Poizner Accuses Anthem of More Than 700 Violations of State Law

On Monday, Insurance Commissioner Steve Poizner (R) announced that a year-long investigation by his office found that Anthem Blue Cross of California committed 732 violations of state law between 2006 and 2009, the San Francisco Chronicle reports (Colliver, San Francisco Chronicle, 2/23).

Anthem's alleged violations include:

  • 277 cases of failing to pay claims in 30 days;
  • 143 cases of failing to provide timely responses to inquiries from the California Department of Insurance;
  • 66 cases of misrepresenting information or policy provisions to consumers;
  • 25 cases of failing to pay interest on unreimbursed claims;
  • 22 cases of offering unfairly low settlement offers;
  • 21 cases of failing to pay or argue a claim within 30 days; and
  • 178 cases of other assorted delays and claims mishandling (Richman, San Jose Mercury News, 2/22).

Poizner said he is filing official accusations of policy violations with the Office of Administrative Hearing (Hindery, AP/Contra Costa Times, 2/22). An administrative judge then will determine whether each allegation is legitimate (San Francisco Chronicle, 2/23)

Each violation carries a maximum penalty of $10,000, meaning that Anthem could face up to $7 million in fines (Rauber, San Francisco Business Times, 2/22).

More Heat for Anthem

Anthem has come under fire recently from state and federal lawmakers over proposed rate hikes of up to 39% for more than 700,000 individual policy holders in California.

The company recently agreed to delay the rate increase from March 1 until May 1, allowing the state to conduct an analysis and review of the proposed hikes (Glover, Sacramento Bee, 2/23).

This week, state and federal lawmakers are holding hearings to examine the rate increases (Helfand, Los Angeles Times, 2/23).

Poizner Commissions Audit

Current California law allows the state insurance commissioner to ensure that health plans spend at least 70% of premiums on medical care.

Poizner has commissioned an audit to determine whether Anthem has complied with that rule (San Francisco Chronicle, 2/23). The audit is expected to be completed in mid-April (San Jose Mercury News, 2/22).

Anthem Profitable for WellPoint, Analysis Finds

In related news, a Los Angeles Times analysis of Anthem's regulatory filings found that that Anthem sent $525 million in earnings to its parent company WellPoint in 2009, despite its claims that the cost of medical care exceeded premiums in that year.

The analysis noted that Anthem has contributed more than $4.2 billion to WellPoint's bottom line since the parent company acquired Anthem in 2004 (Girion, Los Angeles Times, 2/23).
Katie Britton
Testing - Katie
James Roache
While I certainly applaud Commsioner Poizner's actions taken against Anthem Blue Cross, I find it somewhat bitter-sweet when it comes to allowing a 30% gross profit margin by law. That is, "70% of premium dollars must pay for services". Consider the State's own 'health insurance company', Medi-Cal, who insures 20% of our state's population. Through its own agency, the Department of Health Care Services, the gross profit margin allowed for its own pharmacy providers is more often than not, less than 5%. In the case of Synagis, a life saving biotechnical injection for infants, our pharmacy is only allowed $0.19 (that's 19 cents)gross profit on the drug that costs us $1,802. I would like to publically request that either Mr. Poizner or the appropriate state officials look into this gross inequity in order to preserve pharmacy services for its most needy beneficiaries. Witness Walgreen's decision to stop accepting Medicaid in the State of Washington. Will California be next?

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