Health Net Pays $9 Million for Canceling Patient’s Policy

Put yourself in Patsy Bates’ shoes. She is a hairdresser who had health insurance coverage with Health Net, a large insurer in California.

In 2004, Patsy was diagnosed with breast cancer, and part way through her chemotherapy treatments, Health Net decided to cancel her insurance. At the point where she owed almost $130 thousand for medical bills, her doctors stopped her treatment.

Can you imagine? It’s bad enough to be sick. At least you’re confident that your insurance is covering most of the bills… only to find out that it isn’t? And because it isn’t, you can’t finish being treated?

That was then. Patsy was able to find a state-funded program that helped her get the rest of her treatment and she considers herself healthy today. And now her wallet is healthier, too — to the tune of the $9 million (minus the attorney’s cut, of course) she was awarded by the courts in California — payable by Health Net for the entire insult.

As it should be. And this, one day after the Los Angeles city attorney filed suit against Health Net for canceling another 1,600 policies, too. There may be thousands more, because in 2002 and 2003, Health Net was rewarding its employees big bonuses for the policies they managed to cancel.

Doesn’t this all just turn your stomach? I want to know where else is this happening? In what states are health insurance companies still getting away with cancellations? What would have happened if this woman had died? How could those people who won bonuses for cancelling policies live with themselves?

And what makes any of the rest of us with health insurance think this won’t happen to us, too?

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2 thoughts on “Health Net Pays $9 Million for Canceling Patient’s Policy”

  1. Trisha, this does churn my stomach and make me angry at HealthNet and any other insurance companies which are conducting business the same way. But it also bothers me that so much money would be paid out to award patients such as Patsy (who was able to find a program to continue her treatments) and paid out as penalties for cancelling policies. That money came from somewhere, and not likely all from HealthNet investments. That money came from policy holders who paid their premiums ontime and trusted HealthNet to cover agreed-upon medical expenses. That also churns my stomach and makes me doubt my own sense of fairness when examining corrupt health insurance behavior.

  2. Lisa,

    You make an excellent point — where is that $9 million going to come from? I don’t find the answer in any of the news reports, but it’s entirely possible the courts stated that the money had to come from existing money and could not be raised by increasing premiums, not this year, not next, etc.

    A smart consumer remembers this when it comes time to change health insurance companies — December or whenever. Because Health Net will be looking for some way to refill the till.

    Thanks for your post.

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Trisha Torrey
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