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Read Making a Killing

home / healthcare / in the media

Ventura County Star
Jul 06, 2005

by Allison Bruce

Blue Cross billing errors result in fine of $150,000;

Nearly 45,000 charged multiple times
The California Department of Managed Health Care has fined Blue Cross of California $150,000 for errors that resulted in nearly 45,000 customers being billed multiple times for their monthly insurance premiums.

The company said the problems stemmed from software and human errors that caused some customers with automatic bank draft or credit card charge plans to be charged several times over for their monthly premiums in April.

The Foundation for Taxpayer and Consumer Rights reported that one customer in Stockton had $1,110, five times her monthly premium, taken out of her bank account because of the error.

The overcharges totaled about $12 million in premiums, according to the Department of Managed Health Care.

"This is the second time in recent weeks that we've fined a health plan for failing to prevent and detect computer errors," department director Cindy Ehnes said in a written statement.

The department fined the Kaiser Foundation Health Plan $200,000 on June 20 for exposing confidential patient information on the Web.

The Blue Cross problem arose when a new billing system stopped working and did not restart properly. The department fined Blue Cross for not taking the proper steps to prevent and detect overcharges and failing to inform regulators and the public of the error in a timely manner.

Department officials said they did not find out about the problem until it was reported by the media almost a week after the incident.

Blue Cross said the issue was resolved quickly and all affected policyholders have been reimbursed or credited fully for the billing error. Company officials said they have taken measures to avoid a similar software problem in the future. "Our relationship with our policyholders is the most important asset we have, and we sincerely regret any inconvenience this issue may have caused them. While not entirely within our control, Blue Cross has acknowledged ultimate responsibility for this error and the resulting inconvenience for our members, regardless of the source of the problem," said David Helwig, president and CEO of Blue Cross of California, in a written statement.

Blue Cross of California is one of the state's largest health insurers and serves more than 7.6 million medical members with its California affiliate, BC Life & Health Insurance.

The company also is required to pay any interest or related costs from the error for policy holders, such as time off from work or insufficient funds bank fees.

Jerry Flanagan with the Foundation for Taxpayer and Consumer Rights said his office had received hundreds of calls about the charges. Flanagan said he was disappointed with the fine imposed.

"Requiring the company to pay back overdraws and pay fees is nothing. It won't deter Blue Cross from making the same mistake again," he said. "The key with the fines, they are supposed to jolt a company into having some concern for its patients. For a company as profitable as Blue Cross,
$150,000 is pocket change."
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Contact the author at: abruce@VenturaCountyStar.com

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