Insurance Commissioner Dave Jones Defends Consumers' Right to Appeal Health Insurance Cancellations
News: 2013 Press Release
SACRAMENTO - Insurance Commissioner Dave Jones announced today that the California Department of Insurance (CDI) has filed a cross-appeal to defend against the Association of Life & Health Insurance Companies' (ACLHIC) legal challenge to rules he issued protecting consumers whose health insurance has been wrongfully cancelled or rescinded.
"I am committed to protecting the rights of California consumers when their health coverage is being terminated," said Commissioner Jones. "Consumers must be given adequate notice of their right of review and appeal when they face the loss of coverage."
In July 2011, the Commissioner issued rules (officially known as a "Guidance") on how insurers must comply with 2010 legislation (AB 2470), which banned the practice of "medical rescissions." The legislation also authorized Commissioner Jones to establish a process for consumers to request assistance from the Insurance Commissioner if they believe their health insurer wrongfully or incorrectly terminated their health insurance. When the Commissioner determines that a health insurance termination is unlawful, he can order the insurer to reinstate coverage, retroactive to the date of termination. Insurance Commissioner Jones issued a Guidance setting forth protections for consumers whose health insurance was cancelled or rescinded.
Late in 2011, the health insurance lobby ACLHIC sued the Commissioner, seeking to invalidate the Guidance. The superior court ruled in the Commissioner's favor on 11 of 13 issues ACLHIC raised in its lawsuit. On February 1, 2013, ACHLIC appealed the portion of the court's judgment which upheld the Commissioner's procedures protecting consumers.
The Commissioner has filed a cross-appeal to contest the court's ruling on the two issues where it ruled against him and will defend against the health insurers' challenge to the consumer-friendly provisions the court upheld.
Specifically, Commissioner Jones seeks to reverse the court's ruling that limited the scope of the requirement that insurers send consumers a notice of their right to a review by the Commissioner when their health coverage is being terminated. Commissioner Jones also seeks to reverse the court's ruling that insurers are not required to provide consumers a true grace period before terminating coverage for nonpayment of premium. The court ruled that insurers could satisfy the grace period requirement by adjusting their billing cycles so they could call periods for which they had already received payment a grace period.
The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $288 billion in premiums annually in California. In 2015 the California Department of Insurance received more than 155,000 calls from consumers and helped recover over $84 million in claims and premiums. Please visit the Department of Insurance web site at www.insurance.ca.gov. Non-media inquiries should be directed to the Consumer Hotline at 800.927.HELP or 213.897.8921. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.