The city attorney for Los Angeles has reacted quickly to citizen complaints filed on a new Web site, filing suit on Thursday against health insurer Health Net Inc.
Los Angeles City Attorney Rocky Delgadillo has filed a civil law enforcement action against Los Angeles-based Health Net Inc. and two of its subsidiaries for engaging in unlawful and deceptive business practices.
Delgadillo's action contends that the insurer's practices caused it to deny or delay the authorization of claims, or resulted in the cancelation of coverage after it initially issued a policy.
Health Net executives denied the charges and said the company has taken steps in past years to improve its cancelation practices.
Delgadillo also announced that he's initiating a criminal investigation of individuals associated with Health Net's illegal bonus payment program for policy cancelations, in violation of the state's Know-Keene Act, and other individuals who may have made false statements to the state's department of managed health care regarding the bonus plan.
Health Net responded by saying it had already acted to drop the bonus payment program.
The complaint filed against Health Net said it purposefully used false and misleading marketing in efforts to gain more members. It contends applications asked prospective members for medical history and were accepted by the insurer without investigation of the medical history.
"Then, only after policy holders submitted claims for medical services did Health Net retroactively conduct investigations into their medical history in order to find discrepancies in the application to allow for a delay in payment or cancelation of coverage," Delgadillo said. "This practice of post-claims policy cancelation is unlawful, unfair and fraudulent."
In addition to requiring Health Net to stop such practices, the suit asks the court to assess civil penalties of $2,500 for each violation of false advertising laws and unfair competition statutes.
Last week, the city attorney's office launched a prosecutor-sponsored Web site, www.ProtectingTheInsured.org to collect information from consumers, physicians and hospitals as part of an ongoing investigation into health insurance companies.
"Countless Californians who believe they have insurance actually have policies that arean't worth the paper they're printed on," he said. "At a patient's most vulnerable moment, the insurance company won't pay for care or will cancel the policy altogether. Industry schemes to maximize profits at the expense of patients are unfair and unlawful, and they must be stopped."