Jerry Brown

SACRAMENTO (Legal Newsline)-Attorney General Jerry Brown's office is investigating whether some California residents were improperly kicked off their health care plans, following a move by the state's Department of Managed Health Care to restore coverage to 26 patients whose plans it says were wrongly rescinded.

THe Department of Managed Health Care (DMHC) plans to look into all rescission cases over the past four years in California, potentially overturning thousands of denied claims and canceled policies.

The attorney general's office also is looking into the matter under the broad net of unfair business practices, a spokesman said.

"Insurers shouldn't cancel people's insurance unless the individual outright lied," Gareth Lacy, Brown's spokesman, told Legal Newsline. "If they just sign people up for insurance, then cancel it when the person gets sick, that's questionable and we want to look into it."

Lacy said the two state departments, Justice and Managed Health Care, are working in tandem.

He said DOJ staff plan to meet with major health care providers and consumer groups as part of the investigation. Lacy added that he couldn't identify specific businesses that are subject to the investigation at this point.

DMHC investigated the rescission practices of California's five largest health care plans. It did not identify the 26 people whose plans it ordered restored.

"During our investigations, it was obvious in some of the individual case files examined that no reasonable argument could be made that the applicant deliberately misrepresented their health history information or that underwriting was done properly," the department's director, Cindy Ehnes, said in a statement.

The department fined two of those carriers during the investigation--though it did not specify which--one for unfair rescission practices, and the other for paying bonuses to employees for rescinding coverage, the statement said.

Lacy, from the Justice Department, said meetings with providers will take place soon.

"If we can get a resolution, that's good," Lacy said. "If not, we'll take a legal course of action."

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