Saturday, March 24, 2007

Blue Cross "Slammed" With Fine For Dumping Customers

Blue Cross of California "routinely" violated state law when it canceled individual health insurance coverage after policyholders got pregnant or sick, making no attempt to determine whether they did anything to merit such "harsh" treatment, according to a state investigation of practices that appear to be industrywide.

State regulators plan similar investigations of other health plans in California, and the findings against Blue Cross ratchet up the risk of liability for other insurers, many of whom face lawsuits from consumers who claim they were illegally dumped and subjected to substantial hardships.

Wow, a mega health insurance company just got nailed for violating state law. Can you imagine the outrage? They dumped sick people just because of their illness to increase their bottom line. I am sure the state of California taught a lesson that they will never forget so this behavior stops immediately. Let's read on.
As a result of its unprecedented investigation, the Department of Managed Health Care on Thursday said that it had fined Blue Cross $1 million — an amount immediately criticized by canceled policyholders and consumer advocates as too small to matter to an insurer whose parent company, WellPoint Inc., earned $3.1 billion in profit last year on revenue of $57 billion.

So instead of $3,100,000,000 in profit for last year, it turns out they made $3,099,000,000 instead. That will fix them but good! I just did the math. They fined them almost 3 hours worth of profits. I think to be fair to the stockholders everybody should work 1 extra minute a day so the bottom line isn't affected.

Good grief. This is why I object to "tort reform" btw. Not all lawsuits are frivolous. When you cap damages against mega corporations, they will let people literally die if it is good for the bottom line. A theoretical example comes to mind.

If a medical treatment costs $500,000 per patient is routinely rejected by the insurer, and the old cheap treatment which costs $1,000 is put in place instead, with caps on damages, the company simply won't care that you die. If the new treatment cures 80% of the people, if 10 took it at a total cost of $5,000,000 it would hurt the bottom line.

On the other hand, just say awards are capped at $500,000. The old treatment costs the company $100,000 to give to the patients. It only works 50% of the time. The 5 survivors out of the ten sue and cost the company $2,500,000 for the lawsuit, plus the $100,000 for the drug. There are souless accountants who will look at these numbers and due the cold calculating math in their head.

This fine by California will be treated the same way. Just the cost of doing business. Although deep pockets are attractive to trial lawyers, has anybody considered the fact that the reason the pockets are deep in some cases is because they cut a lot of corners? WellPoint threw a whole bunch of people in crisis and they won't stop. Because it would hurt their bottom line.