Re: SUPPORT - AB 1324 (De La Torre) Health Insurance Postclaims Underwriting

24 March 2007

The Honorable Mervyn Dymally
Assembly Health Committee Chair
State Assembly
Sacramento, CA 95814

Re: SUPPORT - AB 1324 (De La Torre) Health Insurance Postclaims Underwriting

Dear Assemblymember Dymally,

CALPIRG strongly supports AB 1324 (as introduced). AB 1324 would give health insurance policyholders stronger guarantees that they won’t have their policies cancelled simply for using them.

Recent media reports have highlighted the need for this basic consumer protection legislation. The Los Angeles Times reports that in a Department of Managed Health Care survey of 90 randomly selected policy cancellations from Blue Cross, all 90 contained violations. According to The Times, the investigation also “found that Blue Cross used computer programs and a dedicated department to systematically cancel the policies of pregnant women and the chronically ill regardless of whether they intentionally lied on their applications.”

While Blue Cross has rightly been fined based on the results of this investigation, consumers still need better protections against the strong commercial incentives insurers have to cancel policies.

Rather than leaving consumers to fend for themselves after their coverage has been rescinded, AB 1324 would require insurers to prove that an applicant willfully misrepresented information before canceling a policy. Further, the bill would entitle consumers to the benefits of their coverage unless a false statement on a policy was both made with the intent to deceive the insurer and it materially impacted the insurer’s decision to write the policy.

CALPIRG is pleased to support Assemblymember De La Torre’s effort to stand up for consumers and urges all legislators to join him in this fight by supporting AB 1324.

Sincerely,


Steve Blackledge
Legislative Director