Calif accused Anthem Blue Cross of 732 violations

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State accused Anthem Blue Cross of 732 violations

Colliver, Chronicle Staff Writer

Tuesday, February 23, 2010

State investigators accused Anthem Blue Cross on Monday of committing more than

700 violations of California law, including misleading consumers, failing to pay

claims on time and ignoring inquiries from regulators in the state insurance

commissioner's office.

Insurance Commissioner Steve Poizner had some harsh words for the health

insurer, accusing the company, a subsidiary of WellPoint Inc., of being

" belligerent " in its failure to cooperate with the Department of Insurance and

" low-balling " customers in settlement discussions.

Anthem Blue Cross has come under state and national scrutiny in recent weeks for

trying to impose rate increases as high as 39 percent on some of its 700,000

customers who buy individual coverage. Those increases, which are on hold until

May 1, are not directly related to the alleged violations.

Judge to weigh validity

Poizner said Monday's action was the result of a yearlong investigation into the

company's claims-paying practices between 2006 and 2009. An administrative law

judge will determine whether the accusations are legitimate, a decision that

could lead to fines of more than $7 million or up to $10,000 per violation.

" All insurance companies stumble into making mistakes, " Poizner said in a press

conference. " It's only when a health insurance company doesn't take corrective

action or is belligerent or not cooperative with us that we take this kind of

action. "

Anthem Blue Cross officials said Tuesday that the Woodland Hills (Los Angeles

County) company takes the allegations " very seriously " and recognizes its

responsibility to pay claims " fairly, fully and promptly. "

" While this review represents a small fraction of those claims it is nonetheless

very important to us to make sure we take any corrective action that may be

necessary, " Binns, spokeswoman for the insurer, said in a prepared

statement.

Binns said the company had not yet received the complaint. " We look forward to

receiving the specifics from the investigation and to working with Commissioner

Poizner and his staff to resolve these issues to his satisfaction and in the

best interest of our members, " she said.

Breakdown of complaints

The 732 alleged violations are 277 failures to pay claims within the required 30

days, 143 failures to respond to regulators investigating complaints within a

" reasonable " time, 66 instances of misrepresenting facts to members, 25 failures

to pay interest, 22 unreasonably low settlement offers, 21 failures to pay or

contest a claim in 30 days, and 178 miscellaneous delays and other

claims-handling violations.

Monday's action comes a day before a hearing at the state Capitol about Anthem's

proposed rate increases. Margolin, president of Anthem, is scheduled to

speak at the hearing before the Assembly Health Committee. WellPoint's chief

executive officer, Braly, is set to appear before a federal congressional

subcommittee Wednesday.

The state's insurance commissioner has little power over health insurance rates,

other than ensuring that the company spends at least 70 cents of every premium

dollar on medical care.

Poizner, who is a candidate for the GOP nomination for governor, has

commissioned an audit into Anthem's adherence to the so-called 70 percent rule.

On Monday he said he had a " healthy skepticism " as to whether Anthem is

complying with the 70 percent rule. He said Anthem's proposed rate increases of

up to 39 percent are not in line with premium increases nationwide, which

average around 10 percent.

This article appeared on page A - 1 of the San Francisco Chronicle

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/02/23/MN4G1C5CVB.DTL