Insurer allowed to drop Realtors’ health coverage
A judge ruled Monday that Blue Shield of California could cancel group health insurance for the California Assn. of Realtors, apparently dooming it to the growing list of organization-sponsored health plans that have died in recent years, leaving people uninsured.
The association had sued Blue Shield, alleging that it would be illegal for the insurer to cancel the coverage of more than 8,000 people, including real estate agents and family members.
Los Angeles Superior Court Judge Shepard Wiley Jr. denied the group’s request to put a halt to the cancellation at least until the suit was resolved. Blue Shield said the decision vindicated its position that the real estate group had violated the terms of its contract.
The real estate group said it was considering its options, including pressing forward with the suit, seeking legislative relief and searching for alternative coverage for its members.
“We can’t really have our members be without coverage,” said June Barlow, general counsel for the group. “Our members did what everyone says they should. They bought insurance, made sure they were responsible, paid all their premiums. And now, all of a sudden, they’re flushed out of the system. We don’t think that’s right.”
Blue Shield said the real estate agents had other options for coverage. But the agents are concerned that alternative coverage will force them to quit preferred doctors or will be prohibitively expensive.
“I don’t know where to go,” said Yossi Perles, an L.A. real estate broker who pays $1,300 a month for Blue Shield coverage for his family. “I think I’m paying a hell of a lot of money. What do they want from us?”
Health plans provided by professional associations and other groups -- once a common source of insurance for self-employed people -- have been disappearing amid rising costs and insurers’ efforts to avoid consumers with preexisting conditions.
Blue Shield said its decision was not based on such factors but on its view that the California Assn. of Realtors had violated its contract. Blue Shield said the group had failed to enroll enough members in its plan. The contract sets a minimum to ensure that the group’s risk is well-balanced.
“Rather than seek alternative coverage arrangements for its members, CAR and its insurance broker, RealCare Insurance Marketing Inc., chose to pursue a dubious legal challenge,” said Seth Jacobs, Blue Shield’s general counsel. “We appreciate the concern expressed by CAR members about the status of their health coverage and regret that they were ill-advised by their association and insurance broker the past several months.”
The real estate group said its contract with Blue Shield had a guaranteed renewal provision. So, it alleged, Blue Shield invented a contract problem as a pretext to get rid of business it no longer wanted.
The association also offers group coverage through Kaiser Permanente, and Blue Shield participants within the HMO’s service area should be able to switch, Blue Shield said. Those who live too far away should be able to buy coverage guaranteed by the federal Health Insurance Portability and Accountability Act from any insurer, including Blue Shield, the company said.
Marcy Garber, an Encino-based real estate agent, attended the hearing where the judge said Blue Shield had the right to “dump us -- maybe not the moral right, but the legal right. And they took it.”
Garber, a breast cancer survivor, said she hoped to replace her Blue Shield coverage with a plan that would allow her to continue seeing the doctors who had taken care of her for years.
