Large California Health Insurer, Health Net Inc. is involved in a $6 million lawsuit with accusations of dropping health policies in order to save money, set company goals, and pay bonuses to employees. Patsy Bates, a California hairdresser, is seeking $6 million in damages after her coverage was rescinded by Health Net during her chemotherapy for breast cancer. These accusations bring forward the staggering fact that between 2000 and 2006, Health Net Inc. avoided paying $35.5 million in medical expenses by canceling around 1,600 policies.

Insurers claim that cancellations are necessary to avoid fraud and keep premiums affordable, while individual coverage is issued only to the healthiest applicants who disclose preexisting conditions. Presently, Health Net Inc. has not made public their internal procedures for reviewing and canceling coverage.

Insurance companies are legally allowed to cancel your policy, but only under strict terms. Some of the reasons for cancelled policies include not paying premiums, growing out of your policy by reaching an ineligible age, and failure to properly answer questions at the outset of the insurance policy. As of August 29 2007, updated rules against health plan cancellations have been delayed.

Along with Health Net Inc., other insurance companies who have gained public notice for canceling policies include Kaiser, Blue Cross, Blue Shield and PacifiCare.

The attorneys at Bachus & Schanker have considerable experience in insurance bad faith claims against large insurance companies. We believe in helping consumers to the best of our abilities and fighting for what they are entitled to.

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