California Attorney General Investigating Seven Health Insurers for Denying Claims, Hiking Rates

California has launched an investigation into possible illegal premium increases and denial of claims by the state’s seven largest health insurance companies.

Yesterday, state Attorney General Jerry Brown issued subpoenas for detailed financial records and other information records to Aetna Health, Anthem Blue Cross, CIGNA, Health Net, Blue Shield of California, Kaiser Permanente and PacifiCare.

Earlier this month Anthem Blue Cross announced it was raising premiums in California by as much as 39 percent for its 800,000 customers, despite a $4.7 billion 2009 profit by its parent firm WellPoint. The insurer is now facing a congressional hearing and Obama administration scrutiny over its rate hikes.

In September, California Nurses Association/National Nurses Organizing Committee (CNA/NNOC) released a report that which states that since 2002 the state’s largest health insurers rejected more than one in five medical claims. Data from the last half of 2009 shows the rejection rate has jumped to more than one in four (26 percent), with PacificCare leading the way, rejecting 41.7 percent of claims, according to the CNA/NNOC report.

CNA/NNOC Co-President Geri Jenkins says the repeated rate hikes and increase claims denials reveal “an arrogant industry”

indifferent to the pain and suffering caused by routine care denials or economic catastrophe prompted by outrageous price gouging. The denials and pricing practices are both motivated by the prime directive that seems to surpass everything else for these companies-squeezing their patients and providers alike for profits and revenues regardless of who gets hurt along the way.

The attorney general’s investigation will include an examination of how much the plans are spending on health care versus non-health care costs such as marketing, administration and profits. The plans have been asked to provide detailed information on how they spend policy-holders’ premiums and how they review claims and decide whether and how much to pay the doctor or hospital for the service.