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Blue Cross Slapped With Fine for Illegal Policy Cancellations

Audio

Aired 4/19/09

State regulators say they hope a $1 million fine against Blue Cross for illegally canceling policies will set an example for other health insurers. Regulators imposed the fine after an investigation showed Blue Cross repeatedly violated state law. KPBS reporter Kenny Goldberg has more.

State regulators say Blue Cross systematically cancelled policies after members became sick or pregnant. Investigators found the company routinely terminated policies regardless of whether a person intentionally lied on their application. Jerry Flanagan is with the Foundation for Taxpayer and Consumer Rights. He calls the $1 million fine chump change.

Flanagan : Blue Cross is getting off easy with the fine, because a million dollars -- for a company that is making millions and millions of dollars by denying coverage -- still makes good business sense.

Blue Cross officials maintain the company has done nothing wrong.  State regulators disagree, and say they'll soon launch investigations into the practices of other insurers like Blue Shield.

Kenny Goldberg, KPBS News.

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