A New York and New Jersey Lawyer Who Represents Policyholders and Beneficiaries in Life Insurance Denial Cases

Okay, so it involves health insurance, but a recent case from the California Appeals Court addressed postclaim underwriting which has imposed hardship on many a health and life insurance consumer. In fact, this is an issue that I wrote an article about in Trial, a monthly publication of the American Association for Justice.

In Blue Cross of California, Inc. v. Superior Ct.,  the Los Angeles City Attorney filed suit against Blue Cross and Wellpoint as a result of the alleged recission of health insurance policies after claims were made, and the court refused to dismiss the case.

Postclaim underwriting in the context of health insurance policies is prohibited under California law and enforceable by local prosecutors. California law protects consumers in this regard in a manner that rises head and shoulders above other states. 

The city attorney was pursuing unfair competition and false advertising claims, for which Blue Cross contended it lacked authority. The court, however, rejected this argument.

As many have argued in support of comprehensive health reform, health insurers should perform comprehensive medical underwriting before a policy is issued and premiums are paid, not after the insured falls ill. The same principal should also apply to life insurance policies.

According to the city attorney, Blue Cross would not investigate an application by contacting the applicant’s doctors and reviewing medical records unless, on its face, the application admitted an illness or impairment. Of course, as those of us who represent policyholders know, often insurance agents read the questions in the application aloud to the applicant in a slipshod, inaccurate manner that results in errors and omissions. I have had underwriters admit this in depositions.

To that end, the complaint set forth that agents received little training and are only paid commissions on applications that are accepted, which creates an incentive for the agent not to go to lengths to uncover serious medical conditions. Further, the city attorney claimed that application questions were “confusing,” “compound,” and “ambiguous.”

Later on, when certain claims were made, only then, allegedly, would the insurer conduct medical underwriting. Not surprisingly, the claims that triggered investigations were those that were costly.

I’ll be interested to see what happens with this case. I can’t help but think of the irony of how Blue Cross and Wellpoint are being pursued for unfair and deceptive practices by the L.A. city attorney, yet on the other hand, are presently influencing healthcare policy in Washington with an army of lobbyists.

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