State regulators have been trumpeting their crackdown on the practice of canceling policyholders' medical coverage after they get sick, otherwise known as rescission. But as reported by the Daily Journal's Evan George, critics are calling the settlements "sweetheart deals" that actually shield health plans from further liability. Private attorneys suing Anthem Blue Cross hope to block the settlements from taking effect. "These are raw deals for the consumer," said Jeff Isaacs, chief of City Attorney Rocky Delgadillo's criminal and special litigation section. "There are so many problems with these agreements in terms of their substance, legally and possibly even ethically." No link to the Daily Journal, but here are some snippets.

Under the settlements, 3,454 patients who had their coverage canceled since 2004 will be offered new insurance. That allows even seriously ill people who would otherwise be denied insurance to regain some coverage fast, said [Cindy Ehnes, director of the Department of Managed Health Care], a Gov. Arnold Schwarzenegger appointee and an attorney. But Ehnes conceded that the deals do not prevent health plans from offering these sick policyholders fewer benefits and higher premiums. She said the settlement could seek only "comparable coverage," not the same policy that was cancelled, a distinction that has not been made clear in news reports.

Here’s another problem: In return for paying fines and following the rules, the insurers are cleared of "all pending enforcement matters and all issues, accusations, and claims that the department has or may have against the plan(s)."

Isaacs said that vague language gave health plans unprecedented immunity because it includes any and all complaints, as well as future accusations consumers might bring to state regulators. Ehnes acknowledged that the wording was overly broad. She called it "legal parsing" and "unfortunate." But, she insisted, it did not weaken the department's overall position. "I would never, ever, enter into an agreement that would preclude us from taking future enforcement actions that are necessary to protect [consumers]," Ehnes said.