NEWS RELEASE
Insurance Commissioner Poizner Reacts to Industry Lawsuit to
Halt Consumer Protections Against Illegal Rescissions
Poizner Calls Insurers’ Lawsuit “Appalling” in Attempt to Continue Illegal Rescissions
Insurance Commissioner Steve Poizner today responded to an insurance industry lawsuit to block
regulations that prevent the practice of unfair rescissions in the individual health insurance industry.
"I find it unconscionable that insurers would sue to keep the Department from stopping the horrific
practice of illegal rescissions," said Commissioner Poizner. "Sometimes I think representatives in
this industry have their heads permanently stuck in the sand. Illegal rescissions are a repugnant
industry practice. In this current environment, this lawsuit is simply short-sighted and morally
wrong."
Earlier this year, Commissioner Poizner introduced historic regulations to prevent the practice of
unfair rescissions in the individual health insurance industry. Rescissions are retroactive
cancellations of coverage after a patient becomes sick with an often expensive-to-treat illness.
These regulations, effective August 18, 2010, mark California's first-ever regulatory steps to clarify
rescission laws, preventing the industry practice of unfairly rescinding health insurance policies.
Previously, insurance companies took advantage of ambiguity in existing laws to inappropriately
rescind health insurance policies for individuals when they need health insurance coverage the most
- after filing claims for medical treatment. Poizner's regulations would ensure that insurance
companies perform all underwriting before accepting a policyholder and receiving premiums. The
regulations would also prohibit insurers from conducting certain rescission focused investigations
after the policyholder becomes sick or injured. The rescission regulations do not prohibit insurers
from addressing fraud by health insurance applicants so long as the insurer has done its work in
reviewing the application prior to issuing the policy.
Commissioner Poizner has taken a series of decisive steps against improper rescissions since
taking office in 2007, cracking down on the three largest individual health insurance companies in
the state - Health Net, Anthem Blue Cross and Blue Shield -- for engaging in the practice with
enforcement actions and settlements to ensure that these companies do not illegally rescind policies
in the future. The settlements, which cover 85 percent of the market, will not be affected by this
lawsuit. Poizner also obtained offers of reinstated coverage for 4,000 customers whose policies
CDI alleges were illegally rescinded.
The lawsuit was filed by the Association of California Life & Health Insurance Companies
(ACLHIC), an industry trade association of life and health insurance companies, in Sacramento
Superior Court on August 16, two days before the new regulation went into effect.
Insurance Commissioner Poizner Reacts to Industry Lawsuit to
Halt Consumer Protections Against Illegal Rescissions
Poizner Calls Insurers’ Lawsuit “Appalling” in Attempt to Continue Illegal Rescissions
Insurance Commissioner Steve Poizner today responded to an insurance industry lawsuit to block
regulations that prevent the practice of unfair rescissions in the individual health insurance industry.
"I find it unconscionable that insurers would sue to keep the Department from stopping the horrific
practice of illegal rescissions," said Commissioner Poizner. "Sometimes I think representatives in
this industry have their heads permanently stuck in the sand. Illegal rescissions are a repugnant
industry practice. In this current environment, this lawsuit is simply short-sighted and morally
wrong."
Earlier this year, Commissioner Poizner introduced historic regulations to prevent the practice of
unfair rescissions in the individual health insurance industry. Rescissions are retroactive
cancellations of coverage after a patient becomes sick with an often expensive-to-treat illness.
These regulations, effective August 18, 2010, mark California's first-ever regulatory steps to clarify
rescission laws, preventing the industry practice of unfairly rescinding health insurance policies.
Previously, insurance companies took advantage of ambiguity in existing laws to inappropriately
rescind health insurance policies for individuals when they need health insurance coverage the most
- after filing claims for medical treatment. Poizner's regulations would ensure that insurance
companies perform all underwriting before accepting a policyholder and receiving premiums. The
regulations would also prohibit insurers from conducting certain rescission focused investigations
after the policyholder becomes sick or injured. The rescission regulations do not prohibit insurers
from addressing fraud by health insurance applicants so long as the insurer has done its work in
reviewing the application prior to issuing the policy.
Commissioner Poizner has taken a series of decisive steps against improper rescissions since
taking office in 2007, cracking down on the three largest individual health insurance companies in
the state - Health Net, Anthem Blue Cross and Blue Shield -- for engaging in the practice with
enforcement actions and settlements to ensure that these companies do not illegally rescind policies
in the future. The settlements, which cover 85 percent of the market, will not be affected by this
lawsuit. Poizner also obtained offers of reinstated coverage for 4,000 customers whose policies
CDI alleges were illegally rescinded.
The lawsuit was filed by the Association of California Life & Health Insurance Companies
(ACLHIC), an industry trade association of life and health insurance companies, in Sacramento
Superior Court on August 16, two days before the new regulation went into effect.
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