Health Net settles over rescissions
Health Net Inc. has agreed to pay California hospitals at least $1.95 million for care delivered to patients whom the insurer later dropped.
The settlement, pending a judge’s approval, resolves a lawsuit filed by California hospitals to recover payments they say the Woodland Hills company improperly withheld after canceling the coverage of hundreds of patients.
Such cancellations, known as rescissions, also were disputed in a class-action lawsuit that received final approval from Los Angeles Superior Court Judge Victoria Chaney on Tuesday.
Under that deal, Health Net will pay as much as $14 million to settle claims by 800 former policyholders whose coverage was dropped after they submitted substantial medical bills. Individuals whose policies were canceled since 2004 are eligible for payments of up to $218,000. The average payment is expected to be $7,836.
The settlements with hospitals and patients follow a two-year crackdown by state regulators on the widespread and controversial practice known as rescission. In deals with regulators, Health Net and other insurers have agreed to substantially change the way they sell individual coverage.
In all, Health Net has agreed to pay more than $40 million to resolve the regulatory actions and litigation over rescission.
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