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| Subject: Re: One more reason why universal health care is needed | |
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Author: Duncan7 |
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Date Posted: 11:08:45 11/12/07 Mon In reply to: Bev 's message, "One more reason why universal health care is needed" on 12:33:28 11/10/07 Sat Sounds like someone stands to make $6 million. Good deal. > >href="http://www.latimes.com/business/la-fi-insure9nov0 >9,0,3065397,full.story?coll=la-home-center">http://www. >latimes.com/business/la-fi-insure9nov09,0,3065397,full. >story?coll=la-home-center > >Health insurer tied bonuses to dropping sick >policyholders > >Ken Hively / Los Angeles Times >DROPPED: Patsy Bates, 51, a Gardena hairdresser, is >seeking $6 million plus damages in a suit against >Health Net after her coverage was rescinded while she >was in the middle of chemotherapy treatments. >By Lisa Girion, Los Angeles Times Staff Writer >November 9, 2007 >One of the state's largest health insurers set goals >and paid bonuses based in part on how many individual >policyholders were dropped and how much money was >saved. > >Woodland Hills-based Health Net Inc. avoided paying >$35.5 million in medical expenses by rescinding about >1,600 policies between 2000 and 2006. During that >period, it paid its senior analyst in charge of >cancellations more than $20,000 in bonuses based in >part on her meeting or exceeding annual targets for >revoking policies, documents disclosed Thursday showed. >The revelation that the health plan had cancellation >goals and bonuses comes amid a storm of controversy >over the industry-wide but long-hidden practice of >rescinding coverage after expensive medical treatments >have been authorized. > >These cancellations have been the recent focus of >intense scrutiny by lawmakers, state regulators and >consumer advocates. Although these "rescissions" are >only a small portion of the companies' overall >business, they typically leave sick patients with >crushing medical bills and no way to obtain needed >treatment. > >Most of the state's major insurers have cancellation >departments or individuals assigned to review coverage >applications. They typically pull a policyholder's >records after major medical claims are made to ensure >that the client qualified for coverage at the outset. > >The companies' internal procedures for reviewing and >canceling coverage have not been publicly disclosed. >Health Net's disclosures Thursday provided an >unprecedented peek at a company's internal operations >and marked the first time an insurer had revealed how >it linked cancellations to employee performance goals >and to its bottom line. > >The bonuses were disclosed at an arbitration hearing >in a lawsuit brought by Patsy Bates, a Gardena >hairdresser whose coverage was rescinded by Health Net >in the middle of chemotherapy treatments for breast >cancer. She is seeking $6 million in compensation, >plus damages. > >Insurers maintain that cancellations are necessary to >root out fraud and keep premiums affordable. >Individual coverage is issued to only the healthiest >applicants, who must disclose preexisting conditions. > >Other suits have been settled out of court or through >arbitration, out of public view. Until now, none had >gone to a public trial. > >Health Net had sought to keep the documents secret >even after it was forced to produce them for the >hearing, arguing that they contained proprietary >information and could embarrass the company. But the >arbitrator in the case, former Los Angeles County >Superior Court Judge Sam Cianchetti, granted a motion >by lawyers for The Times, opening the hearing to >reporters and making public all documents produced for >it. > >At a hearing on the motion, the judge said, "This >clearly involves very significant public interest, and >my view is the arbitration proceedings should not be >confidential." > >The documents show that in 2002, the company's goal >for Barbara Fowler, Health Net's senior analyst in >charge of rescission reviews, was 15 cancellations a >month. She exceeded that, rescinding 275 policies that >year -- a monthly average of 22.9. > >More recently, her goals were expressed in financial >terms. Her supervisor described 2003 as a "banner >year" for Fowler because the company avoided about "$6 >million in unnecessary health care expenses" through >her rescission of 301 policies -- one more than her >performance goal. > >In 2005, her goal was to save Health Net at least $6.5 >million. Through nearly 300 rescissions, Fowler ended >up saving an estimated $7 million, prompting her >supervisor to write: "Barbara's successful execution >of her job responsibilities have been vital to the >profitability" of individual and family policies. > >State law forbids insurance companies from tying any >compensation for claims reviewers to their claims >decisions. > >But Health Net's lawyer, William Helvestine, told the >arbitrator in his opening argument Thursday that the >law did not apply to the insurer in the case because >Fowler was an underwriter -- not a claims reviewer. > >Helvestine acknowledged that the company tied some of >Fowler's compensation to policy cancellations, >including Bates'. But he maintained that the bonuses >were based on the overall performance of Fowler and >the company. He also said that meeting the >cancellation target was only a small factor. > >The documents showed that Fowler's annual bonuses >ranged from $1,654 to $6,310. But Helvestine said that >no more than $276 in any year was connected to >cancellations. > >He said Fowler's supervisor, Mark Ludwig, set goals >that were reasonable based on the prior year's >experience. > >"I think it is insulting to those individuals to make >this the focal point of this case," Helvestine said. > >Bates' lawyer, William Shernoff, said Health Net's >behavior was "reprehensible." > >He said the cancellation goals and financial rewards >showed that the company canceled policies in bad faith >and just to save money. After all, he told the >arbitrator, canceling policies was Fowler's primary >job. > >"For management to set goals in advance to achieve a >certain number of rescissions and target savings in >the millions of dollars at the expense of seriously >ill patients is cruel and reprehensible by any >standards of law or decency," Shernoff said. > >The company declined requests to make Fowler available >to discuss the reviews. > >Cianchetti, the arbitrator, earlier ruled the >rescission invalid because Health Net had mishandled >the way it sent Bates the policy when it issued >coverage. At the end of the hearing, it will be up to >Cianchetti to determine whether Health Net acted in >bad faith and owes Bates any damages. > >The disclosures surprised regulators. A spokesman said >state Insurance Commissioner Steve Poizner was >troubled by the allegations. > >"Commissioner Poizner has made it clear he will not >tolerate illegal rescissions," spokesman Byron Tucker >said. "We are going to take a hard and close look at >this case." > >In recent months, the state's health and insurance >regulators have teamed to develop rules aimed at >curbing rescissions and to more closely monitor the >industry's cancellation policies. > >Other insurers that have rescission operations, >including Blue Cross of California and Blue Shield of >California, said they had no similar policies linking >employee performance reviews to rescission levels. >Blue Cross said it conducted audits to ensure that >claims reviewers were not given any "carrots" for >canceling coverage. > >Bates, who filed the suit against Health Net, owns a >hair salon in a Gardena mini-mall between a liquor >store and a doughnut shop. She said she was left with >nearly $200,000 in medical bills and stranded in the >midst of chemotherapy when Health Net canceled her >coverage in January 2004. > >Bates, 51, said the first notice she had that >something was awry with her coverage came while she >was in the hospital preparing for lump-removal surgery. > >She said an administrator came to her room and told >her the surgery, scheduled for early the next day, had >been canceled because the hospital learned she had >insurance problems. Health Net allowed the surgery to >go forward only after Bates' daughter authorized the >insurance company to charge three months of premiums >in advance to her debit card, Bates alleged. Her >coverage was canceled after she began post-surgical >chemotherapy threatments. > >"I've got cancer, and I could die," she said in a >recent interview. Health Net "walked away from the >agreement. They don't care." > >Health Net contended that Bates failed to disclose a >heart problem and shaved about 35 pounds off her >weight on her application. Had it known her true >weight or that she had been screened for a heart >condition related to her use of the diet drug >combination known as fen-phen, it would not have >covered her in the first place, the company said. > >"The case was rescinded based on inaccurate >information on the individual's application," Health >Net spokesman Brad Kieffer said. > >Bates said she already had insurance when a broker >came by her shop in the summer of 2003, and said she >now regretted letting him in the door. She agreed to >apply to Health Net when the broker told her he could >save her money, Bates said. > >She added that she never intended to mislead the >company. Bates said the broker filled out the >application, asking questions about her medical >history as she styled a client's hair in her busy shop >and he talked to another client waiting for an >appointment at the counter. She maintained that she >answered his questions as best she could and did not >know whether he asked every question on the >application. > >Bates' chemotherapy was delayed for four months until >it was funded through a program for charity cases. >Three years later, she can't afford the tests she >needs to determine whether the cancer is gone. > >So she is left to worry. She is also left with a >catheter embedded in her chest where the chemotherapy >drugs were injected into her bloodstream. Bates said >she found a physician willing to remove it without >charge, but he won't do it without a clear prognosis. >That remains uncertain. > >Shernoff, Bates' lawyer, claimed that the performance >goals for Fowler showed that Health Net was bent on >finding any excuse to cancel the coverage of people >like Bates to save money. > >"I haven't seen this kind of thing for years," >Shernoff said. "It doesn't get much worse." > >lisa.girion@latimes.com [ Next Thread | Previous Thread | Next Message | Previous Message ] |
| Subject | Author | Date |
| Re: One more reason why universal health care is needed | L. | 12:01:23 11/12/07 Mon |
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