Legislation focuses on bonuses for canceling or limiting a patient's coverage

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Schwarzenegger signs ban on health insurers' rescission reward practice

LA Times

Gov. Arnold Schwarzenegger signed into law Tuesday a ban against health insurance companies rewarding employees with bonuses for canceling or limiting a patient's coverage.

The law is one piece of legislative, regulatory and law enforcement efforts to curtail the practice that the industry has defended as a little-used guard against fraud that helps control costs.

Assemblyman Ted Lieu (D-Torrance) introduced AB 1150 after The Times disclosed that Woodland Hills insurer Health Net paid bonuses to an employee in charge of canceling coverage based in some years partly on how many policies she canceled.

In other years, the bonus was based in part on the savings associated with such cancellations.