Some patients with serious illnesses have discovered their insurance companies are dropping them and charging them for treatment after the fact. Sandra Hughes reports on this alarming trend.
>> When Karen Nee assumed spelling decided to get back in shape part of her plan was making some long overdue doctors appointments. Since she had insurance she didn't worry about costs.
>> You know I went to all these different doctors over a period of a couple of months and then got a notice in the mail that my insurance was retroactively canceled.
Background talking
>> It was quite a shock the insurance company had written a letter informing her that not only did she not have any insurance now but it wouldn't pay for any of the previous procedures either. So she was left with a whopping $30,000 worth of medical bills.
>> It's great. I mean you're sitting going this can't be happening. You know I've done everything I'm supposed to. I've paid my premiums every month.
>> Karen Nee is not alone. The Los Angeles City Attorney is suing Anthem Blue Cross for allegedly illegally cancelling 6,000 insurance policies. In a written statement Anthem Blue Cross responded saying invalidating a policy back to its effective date is not a frequent practice in fact it affects roughly 1/2 of 1% of new applicants each year. Rocky Gelgadelo assumed spelling says some insurance companies even review policies after claims have been made with the intention of cancellation.
>> You make a claim. You're insurance policy will be sent to a secret email where somebody there will be given a bonus if they figure out a way to cancel your policy.
>> The Los Angeles City Attorney also went after Blue Shield for allegedly canceling 850 policies it shouldn't have cancelled and Health Net settled a law suit with 800 policy holders over cancelations though the company admitted no wrong doing.
>> In total the insurers paid more than $40 million in various cases related to retroactive cancellations. In one of those cases the insurer was forced to pay $9 million to Patsy Bates assumed spelling, a breast cancer patient who had her policy cancelled in the middle of treatment.
>> I had cancer. My life was on the line and these guys did not care, did not care at all.
>> Our health care system is broken in America. This is a symptom of that. In fact I believe it's at an emergency level. I mean it's a our health care system has flat lined.
>> In Karen Nee's case the company claims she had a chronic back condition, something she didn't disclose on her application. But she says she doesn't have a chronic condition just a onetime injury.
>> You know it's just one of those things you do just stand up the wrong way and you go oh that didn't feel good and you know just, just pulled a muscle. It was a little back spasm; couple days later I was all better. No problem.
>> But her one time problem highlights what some call a chronic flaw background sounds in the health care system. Sandra Hughes, CBS News, Newport Beach California.
==== Transcribed by Automatic Sync Technologies ====
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