From San Francisco Chronicle:
Health Net Inc., one of the California's largest health insurers, tied rewards and savings to its employees' ability to cancel policies based on misrepresentations in members' applications, according to documents in a lawsuit against the company.
The documents showed Health Net saved $35.5 million in "unnecessary" health care expenses for rescinding more than 1,000 policies between 2000 and 2006. At the same time, a Health Net analyst received about $21,000 in bonuses for her work, which included exceeding company goals for policy rescissions.
Insurers say the practice is legal and necessary because it protects them against fraud, and keeps premiums lower for those members who truthfully reveal their health history. But state regulators and plaintiffs' lawyers have argued that the applications often are vague and confusing, and that it's not fair for insurers to review applications only after members file an expensive claim. In Bates' case, her lawyers contend that Health Net tied an employee's bonus to her ability to review cases and rescind coverage. State law prohibits insurance companies from offering financial incentives to reduce or deny care. According to the documents, Health Net analyst Barbara Fowler, who conducted Bates' investigation, exceeded the company's 2002 goal of 15 rescissions a month by averaging 22.9. Fowler's rescission successes were repeatedly lauded in her performance evaluations, which noted she saved the company $5.5 million in 2002 for rescinding 275 contracts. Her bonuses ranged from $1,654 in 2001 to a high of $6,310 in 2005. Well check what you are filling, very carefully those insurance forms. Insurance firms are here to make money, not to save or aid you. Link to SF Chronicle
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