ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Health Insurance Rescission and How To Fight It

Updated on September 9, 2009

Health insurance rescission is the practice of rescinding (canceling) health insurance coverage of clients due to misrepresentation or fraud.

However, what sounds like a perfectly reasonable practice designed to protect insurance companies against clients who knowingly misrepresent their state of health has become subject to rampant abuse by those same companies.

Often what health insurance rescission means in practice is that insurance companies cancel the insurance coverage of clients in good standing when they become seriously ill, at the very moment they need coverage the most, on the flimsiest of grounds.

An investigation by the House Subcommittee on Oversight and Investigation recently found that the three of the largest insurance providers in America, WellPoint, Assurant, and Golden Rule, had rescinded 20,000 policies in the years from 2003-2007 in California alone, saving themselves an estimated $300 million dollars in what the industry terms "medical-loss," the industry term for the cost of actually paying for clients' health care.

Not only that, the investigation discovered that WellPoint had actually rewarded employees for canceling the coverage of sick patients. One employee of Blue Cross Blue Shield, a subsidiary of WellPoint, had single-handedly saved the company $10 million in policy rescissions.

Photo by ragesoss
Photo by ragesoss

These policies were often rescinded on the flimsiest of excuses.

The House Subcommittee on Oversight and Investigation found that several companies had lists of more than 1000 conditions that would cause a client's policy to be flagged for possible rescission, even if the client had paid all premiums fully and on time. Once flagged, insurance companies would search through the policy holder's application looking for errors and omissions. One blogger has estimated that the probability of being rescinded for patients who file claims for serious, expensive conditions such as cancer may be as high as 50%. Some cases are rescinded after pre-certification for a life saving procedure or treatment has already been issued.

A California woman lost hers because her doctor had flagged her file on suspicion that she had polycystic ovarian syndrome without mentioning his suspicions to her.

A Texas woman battling breast cancer lost her coverage because she failed to note a treatment for warts on her application. (It was later reinstated after she took the company to court.)

My own aunt was a victim of rescission in the early 90's, when she was diagnosed with leukemia. Her insurance company dropped her coverage and she was forced to pay for her treatment out of pocket. Fortunately, she and her husband were well-to-do and able to afford to do so. I have little doubt that she would be dead today if they had been poorer. She was only in her early 30's when she was diagnosed.

Even after being confronted with stories such as these at a congressional hearing, three insurance company executives flatly refused a request by Michigan Congressman Bart Stupak's to commit to using rescission only in cases where they could prove intentional fraud.

What To Do If Your Coverage Has Been Rescinded

Rescission leaves a bad taste in juries' mouths, so insurance companies are often willing to settle for large sums of money when a client with a suspicious-looking rescission decides to fight back. Another advantage that former policy holders have in some states is that the insurer may be required to prove intent to deceive, which can be difficult.

If your coverage has been rescinded, the first thing you should do is contact the claims department of your insurance company and ask for a complete explanation of the company's reasons for rescinding your policy in writing.

If you believe your policy was rescinded unfairly, contact your state's Department of Insurance. The DOI employees will be able to offer you advice and in some cases may even file a complaint on your behalf. In other cases, it may be necessary to hire a lawyer.

A lawyer can help you file suit against the insurance company to force it to reinstate your policy or pay damages. In these suits, the primary burden of proof is generally on the insurance company. In particular, they must prove that you committed misrepresentation (possibly intentionally, depending on the state) and that the misrepresentation was material.


    0 of 8192 characters used
    Post Comment
    • Illinois Health profile image

      Illinois Health 

      10 years ago from Illinois

      Great information. I had someone close to me have a policy rescission and I never want to have it happen again.

    • Mitch King profile image

      Mitch King 

      11 years ago from Wilsoville, OR, USA

      It is obvious that changes need to be made in our health care system. That is why this is such a hotly debated topic in government right now. We all know it needs done, but finding a good way to do it is another matter.


    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

    Show Details
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)
    ClickscoThis is a data management platform studying reader behavior (Privacy Policy)