The Health Insurance Company in question is Health Net Inc. The entire Arbitration Award is reportedly over $9 Million. $8.4 Million of the award is an assessment for Punitive Damages. The Health Insurer insisted on resolving the dispute only by Arbitration. Here is a brief but totally accurate outline of the case.
The Health Insurance Company canceled a Policyholder while she was receiving expensive chemotherapy treatments. The evidence reflected that the expense of chemotherapy was the motivation for cancellation.
Documents generated by Health Net itself were made available to the Arbitrator. The documents showed that Health Net paid bonuses to employees who met "a cancellation quota and for the amount of money saved."
This practice did not sit well with the Arbitrator, a retired California State Court Judge, who wrote: "'It's difficult to imagine a policy more reprehensible than tying bonuses to encourage the rescission of health insurance that keeps the public well and alive.'" Quoted in "Health Net Ordered to Pay $9 Million After Canceling Cancer Patient's Policy/The Punitive Damage Award is the First of its Kind and has Prompted the Giant Medical Insurer to Scrap Practices That Have Recently Come Under Fire" by Lisa Girion (Los Angeles Times Online, Saturday, February 23, 2008).
The purpose of Punitive Damages assessments may be furthered by this award, for in the same newspaper article it is reported that other Health Insurers are about to change their own practices in this regard.
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