California regulators admitted Thursday that for more than a year they didn't even try to enforce a million-dollar fine against health insurer Anthem Blue Cross because they knew they would be outgunned in court.
In early 2007, the Department of Managed Health Care pledged to fine the state's largest insurer for "routinely rescinding health insurance policies in violation of state law."
But it never did.
The department's director, Cindy Ehnes, said Thursday that, when it comes to rescissions, the agency has succeeded in forcing smaller insurers to reinstate illegally canceled policies and pay fines, but Blue Cross is too powerful to take on.
"In each and every one of those rescissions, (Blue Cross has) the right to contest each, and that could tie us up in court forever," Ehnes said of about 1,770 Blue Cross rescissions since Jan. 1, 2004.
"They have the largest number of rescissions, so as a practical matter for the department it does present some practical challenges that are different from a Health Net (of California) or a PacifiCare," referring to providers who, along with Kaiser Permanente, have made settlements with the state to reinstate health care coverage.
That means that although Anthem Blue Cross has the highest number of alleged illegal rescissions, it may face the least regulatory consequence simply because of its sheer size and its skill in legal intimidation.
Anthem Blue Cross, a unit of WellPoint Inc., acknowledged Thursday that it had seen the March 22, 2007, announcement of the $1 million fine, but noted that "Anthem Blue Cross has not been fined by the DMHC."
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