Governor’s Signature Brings Protection

From Health Insurance Cancellations

HARTFORD — Attorney General Richard Blumenthal, State Healthcare Advocate Kevin Lembo, and Insurance Commissioner Thomas Sullivan announced June 13 that Governor M. Jodi Rell signed into law critical consumer protection legislation jointly proposed by their offices and passed unanimously by both houses of the General Assembly.

Public Act 07-113, An Act Concerning Postclaims Underwriting, is the product of three years of work at the legislature to protect consumers from unfair health insurance rescissions, cancellations, or limitations of their individual policies.

 “Our state has zero tolerance for insurers that abusively and arbitrarily rescind insurance policies and deny claims — and now we have a fierce legal arsenal to fight these unconscionable practices,” Mr Blumenthal said following news of the signing. “Insurers cannot abrogate their profound responsibility and abandon consumers suffering from catastrophic illness to save money. We will hold insurers to their moral and legal obligations to consumers, and now we have stronger legal tools to do so.”

“I am pleased with the passage of this bill and the protections it provides consumers of the state,” said Commissioner Sullivan. “The department will carry out the regulatory authority provided in this law which we advocated for during the past three legislative sessions. The protections in this law will rein in the arbitrary process of postclaims underwriting of the insurers who conduct business in our state.”

“Based on the reprehensible conduct of some insurance companies, and the catastrophic impact on consumers, we decided that passage of this bill was going to be one of our highest priorities,” added Mr Lembo. “Health insurance is meaningless unless it pays when you get sick.”

The Office of the Attorney General (OAG), Office of the Healthcare Advocate (OHA), and the Connecticut Insurance Department (CID) together assist thousands of people a year struggling with the health insurance system. In the last few years, each office received a steadily increasing number of calls from people suffering catastrophic illness and needing assistance because their insurance policies were rescinded or their claims were denied.

Some individual insurers — after issuing policies — review the policyholder’s previous medical records in detail only after a medical condition arises and a claim is submitted. PA 07-113 now prohibits this practice, referred to as postclaims underwriting. Prior to PA 07-113, insurers could rescind a policy for more arbitrary reasons.

Under PA 07-113 insurers will need the approval of the Connecticut Insurance Department before they can rescind a policy.

“We are pleased that PA 07-113 places the burden on the insurer to prove to us that an insured knowingly omitted or misstated material information. Without this process, the consumer is left with no protections,” said Commissioner Sullivan.

Mr Blumenthal added that the new bill makes a violation of PA 07-113 by an insurer a per se violation of the Connecticut Unfair Insurance Practices Act, allowing broader enforcement of the law.

PA 07-113 also imposes important new requirements on short-term nonrenewable individual policies that had been exempt from the statutes and represent a significant number of the problems that were highlighted this year in the news media.

“The short-term market has taken off in the last few years and has been a breeding ground for conduct such as rescissions and preexisting condition limitations,” Mr Lembo said, “This legislation puts these policies on the same regulatory field with other individual policies — where they should be.”