Anthem Blue Cross to pay Calif. hospitals $11.8M

Hospitals and physicians joined forces in October 2006 to sue the state's largest insurer and its parent, Indianapolis-based WellPoint Inc., because patients said Anthem Blue Cross illegally dropped them after they received treatment.

"We have reached an understanding with California hospitals on behalf of individuals under which the hospitals will no longer pursue reimbursement from individuals whose policies were previously rescinded," Leslie Margolin, president of Anthem Blue Cross, said in a statement.

Monday's settlement only applies to hospitals represented by the California Hospital Association.

The more than 30,000 physicians represented by co-plaintiff California Medical Association will "still move forward with the case," association spokesman Ned Wigglesworth said Tuesday.

In the lawsuit, hospitals and physicians said they were often left to foot the bill for patients who had insurance when they sought health care. But after they received care, plaintiffs said Anthem Blue Cross rescinded insurance policies, leaving patients and providers in the lurch.

"Hospitals took care of Blue Cross' patients, got authorizations, and then didn't get paid by Blue Cross for the care they provided," said Ditmar Grellmann, senior vice president of managed care and professional services for the California Hospital Association.

The settlement resolves all rescissions dating back to 2001, Grellmann said.

Hospitals tried, often unsuccessfully, to recoup their losses from patients. Though the settlement doesn't pay all of the costs incurred, the hospitals have agreed to stop trying to collect the remainder from patients.

"This settlement does get some relief for the patients who will not be asked to pay for any more," said Glenn Solomon, a lawyer for Hooper, Lunday & Bookman who represents the hospitals.