My thought is that her lawyer looked at the agent, then looked at the insurance company and decided they could make more money going ofter the insurance company.
matt horn | 02.25.08 - 10:26 am | #

In situations like this they name everyone.

The agent probably has nothing worth going after but the carrier certainly has deep pockets.

While it is true that carriers can do some incredibly stupid things, I feel they were backed into a corner and this was their only recourse. That was to follow the contract and then let the court overrule.
Bob | Homepage | 02.25.08 - 1:21 pm | #

What a mess!

OTOH: terrific post! It'll be fun, er, uh, interesting to follow this story.


Henry Stern, LUTCF, CBC | Homepage | 02.25.08 - 4:40 pm | #

Excellent post, good information. This should be required reading.
Jonathan Pletzke | Homepage | 02.25.08 - 6:05 pm | #

Bates said a broker filled out the application while she was styling a client's hair on a busy day in her shop. She said she answered his questions as best she could.

With this new information, it is possible the agent purposely left out damning information, or the applicant failed to fully disclose pertinent details. Regardless of where the fault lies, it is still the responsibility of the applicant to REVIEW the application before signing.

Having read the judgment of the arbitrator, I have to agree with him that HealthNet's attempt to rescind the policy was wrong.
1. The mess was caused by the agent's decision to change her weight on the app. Because "He" initialed the change, the app was defective in that the "insured" did not otherwise approve the a change.
2. Instead of properly underwriting the application (and asking the appropriate questions), HealthNet issued the policy without asking further questions.
3. HealthNet's decision to base employee bonus amounts (however small) on the number of policy's rescinded in a given period.

Although the insured bears some responsibility and the agent may have committed a crime, HealthNet's poor business practices lead to the outcome.
Handsome Stranger | Homepage | 02.25.08 - 8:28 pm | #

Carriers do some incredibly stupid things, and no doubt H N was wrong in giving out bonuses to employees who acted as headhunters, looking for ways to cancel policies. I have to admit, in all years in the business, I have never heard of anything even close to this kind of sniping.

You (stranger) have a leg up on me as I have not read the transcript of either the hearing nor the arbitrator's decision.

There is enough blame to go around, including the applicant. I will agree that H N does appear to be the heavy here.

This decision will reverberate throughout the insurance community for some time.
Bob | Homepage | 02.25.08 - 9:56 pm | #

The weight and heart conditions were not revelent to her claims for breast cancer. These guys were scrubbing applications AFTER there were claims looking for ways to get out of their obligations. Meantime, they were perfectly happy to sit back and collect premiums. Let them scrub their applications & cancel BEFORE there are claims.
Anonymous | 02.25.08 - 10:38 pm | #

I can't believe this woman was dropped by her health insurance carrier while undergoing chemotherapy! My mom had leukemia and I know how awful chemo is, without having to worry about coverage.

Thanks for pointing out the information about the agent. I hadn't heard that.
Billy | Homepage | 02.26.08 - 12:37 am | #

Anon:

The weight and heart conditions probably weren't relevant to the breast cancer; they were, however, relevant as to whether cover would have been offered in the first place.

Billy:

You're welcome. Bob did quite a bit of research on this piece (more, apparently, than the "professional journalist" did).


Henry Stern, LUTCF, CBC | Homepage | 02.26.08 - 8:51 am | #

This is a classic example of the importance of understanding the intricacies of purchasing a health insurance plan.

Having said that, members should have some level of protection when an agent blatantly disregards standard procedures, either because of ignorance or greed, which doesn't jeopardize insurability.

Consider the following.

1) Both parties need to sign the insurance application.

2) Guaranteed 10 free day look period. Some carriers do allow more time. This is the time that 1 out 10,000,000 consumers read their policy.

As an agent, I was not at all happy to hear that Health Net employees were paid bonuses on rescissions. Let me put that another way. I COULD NOT perform that job, but I understand how the machine operates.

When agents are not trained properly and held accountable (outside of CE requirements) with more than a "here's a brochure go get em tiger" one can surmise that something is going to hit the fan.
J.R. | Homepage | 02.26.08 - 10:31 pm | #

All good points, JR.

Bob & I spent an hour or so on the phone this afternoon dissecting the arbiter's decision.

It ain't pretty.

Between the two of us, we have something like 125 years in the biz (I'm the newbie with 25), and neither of us have EVER heard of "cash for recission" contests like this.

OTOH, neither of us would be saddened to learn that the (now former) agent had been transferred to the Gitmo office.

After perusing the decision, I have a lot more sympathy for the client: though she clearly shares some of the blame, she seems to be the least culpable here.

Bob will have more -- probably much more -- in the next day or so.


Henry Stern, LUTCF, CBC | Homepage | 02.26.08 - 10:54 pm | #