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Bates' lawyer, William Shernoff, said Health Net's behavior was "reprehensible."
He said the cancellation goals and financial rewards showed that the company canceled policies in bad faith and just to save money. After all, he told the arbitrator, canceling policies was Fowler's primary job.
"For management to set goals in advance to achieve a certain number of rescissions and target savings in the millions of dollars at the expense of seriously ill patients is cruel and reprehensible by any standards of law or decency," Shernoff said.
The company declined requests to make Fowler available to discuss the reviews.
Cianchetti, the arbitrator, earlier ruled the rescission invalid because Health Net had mishandled the way it sent Bates the policy when it issued coverage. At the end of the hearing, it will be up to Cianchetti to determine whether Health Net acted in bad faith and owes Bates any damages.
The disclosures surprised regulators. A spokesman said state Insurance Commissioner Steve Poizner was troubled by the allegations.
"Commissioner Poizner has made it clear he will not tolerate illegal rescissions," spokesman Byron Tucker said. "We are going to take a hard and close look at this case."
In recent months, the state's health and insurance regulators have teamed to develop rules aimed at curbing rescissions and to more closely monitor the industry's cancellation policies.
Other insurers that have rescission operations, including Blue Cross of California and Blue Shield of California, said they had no similar policies linking employee performance reviews to rescission levels. Blue Cross said it conducted audits to ensure that claims reviewers were not given any "carrots" for canceling coverage.
Bates, who filed the suit against Health Net, owns a hair salon in a Gardena mini-mall between a liquor store and a doughnut shop. She said she was left with nearly $200,000 in medical bills and stranded in the midst of chemotherapy when Health Net canceled her coverage in January 2004.
Bates, 51, said the first notice she had that something was awry with her coverage came while she was in the hospital preparing for lump-removal surgery.
She said an administrator came to her room and told her the surgery, scheduled for early the next day, had been canceled because the hospital learned she had insurance problems. Health Net allowed the surgery to go forward only after Bates' daughter authorized the insurance company to charge three months of premiums in advance to her debit card, Bates alleged. Her coverage was canceled after she began post-surgical chemotherapy threatments.
"I've got cancer, and I could die," she said in a recent interview. Health Net "walked away from the agreement. They don't care."
Health Net contended that Bates failed to disclose a heart problem and shaved about 35 pounds off her weight on her application. Had it known her true weight or that she had been screened for a heart condition related to her use of the diet drug combination known as fen-phen, it would not have covered her in the first place, the company said.
"The case was rescinded based on inaccurate information on the individual's application," Health Net spokesman Brad Kieffer said.
Bates said she already had insurance when a broker came by her shop in the summer of 2003, and said she now regretted letting him in the door. She agreed to apply to Health Net when the broker told her he could save her money, Bates said.
She added that she never intended to mislead the company. Bates said the broker filled out the application, asking questions about her medical history as she styled a client's hair in her busy shop and he talked to another client waiting for an appointment at the counter. She maintained that she answered his questions as best she could and did not know whether he asked every question on the application.
Bates' chemotherapy was delayed for four months until it was funded through a program for charity cases. Three years later, she can't afford the tests she needs to determine whether the cancer is gone.
So she is left to worry. She is also left with a catheter embedded in her chest where the chemotherapy drugs were injected into her bloodstream. Bates said she found a physician willing to remove it without charge, but he won't do it without a clear prognosis. That remains uncertain.
Shernoff, Bates' lawyer, claimed that the performance goals for Fowler showed that Health Net was bent on finding any excuse to cancel the coverage of people like Bates to save money.
"I haven't seen this kind of thing for years," Shernoff said. "It doesn't get much worse."
lisa.girion@latimes.com
He said the cancellation goals and financial rewards showed that the company canceled policies in bad faith and just to save money. After all, he told the arbitrator, canceling policies was Fowler's primary job.
"For management to set goals in advance to achieve a certain number of rescissions and target savings in the millions of dollars at the expense of seriously ill patients is cruel and reprehensible by any standards of law or decency," Shernoff said.
The company declined requests to make Fowler available to discuss the reviews.
Cianchetti, the arbitrator, earlier ruled the rescission invalid because Health Net had mishandled the way it sent Bates the policy when it issued coverage. At the end of the hearing, it will be up to Cianchetti to determine whether Health Net acted in bad faith and owes Bates any damages.
The disclosures surprised regulators. A spokesman said state Insurance Commissioner Steve Poizner was troubled by the allegations.
"Commissioner Poizner has made it clear he will not tolerate illegal rescissions," spokesman Byron Tucker said. "We are going to take a hard and close look at this case."
In recent months, the state's health and insurance regulators have teamed to develop rules aimed at curbing rescissions and to more closely monitor the industry's cancellation policies.
Other insurers that have rescission operations, including Blue Cross of California and Blue Shield of California, said they had no similar policies linking employee performance reviews to rescission levels. Blue Cross said it conducted audits to ensure that claims reviewers were not given any "carrots" for canceling coverage.
Bates, who filed the suit against Health Net, owns a hair salon in a Gardena mini-mall between a liquor store and a doughnut shop. She said she was left with nearly $200,000 in medical bills and stranded in the midst of chemotherapy when Health Net canceled her coverage in January 2004.
Bates, 51, said the first notice she had that something was awry with her coverage came while she was in the hospital preparing for lump-removal surgery.
She said an administrator came to her room and told her the surgery, scheduled for early the next day, had been canceled because the hospital learned she had insurance problems. Health Net allowed the surgery to go forward only after Bates' daughter authorized the insurance company to charge three months of premiums in advance to her debit card, Bates alleged. Her coverage was canceled after she began post-surgical chemotherapy threatments.
"I've got cancer, and I could die," she said in a recent interview. Health Net "walked away from the agreement. They don't care."
Health Net contended that Bates failed to disclose a heart problem and shaved about 35 pounds off her weight on her application. Had it known her true weight or that she had been screened for a heart condition related to her use of the diet drug combination known as fen-phen, it would not have covered her in the first place, the company said.
"The case was rescinded based on inaccurate information on the individual's application," Health Net spokesman Brad Kieffer said.
Bates said she already had insurance when a broker came by her shop in the summer of 2003, and said she now regretted letting him in the door. She agreed to apply to Health Net when the broker told her he could save her money, Bates said.
She added that she never intended to mislead the company. Bates said the broker filled out the application, asking questions about her medical history as she styled a client's hair in her busy shop and he talked to another client waiting for an appointment at the counter. She maintained that she answered his questions as best she could and did not know whether he asked every question on the application.
Bates' chemotherapy was delayed for four months until it was funded through a program for charity cases. Three years later, she can't afford the tests she needs to determine whether the cancer is gone.
So she is left to worry. She is also left with a catheter embedded in her chest where the chemotherapy drugs were injected into her bloodstream. Bates said she found a physician willing to remove it without charge, but he won't do it without a clear prognosis. That remains uncertain.
Shernoff, Bates' lawyer, claimed that the performance goals for Fowler showed that Health Net was bent on finding any excuse to cancel the coverage of people like Bates to save money.
"I haven't seen this kind of thing for years," Shernoff said. "It doesn't get much worse."
lisa.girion@latimes.com
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