the workplaces where women work and just have cubicles set up in the kitchens for the women. Men, of course, could go into the kitchen anytime they wanted and request a cup of coffee and home-cooked meal.

/snark/

st john

Posted by: st john on April 23, 2010 at 1:42 PM | PERMALINK

You all understand that Wellpoint is fulfilling its fiduciary duty to its shareholders. It is the duty of every corporation to maximize profits for the shareholders. In the insurance company context that means charging the highest possible premiums and paying out the lowest possible in claims. Recission is a great tool to help maximize profits. After collecting a sucker's premiums you dump the poor bastard if it looks like she is going to cost a lot. Don't blame Wellpoint executives. They are just doing their job.

Posted by: Ron Byers on April 23, 2010 at 1:42 PM | PERMALINK

An insurance company we could all be proud of .
An insurance company of the people , by the people , for the people . So that the people shall not perish from the earth .

Posted by: FRP on April 23, 2010 at 1:43 PM | PERMALINK

They are WOMEN for pete's sake. Did you see NOTHING of the debates??? If we learned NOTHING we learned that women's health does not matter to the ins. companies. And Jim Pharo? YES we will still be fighting in 10 years but we have a BASE to start from. Prior to this year we had nothing.

Posted by: SYSPROG on April 23, 2010 at 1:43 PM | PERMALINK

Somehow, I just don't think the "We're not doing anything that's actually illegal" defense is going to work in this case. But we shall see...

Posted by: MattF on April 23, 2010 at 1:43 PM | PERMALINK

Evan Bayh's wife works for Wellpointe so it is a good thing he is not seeking re-election. What is worse Max Baucus used Wellpoint representative as his advisors during health Care Deform.Seh sat right behind him during Senate hearings. That is why the law is so corporate friendly and has no competition like Medicare buy in or public option. Max ensured he would receive more $$ from insurance company so ensured those competive options were left out.

Posted by: MLJohnston on April 23, 2010 at 1:45 PM | PERMALINK

"I still occasionally find it hard to believe health care reform was deemed unnecessary by so many."

I still occasionally find it hard to believe that the Obama Administration and Steve Benen deemed it *necessary* to fight so hard for health care reform that left these reprehensible cretins in charge of health care in this country.

Posted by: Vince on April 23, 2010 at 1:46 PM | PERMALINK

Wellpoint fulfilling their legal obligation to its shareholders is fine by me. It's one reason why I find the WH's yammering so disingenuous. Bashing Wellpoint is well, point-less. (Sorry -- coudn't resist.) The only way to force corporations to behave other than in the interests of their shareholders is to pass and enforce actual laws, which we have not done and are unlikely to do anytime soon.

Posted by: Jim Pharo on April 23, 2010 at 1:47 PM | PERMALINK

"I still occasionally find it hard to believe health care reform was deemed unnecessary by so many."

Agreed. But I also find it hard to believe/understand just how many people are 'shocked' when large oligopolistic concentrations of econmic power use that power to lie, cheat and steal from their customers and how many of those same shocked and victimized people then blame, not the liers, cheaters and thieves, but the government, even though its regulatory muscle they previously criticised and allowed to atrophy. Its not "Obama can't save you!", its "Gates (or other "Master of Universe') won't help you or save you and is out to get you!"

Posted by: robert on April 23, 2010 at 1:47 PM | PERMALINK

I give it until Monday before this non-sense gets blamed on the HRC bill. After all how is WellPoint to turn a buck once all the HRC provisions are in place ?

Posted by: ScottW714 on April 23, 2010 at 1:47 PM | PERMALINK

And loud condemnation is all the legislation allows for! The Administration or Pelosi's office can only bark at the insurance industry - the bite was taken out of the final version of the HCR bill! -Kevo

Posted by: kevo on April 23, 2010 at 1:49 PM | PERMALINK

@SYSPROG: Women's health doesn't matter to the Congress, either. Witness the excission of abortion coverage and the continued (and wholly unnecessary) propagation of the "Hyde Amendment" in bill after bill after bill. Hyde's been DEAD for how long?

@Ron Byers on fiduciary duty: Michael Moore made this point at great length last night on Olbermann. It seems to be a good argument against allowing ANY for-profit health care, doesn't it?

Posted by: Zandru on April 23, 2010 at 1:50 PM | PERMALINK

I guess there's just no other option but to pass a public option. The Democrats in Congress didn't want to do it but what else was there to do? Try not to smile too big when you so sadly introduce the bill.

Posted by: Th on April 23, 2010 at 1:53 PM | PERMALINK


"You all understand that Wellpoint is fulfilling its fiduciary duty to its shareholders. It is the duty of every corporation to maximize profits for the shareholders. In the insurance company context that means charging the highest possible premiums and paying out the lowest possible in claims. Recission is a great tool to help maximize profits. After collecting a sucker's premiums you dump the poor bastard if it looks like she is going to cost a lot. Don't blame Wellpoint executives. They are just doing their job".

Save your breath, Ron. Bleeding hearts cannot be reasoned with.

Posted by: JW on April 23, 2010 at 1:54 PM | PERMALINK

Jezus Fucking Christ, Wellpoint execs ought to be in prison...for murder.

and god damn it... writing "sternly-worded letters" without taking any action ought to be worth 30 days picking up trash on a freeway.

assholes

Posted by: neill on April 23, 2010 at 2:02 PM | PERMALINK

Is it just me, or does the health insurance industry have a death wish?

First Anthem's 40 percent premium increases pushed the reform bill over the top, and now Wellpoint's stupidity is ensuring that the narrative going into November is "the only thing stopping your insurer from cancelling you for getting that cold is the health care reform bill that the Democratic Congress passed and Democratic President Obama signed specifically to stop this robber-baron behavior. Behavior, by the way, that republicans like (name your representative) think is just fine."

What a bunch of maroons.

Posted by: Yellow Dog on April 23, 2010 at 2:06 PM | PERMALINK

Relax everyone. If these women get dropped for having breast cancer, they can always pay for treatments with chickens.

And, for that matter, since they should go back into the kitchen anyway, the can whip up some yummy chocolate chip cookies or some cupcakes to trade for radiation or chemo treatments.

Posted by: Eeyore on April 23, 2010 at 2:10 PM | PERMALINK

Yesterday, HHS Secretary Kathleen Sebelius wrote a letter to WellPoint's CEO urging her company to immediately end this harmful practice.

That'll show 'em! I bet that letter was even sternly written! Glad to see the Obama administration has gotten serious!!!!

Posted by: Richard Goblin on April 23, 2010 at 2:26 PM | PERMALINK

Of course the execs at Wellpoint are "just doing their job." That's not the point, the guards at Auschwitz were just doing their job too. The fact is that people's access to healthcare should not be determined by the for profit marketplace. Either Ron is being sarcastic or he has a teabag imbedded in his brain.

Posted by: bradgalt on April 23, 2010 at 2:29 PM | PERMALINK

If the Dems want to avoid obliteration this November, they had better find a way to bring some serious financial pain to Wellpoint and other insurance companies who are engaging in this practice.

If letters and condemnations are the best they can do, the bill isn't worth the paper it's printed on.

People want to see some fucking retribution.

Posted by: bdop4 on April 23, 2010 at 2:32 PM | PERMALINK

Wellpoint's behavior is an example of just why health care insurance AND providers should not be for-profit companies. Sooner or later this country will have single-payer, nationalized health care. I honestly thought back in about 1976 that it would take 30 years, and we still aren't there. Hopefully it won't take another 30 years before we finally get it.

Posted by: winddancer on April 23, 2010 at 2:39 PM | PERMALINK

The Democratic Party: The Home of the Sternly Worded Letter.

Sheesh.

Posted by: Jim Pharo on April 23, 2010 at 2:47 PM | PERMALINK

For those of you who haven't heard one of the 2010 HCR measures is insurers will no longer be able to rescind policies to avoid paying medical bills when a person becomes ill.

Oh, yes, this Wellpointe program does provide a strong argument for an actual government run health care and my heart does bleed. My primary ethical rule is that we should all do unto others as we would have them do unto us.

Posted by: Ron Byers on April 23, 2010 at 2:49 PM | PERMALINK

I'm just wondering what is in the new legislation that prevents insurance companies from launching these same kind of 'fraud investigations'?

Posted by: J on April 23, 2010 at 2:55 PM | PERMALINK

Ron Byers:

"And despite a flurry of news reports that the bill bans a controversial practice where insurers retroactively cancel the health coverage of patients — known in the industry as rescission — the law has not changed. Federal law already outlaws rescission, except in the case of fraud. "

This is from this link
http://trueslant.com/huffpostfund/2010/03/30/will-health-care-bill-ban-rescissions-gaps-in-legislation-raise-doubts/

The truth is that rescission is NOT changing under the new law, and what Wellpoint is doing here is not going to become illegal, and therefore it is not going to stop.

Bill. Of. Goods. That's what we've bought.

Posted by: Jim Pharo on April 23, 2010 at 2:58 PM | PERMALINK

Jim, what does the new bill say that is different than the old rule concerning recission? In the past the definition of "fraud" has been pretty much any irrelevant mistake or misspelling in the paper work. Has that definition changed?

Posted by: Ron Byers on April 23, 2010 at 3:11 PM | PERMALINK

That's the rub: it says nothing about rescission for fraud. All that's changed is that the insurer can't drop you simply because you get sick. So it addresses the worst abuse (already illegal in many states), but leaves open a path the insurers are quite comfortable with using. This is one of the reasons why the insurers didn't fight the bill as much as they might have.

Posted by: Jim Pharo on April 23, 2010 at 3:15 PM | PERMALINK

"And when Republican leaders call for repeal of the health reform law, they are endorsing a return to these abusive policies that have no place in our medical system."

So Jim, Pelosi is wrong and this type of thing will continue? My, we were sold a bill of goods.

Posted by: whichwitch on April 23, 2010 at 3:17 PM | PERMALINK

The following is an explanation of the change to the law concerning recission drafted by the llinois Department of Insurance:

Prohibition against unwarranted rescissions.

Current Illinois law allows a health insurer to rescind an individual or family policy if a claim filed within two (2) years of the policy issuance would have resulted in either:
1. denial of the application,
2. exclusion of a preexisting condition, or
3. charging more to the policyholder.

By pure volume, Illinois has more rescissions than any state in the United States and, per capita, is second only to New Mexico.

Current Illinois law allows a rescission in the absence of a medical nexus between the claim and the historical event (e.g. claim for heart attack leads to discovery of a knee problem). One teenager's dependent coverage was rescinded due to failure to disclose that she had a "congenital deformity": braces.

National health insurance reform will prohibit the rescission of a health insurance policy except for instances of fraud.

As any lawyer will tell you fraud has a very specific definition. I don't think that a teenagers failure to disclose that she wears braces will qualify as fraud.

Posted by: Ron Byers on April 23, 2010 at 3:19 PM | PERMALINK

I think a teenager's failure to disclose her braces is certainly going to be judged as fraud. Remember what those forms say: I verify that all information herein is true and correct, and that I have omitted nothing, and that I understand that omitting anything may be grounds for termination," etc.

You know, insurance companies have lawyers, too. And they've been at this for a very long time.

Posted by: Jim Pharo on April 23, 2010 at 3:25 PM | PERMALINK

Insurance fraud is commonly defined as an intentional material misrepresentation to obtain a benefit or to deny a benefit.

Posted by: Ron Byers on April 23, 2010 at 3:26 PM | PERMALINK

The standard definition of insurance fraud moves the burden from the insured to the insurer. Wellpoint is going to have to prove that the failure of the teenager to disclose her braces was both intended and material to the benefit. I think the Illinois Insurance Commissioner agrees with me. Mere failure to dot an i or cross a t is no longer going to be enough. I do agree that we have to make sure the insurance company lawyers don't reimpose the old formalism.

Posted by: Ron Byers on April 23, 2010 at 3:34 PM | PERMALINK

Ron, Wellpoint doesn't have to prove anything. All they have to do is deny coverage. The fact that the insured may well have some recourse is close to irrelevant.

And if I can find a study that says wearing braces correlates to higher rates of breast cancer, I think I'm winning that appeal even on your rules...

The game is rigged, friends. Nothing in the new bill is going to change that.

Posted by: jim Pharo on April 23, 2010 at 3:38 PM | PERMALINK

Selling medical insurance - with its promises to pay for health care - and then canceling policies because one needs health care - is out and out FRAUD.

Why the FTC hasn't prosecuted every such case is beyond any understanding.

If you pay for ANY other product or service, and then the seller reneges on delivery, it is UNDERSTOOD to be fraud. Why does no one jump all over this? Why aren't individuals suing the bejeezus out of the insurance companies? Class action suits and all.

Posted by: SteveGinIL on April 23, 2010 at 4:04 PM | PERMALINK

Jim if you are right, we need to pass a corrections bill sooner than later. By the way, I was for medicare for all before it was cool. I still am. Sadly I have to live with the law we passed, at least until we can change it.

Posted by: Ron Byers on April 23, 2010 at 4:05 PM | PERMALINK

["I still occasionally find it hard to believe that the Obama Administration and Steve Benen deemed it *necessary* to fight so hard for health care reform that left these reprehensible cretins in charge of health care in this country."]

Really? Because I thought Mr. Benen explained this quite clearly at the time. He felt that creating a foundation and building on that had a higher chance of success than trying to get the whole deal all at once. His justification for this was to point out the fact (not opinion, *fact*) that every good government care program we have today, like Social Security and Medicare, started out much thinner than they are now and were beefed up later.

Posted by: Shade Tail on April 23, 2010 at 4:36 PM | PERMALINK

"Well"pointe, my a*s. DEADpointe is more like it.

Single payer NOW. Put the bast*rds out of business.

Posted by: Hannah on April 23, 2010 at 5:54 PM | PERMALINK

I do not buy that they are "just doing what they are supposed to do, to maximize the gain for their stockholders," which implied this is normal business practice and ethics. They are corporate robber barons, violating the social contract in this society. They are creating a new norm that "money is everything," that it's perfectly ok to treat people unfairly, essentially kill them off for money. It is NOT ok. They are helping to destroy the middle class, financially and physically. And as with other issues, the media repeat the mantra above without questioning the implication that their actions are "acceptable" in our society. We have to call the media on unthinkingly promoting this view, and must call the insurance companies on violating our trust and the intent of the new law. I hope we can find a way to punish & prevent these practices but think they will continue to push the limit until it's so totally crazy that enough people wake up and force a change to non-profit and/or govt-based coverage.

Posted by: pea on April 23, 2010 at 10:21 PM | PERMALINK

ps. Can't Obama make an executive order so insurance companies are prevented from these bad-faith recissions? He could claim they forced him to protect US citizens -- and seems like that could also score points with the average guy who might be beginning to worry about his health insurance.

Posted by: pea on April 24, 2010 at 1:00 AM | PERMALINK

For the near term, we have the administration signalling that it is going to take a very dim view of insurers claiming that irrelevant omissions constitute fraud under the new law.

For the long term, once health-care exchanges and personal mandates go into effect then pre-existing conditions will no longer be an excuse to deny coverage or raise rates. At that point, the very slender excuse companies have had for this practice up to now goes away entirely.

Btw, the practice of using any excuse they can come up with to deny coverage is not limited to health insurance. There was a case a few years ago in Washington State that was described as a fairly common example, though the particular vary considerably. A family lost their home in a fire and was covered for replacement costs. Due to disputes between the insurer and the contractor, repairs/rebuilding of their home dragged on and on. Their payments for rent while waiting for the home to be livable had run out, and the deadline for replacing the contents was due to expire, the insurance company wouldn't pay for storage of replacement items and the family couldn't afford to pay for storage along with all the other expenses running up during the delays.

So the family bought the replacement furniture and resold some of it, which was specifically forbidden by their policy. When the company found out, it not only tried to get back what it had paid for the furniture, it canceled their policy, stopped paying for the ongoing costs of rebuilding their house and tried to recover everything else they had paid out since the fire. This amounted to hundreds of thousands of dollars that the company tried to reclaim after "fraudulent" claims for a few thousand dollars worth of furniture.

In general, if this ends up in a civil trial, the courts take a dim view of this, but even when the companies fail, they rarely pay a significant penalty for the attempt. They only need to succeed a few times to pay for the legal expenses of dozens of unsuccessful cases.

Needless to say, a health insurance client in the middle of expensive treatement for a life-threatening condition is in a worse position than most to deal with this kind of f***ed up shit. By the time the courts can force the insurer to pay up, the patient is frequently dead. In rare cases, this has lead to wrongful death claims or punitive damages of one type or another. But as others have said, what's really needed is prison sentences for manslaughter. Or better yet, change the entire f***ing system.

Posted by: tanstaafl on April 24, 2010 at 1:27 AM | PERMALINK

Surely there are some tort lawyers out there who will organize a class action for this? If you can sue the hell out of tobacco companies, surely you can do so against Wellpoint.

Posted by: bob h on April 24, 2010 at 5:39 AM | PERMALINK

I can't get excited about any of this. What are the odds that someone will become diseased and die? The odds are 100%. Insuring oneself against an event that is a 100% certainty is very expensive. It's like buying life insurance at the age of 90. The smart move is to invest the health insurance premium in gold, silver and oil. When the time comes to pay for your cancer treatment you'll have plenty of money and no insurer to deal with.

Posted by: russ on April 24, 2010 at 12:57 PM | PERMALINK

I still occasionally find it hard to believe health care reform was deemed unnecessary by so many.


"WAS"???!!!

Mr. Benen, aren't you the guy who keeps telling us that Republicans are calling for full repeal?

Posted by: toowearyforoutrage on April 24, 2010 at 8:32 PM | PERMALINK

I don't see any evidence this is actually happening> No names no dates just a bunch of crap from politicians that have a political stake and pushing a myth. Why didn't Wellpoint drop me for the 100k of services i have received in last two years. They didn't. This is politically motivated crap from politicians with their own motives as they unsuccessfully try to sell this unpopular plan to the American people.

Posted by: Vichet on April 25, 2010 at 1:47 PM | PERMALINK

Yeah, Death to WellPoint! I'm forced to take their coverage. Unlike what's coming...

Posted by: Francis on April 25, 2010 at 4:11 PM | PERMALINK

Somebody remind me again why we had to allow these bastards to stay in business.
----
The same reason Goldman Sachs is...

Posted by: GS Rulz on April 25, 2010 at 4:12 PM | PERMALINK

So Vichet, because it didn't happen to you, it must not happen to anybody? Nice argument, or maybe you just have a stake in not believing anything that might support the Democrats.

As for why Wellpoint didn't drop you, two obvious possibilities come to mind. First, that you have coverage through a group plan rather than an individual policy. In that case, you probably won't have had to fill out a lot of forms about your medical history. They couldn't drop you and ccouln't deny coverage for pre-existing except for a specific period after you join the plan.

If you do have individual coverage through Wellpoint, then you have no way of knowing whether they did try to investigate you and your application. However, without some kind of oversight in your application, however minor, they would not have the excuse they need to drop you.

Posted by: Tanstaafl on April 27, 2010 at 4:18 PM | PERMALINK




 

 

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