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74–091 2012

TERMINATIONS OF HEALTH POLICIES BY INSURANCE COMPANIES: STATE PERSPECTIVES AND 

LEGISLATIVE SOLUTIONS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON OVERSIGHT AND 

INVESTIGATIONS 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

JULY 27, 2009 

Serial No. 111–58 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 


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COMMITTEE ON ENERGY AND COMMERCE 

HENRY A. WAXMAN, California, Chairman 

JOHN D. DINGELL, Michigan 

Chairman Emeritus 

EDWARD J. MARKEY, Massachusetts 

RICK BOUCHER, Virginia 

FRANK PALLONE, JR., New Jersey 

BART GORDON, Tennessee 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

BART STUPAK, Michigan 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

Vice Chairman 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANE HARMAN, California 

TOM ALLEN, Maine 

JANICE D. SCHAKOWSKY, Illinois 

CHARLES A. GONZALEZ, Texas 

JAY INSLEE, Washington 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

ANTHONY D. WEINER, New York 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

CHARLIE MELANCON, Louisiana 

JOHN BARROW, Georgia 

BARON P. HILL, Indiana 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

CHRISTOPHER S. MURPHY, Connecticut 

ZACHARY T. SPACE, Ohio 

JERRY MCNERNEY, California 

BETTY SUTTON, Ohio 

BRUCE BRALEY, Iowa 

PETER WELCH, Vermont 

JOE BARTON, Texas 

Ranking Member 

RALPH M. HALL, Texas 

FRED UPTON, Michigan 

CLIFF STEARNS, Florida 

NATHAN DEAL, Georgia 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOHN B. SHADEGG, Arizona 

ROY BLUNT, Missouri 

STEVE BUYER, Indiana 

GEORGE RADANOVICH, California 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO MACK, California 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

SUE WILKINS MYRICK, North Carolina 

JOHN SULLIVAN, Oklahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 

(II)


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(III) 

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

BART STUPAK, Michigan, Chairman 

BRUCE L. BRALEY, Iowa 

Vice Chairman 

EDWARD J. MARKEY, Massachusetts 

DIANA DEGETTE, Colorado 

MIKE DOYLE, Pennsylvania 

JAN SCHAKOWSKY, Illinois 

MIKE ROSS, Arkansas 

DONNA M. CHRISTENSEN, Virgin Islands 

PETER WELCH, Vermont 

GENE GREEN, Texas 

BETTY SUTTON, Ohio 

JOHN D. DINGELL, Michigan (ex officio) 

GREG WALDEN, Oregon 

Ranking Member 

ED WHITFIELD, Kentucky 

MIKE FERGUSON, New Jersey 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 


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C O N T E N T S 

Page 

Hon. Bart Stupak, a Representative in Congress from the State of Michigan, 

opening statement ................................................................................................ 1 

Hon. Baron P. Hill, a Representative in Congress from the State of Indiana, 

opening statement ................................................................................................ 4 

Hon. John A. Yarmuth, a Representative in Congress from the Commonwealth of Kentucky, opening statement ............................................................. 5 

WITNESSES

Peggy Raddatz, Relative of Policyholder, La Grange, Illinois .............................. 7 

Prepared statement .......................................................................................... 9 

Patricia Reilling, Policyholder, Louisville, Kentucky ........................................... 11 

Prepared statement .......................................................................................... 16 

Robin Beaton, Policyholder, Waxahachie, Texas .................................................. 20 

Prepared statement .......................................................................................... 23 

Richard Collins, Chief Executive Officer, Golden Rule Insurance Company, 

Unitedhealth Group ............................................................................................. 39 

Prepared statement .......................................................................................... 41 

Brian A. Sassi, President And Chief Executive Officer, Consumer Business, 

Wellpoint, Inc. ...................................................................................................... 44 

Prepared statement .......................................................................................... 47 

Carol Cutter, Commissioner, Indiana Department of Insurance ........................ 53 

Prepared statement .......................................................................................... 55 

Eleanor Kinney, Co-Director, William S. and Christine S. Hall Center for 

Law and Health, Indiana University School of Law ......................................... 58 

Prepared statement .......................................................................................... 60 

SUBMITTED MATERIAL

Document binder ...................................................................................................... 85 


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TERMINATIONS OF HEALTH POLICIES BY INSURANCE COMPANIES: STATE PERSPECTIVES AND LEGISLATIVE SOLUTIONS 

MONDAY, JULY 27, 2009 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, 

COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The subcommittee met, pursuant to call, at 9:00 a.m., in the Hoosier Room, University Center North Building at Indiana University 

Southeast Campus, 4201 Grant Line Road, New Albany, Indiana, 

the Hon. Bart Stupak [chairman of the subcommittee] presiding. 

Member present: Representative Stupak. 

Also present: Representatives Hill and Yarmuth. 

Staff present: Michael Gordon, Chief Investigative Counsel; Ali 

Golden, Investigator; Paul Jung, Public Health Investigator; and 

Sean Hayes, Minority Oversight Counsel. 

OPENING STATEMENT OF HON. BART STUPAK, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN 

Mr. STUPAK. This meeting will come to order. 

Today we have a hearing entitled ‘‘Terminations of Health Policies by Insurance Companies: State Perspectives and Legislative 

Solutions.’’ 

Before we begin the hearing, I would like to thank Congressman 

Hill, a member of the full Energy and Commerce Committee, for 

housing us today here in Indiana. In addition, I want to welcome 

Congressman Yarmuth across the river in Kentucky. 

It is our general practice at subcommittee hearings that nonmembers of the subcommittee do not make opening statements or 

question witnesses. I believe it is appropriate that we deviate from 

this practice today. I ask unanimous consent that Congressmen 

Hill and Yarmuth be permitted to make opening statement, if they 

choose, and to question witnesses during today’s hearing. Hearing 

no objection, that will be the order. 

The chair will now be recognized for a five-minute opening statement. Other members of the subcommittee will be recognized for 

a three-minute opening statement. I will begin. 

This hearing of the Subcommittee on Oversight and Investigations has commenced here in Indiana at the request of our friend 

Congressman Baron Hill. We are pleased to be here for this hearing on abuses in the health insurance industry. I would like to 


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thank Congressman Hill and his staff for requesting this hearing 

and housing us here today. 

Congressman Hill has been a leader on health care, and I can 

tell you from firsthand experience that he has been working diligently in Congress and on our Energy and Commerce Committee 

to look out for the people of Indiana. Thank you for having us here 

today, Baron. 

I would also like to welcome our friend Congressman John Yarmuth, who is from across the river in Kentucky. Congressman Yarmuth has been a key player in many issues in his position on the 

Ways and Means Committee, and we are delighted that he is here 

with us today. 

Let me also thank Indiana University for hosting us today. It is 

critical that Congress understand the concerns of local communities 

as we develop national health care policies, and we do that precisely through field hearings like the one we have here today, 

where we can go out and hear directly from people on matters of 

urgent concern. 

Today’s hearing is about a horrendous practice that some insurance companies engage in called ‘‘rescission.’’ Here is how it works. 

When you apply for health insurance, you fill out an application. 

The forms ask about all of your preexisting conditions and health 

history, and sometimes they are extremely complicated. These insurance companies typically require access to all of your health 

records as well. 

The problem is that these insurance companies do not review 

these applications very carefully when you submit them. They wait. 

They let you pay your premiums, they let you go along and keep 

paying for years, creating a false sense of security that you will be 

covered if something terrible ever happens. 

When something does happen, however, when you develop a 

deadly disease, when you need expensive medical care, or when you 

have to go to a hospital for critical treatment, these insurance companies don’t honor their agreements. Instead, they mobilize a team 

of investigators to go back through your original application. 

They scour years and years of your medical records to find some 

technicality, some error or omission, some box that wasn’t checked 

when it should have been. And when they find it, they cancel your 

health insurance. They refuse to pay. And there you are in the hospital left waiting for potentially life-saving medical care that you 

may never receive. 

What is outrageous about this practice is that these insurance 

companies cancel policies even for people who didn’t do anything 

wrong. The omissions on their applications relate to conditions that 

their doctors may have never told them about. They relate to conditions that insurance companies’ own agents told them not to write 

down. And many times they relate to conditions that are completely unrelated to the illness or disease they are now seeking 

treatment for. 

Our subcommittee has been conducting a year-long investigation 

into this abusive practice. We have reviewed more than 116,000 

pages. We have reviewed more than 116,000 pages of documents 

from three of the largest health insurance companies—Assurant, 

United Health Group, and WellPoint. And we learned that these 


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three companies retroactively terminated nearly 20,000 policies 

over the past five years based on omissions on applications that 

were identified only after people became ill. These rescissions resulted in savings to the companies of more than $300 million. 

Last month we held a hearing in Washington, D.C. with these 

three companies, and I asked their CEOs to stop canceling health 

insurance for innocent policyholders. Amazingly, they refused. Let 

me show you a clip from that hearing. It will take a minute to put 

up there. 

[Video presentation begins.] 

Mr. STUPAK. Let me ask each of our CEOs this question, starting 

with you, Mr. Hamm. Would you commit today that your company 

will never rescind another policy unless there was intentional 

fraudulent misrepresentation in the application? 

Mr. HAMM. I would not commit to that. 

Mr. STUPAK. How about you, Mr. Collins? Would you commit not 

to rescind any policy unless there is intentional fraudulent misrepresentation? 

Mr. COLLINS. No, sir. We follow the State laws and regulations, 

and we would not stipulate to that. That is not consistent with 

each State’s policies. 

Mr. STUPAK. How about you, Mr. Sassi? Would you commit that 

your company will never rescind another policy unless there was 

intentional fraudulent misrepresentation? 

Mr. SASSI. No, I can’t commit to that. 

Mr. STUPAK. Each of these three companies simply refused to 

stop canceling innocent policyholders’ contracts. Now, it is one 

thing to cancel coverage for someone who commits insurance fraud, 

but it is another thing to cancel coverage for people in the middle 

of a health care crisis based on innocent mistakes or technicalities. 

It is simply not fair for insurance companies to collect record profits and award their executives billions of dollars while they are denying innocent people the health insurance they pay for. 

Facing with this damning testimony, we concluded that the only 

way to stop these insurance companies was to change the law. So 

our Energy and Commerce Committee has drafted health reform 

legislation that will prohibit this practice of rescission once and for 

all. 

Our bill will protect consumers in a couple of ways. First, we will 

prohibit insurance companies from rescinding coverage unless 

there is clear and convincing evidence of fraud during the application process. Second, we guarantee that consumers have an independent and third-party review of any rescission. 

We have asked the insurance companies back today to see if they 

have had a change of heart and to find out what they think of our 

legislation. We have also invited Indiana’s Insurance Commissioner, Carol Cutter, to hear if the State of Indiana supports ending this terrible practice, as well as Professor Eleanor Kinney, the 

co-director of Indiana Law School’s Center for Law and Health. 

I also want to extend a personal thanks to both Peggy Raddatz 

and Robin Beaton, who traveled here today from Illinois and Texas 

to tell us their stories about how these insurance companies improperly rescinded their health insurance. I also want to thank PaVerDate Mar 15 2010 05:15 Aug 04, 2012 Jkt 074091 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 E:\HR\OC\A091.XXX A091

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tricia Reilling from Louisville, Kentucky for testifying today about 

how her policy was recently terminated by her insurance company. 

Let me point out that Ms. Beaton’s case highlights that this is 

not a partisan issue. This is not a Democratic or Republican issue. 

When Ms. Beaton’s insurance company canceled her health insurance, she called her local congressman, Joe Barton, who happens 

to be the ranking Republican member of our committee. To his immense credit, Congressman Barton intervened on Ms. Beaton’s behalf, and made sure the insurance committee reinstated her coverage. 

Ms. Beaton, I know you regard Mr. Barton as a hero for coming 

to your rescue. I am not sure if you heard what Congressman Barton said at our hearing in Washington about your case, so let me 

show you, and here is what he said. 

[Video presentation begins.] 

Mr. BARTON. I think I speak for every member of the committee 

on both sides of the aisle that if in fact there is a practice of going 

in after the fact and canceling policies on technicalities, we have 

got to do whatever is possible to prevent that. If a citizen acts in 

good faith, we expect the insurance companies who take their 

money to act in good faith also. 

Mr. STUPAK. I couldn’t have said it better myself. 

That is the end of my opening statement. Let me next turn to 

Congressman Baron Hill. Thank you again for hosting us, and you 

will be recognized for an opening statement, please. 

OPENING STATEMENT OF HON. BARON P. HILL, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF INDIANA 

Mr. HILL. Thank you, Bart. I want to begin by thanking Congressman Stupak for taking the time to come to the place where 

God himself was born in Southern Indiana. It is good to have you 

here in Hoosier State, and we are delighted that you are carrying 

on these hearings. Hopefully, you will be able to get some results, 

and people all across our great country will get relief from some of 

the questionable practices that I have been hearing about. 

I also would like you to know that Congressman Stupak is from 

Michigan, and I am going to be spending a lot of time in your great 

State, Congressman Stupak, because my youngest daughter this 

Wednesday travels to Ann Arbor to attend medical school at the 

University of Michigan. So I am looking forward to that as well. 

I have heard Congressman Stupak talk about this issue of postclaims underwriting or health insurance rescission, what transpired at the hearing held on this issue in Washington, D.C. I am 

very interested to hear what our witnesses have to say today in 

light of that hearing, and some of the things that they have said 

that they would not do as a company in response to Congressman 

Stupak’s questions about whether or not they would change their 

ways of looking at the claims. 

And I would also like to thank all of the witnesses for taking the 

time to participate in this hearing. This hearing could not be more 

timely. I hope it sheds light on some of the serious ills of our current health care system. 

Health care reform is certainly the topic of conversation right 

now. Today, I am going to be going back to meet with the comVerDate Mar 15 2010 05:15 Aug 04, 2012 Jkt 074091 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 E:\HR\OC\A091.XXX A091

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mittee chairman and the White House and other members of the 

Energy and Commerce Committee who are dealing with this most 

important issue, so that we can have health care for all Americans. 

So I am glad we are holding such an important hearing right 

here in New Albany. This issue of health insurance rescission is, 

quite honestly, shocking. I can’t imagine what I would do if this 

happened to someone in my family, and I think that is how we 

need to approach health care reform. 

Put yourself in other people’s shoes. This issue is particularly 

distressing, because these folks aren’t trying to trick the system. 

They are trying to do the right thing by being covered. And then, 

to have the rug pulled out from underneath them is not acceptable. 

This is also a completely bipartisan issue, as Congressman Stupak has already spoken about. The most vocal critic of this practice 

is the Republican ranking member of the Energy and Commerce 

Committee, Congressman Joe Barton. 

And I want to repeat what has already been said. In fact, Congressman Barton said this today, this morning, and also said it 

during the hearing, or not Congressman Barton but Congressman 

Stupak was quoting Congressman Barton. ‘‘I think I speak for 

every member of the committee on both sides of the aisle that if 

in fact there is a practice of going in after the fact and canceling 

policies on technicalities, we have got to do whatever is possible to 

prevent that.’’ 

So I thank everybody for coming today, and I look forward to 

hearing more testimony from our witnesses. Hopefully, we will be 

able to get some resolution to this very serious problem. 

Thank you. 

Mr. STUPAK. Thank you. 

Mr. Yarmuth, your opening statement, please. And it is a pleasure to have you here as a member of the Ways and Means Committee. And now you are an honorary member of the Energy and 

Commerce Committee. 

OPENING STATEMENT OF HON. JOHN A. YARMUTH, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH 

OF KENTUCKY 

Mr. YARMUTH. Thank you very much, Mr. Chairman, and thank 

you for extending the courtesies of the subcommittee to me. Thank 

you for holding this hearing. 

This hearing is important for a number of reasons. I think the 

foremost reason it is critical is that as we debate insurance reform 

and health care reform, we end up talking about a lot of dollars 

and a lot of abstract theories and a lot of macroeconomic implications. But at its very core, this is a debate about human beings, 

and this is a debate about humans and their families and their 

need and their right to have quality health care coverage that they 

can afford. 

So I am very appreciative of the three witnesses—Ms. Beaton, 

Ms. Raddatz, and Ms. Reilling—for being willing to come here and 

tell their stories, because unfortunately their stories are not atypical. Their stories are all too common, and we are proud to have 

them. It is very valuable to have a human face put on the issues 

that we are discussing today. 


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Secondly, we will hear a lot about coverage and the uninsured 

today, and what is important to note is—and I think this hearing 

is important because it will point out a number of the reasons why 

people end up uninsured. It is not because they don’t want to have 

insurance. It is because they are put in positions where, through 

no fault of their own, they are cast in a market where they cannot 

either afford or even buy at any cost the insurance that they need. 

And we will hear a lot of discussion about profits. I know, for instance, that over the last—well, for seven years, from 2000 to 2007, 

the profits of the 10 largest insurance companies rose over 400 percent. I don’t think that the cost of health care rose over 400 percent. I know it didn’t. I know salaries didn’t rise over 400 percent. 

And when you connect what we have—the subjects we will hear 

today, the stories we will hear today, to both issues of profitability 

and to the inability of Americans to afford insurance, it will be very 

clear. 

And, finally, I think these hearings are important, because as we 

discuss the need for a public option in health care reform, a public 

option that will compete with private insurers, as President Obama 

says ‘‘to keep them honest,’’ I think it will be abundantly clear after 

these hearings why keeping the insurance companies honest is a 

mandatory element of what we are trying to do in Congress for the 

American people right now. 

So I applaud the subcommittee for holding this hearing, and I 

am happy to be a part of it. 

Thank you, Mr. Chairman. 

Mr. STUPAK. Thank you, Mr. Yarmuth. 

Let us call our first panel of witnesses forward. On our first 

panel we have Ms. Robin Beaton, who is a policyholder from 

Waxahachie, Texas. Ms. Beaton, if you want to come forward. Ms. 

Peggy Raddatz of LaGrange, Illinois, who is a sister of the late policyholder, Otto Raddatz. And Ms. Patricia Reilling, who is a policyholder from Louisville, Kentucky. If she would come forward, 

please. 

OK. This is a congressional hearing. Our statements, questions, 

and answers to our questions are recorded and will be part of the 

official record of the Energy and Commerce Committee. It is the 

policy of the subcommittee to take all testimony under oath. Please 

be advised that you have the right under the rules of the House 

to be advised by counsel during your testimony. 

Do any of you wish to be advised by counsel? You are all shaking 

your head in a no manner, so I figure that is no. OK. Then, I am 

going to ask you to take the oath. 

[Witnesses sworn.] 

Let the record reflect that the witnesses have replied in the affirmative. You are now under oath, beginning with your opening 

statement. We will have an opening statement. You may submit a 

longer statement for the record, and it will be included in the official transcript. 

Ms. Beaton, do you want to start? No. Ms. Raddatz, would you 

like to start? 


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STATEMENTS OF PEGGY RADDATZ, RELATIVE OF POLICYHOLDER, LAGRANGE, ILLINOIS; PATRICIA REILLING, POLICYHOLDER, LOUISVILLE, KENTUCKY; AND ROBIN BEATON, 

POLICYHOLDER, WAXAHACHIE, TEXAS 

STATEMENT OF PEGGY RADDATZ 

Ms. RADDATZ. I would be happy to, Chairman. Once again, thank 

you very much for inviting me here today. My name is Peggy 

Raddatz, and I am appearing here today to testify on behalf of my 

brother, Otto S. Raddatz. My brother was business owner of a restaurant that he ran with his wife Marie. He purchased a health insurance policy from Fortis Insurance Company in August of 2003, 

as so many small business owners do in this country. 

On the application he indicated he had kidney stones and that 

he smoked. He also listed all physicians who treated him. Otto’s 

health application with Fortis was accepted, and his coverage 

began in August of 2003. 

A year later, my brother found himself inexplicably losing 

weight. His wife, Marie Raddatz, urged him to see a doctor. In September of 2004, my 59 year-old brother was diagnosed with Stage 

4 Non-Hodgkins-type lymphoma. The very next day he began an 

intensive course of chemotherapy treatments. 

Due to the very aggressive type of cancer that my brother had, 

a mantel zone lymphoma, he was given six more rounds of chemotherapy by January of 2005. This was a very difficult time for him. 

Because he was going through intensive chemotherapy, he found it 

difficult to work, and as a result difficult to continue to manage his 

business as a restaurant owner. 

Otto was referred to a specialist in stem cell transplantation and 

for high-dose chemotherapy. Otto began more chemotherapy for 

purposes of preparing him for a stem cell transplant. In the midst 

of his chemo treatments, Otto received a phone call and letter from 

Fortis Insurance Company stating his insurance was canceled. He 

was devastated. I remember the day very well. 

My very strong brother who was always together, my older 

brother, was just totally distraught. And he called me, his sister, 

who happens to be attorney. He was rescinded all the way back to 

the acceptance date of August 7, 2004, which meant he basically 

had no health insurance whatsoever. This meant none of his cancer 

treatments would be covered at all going all the way back to the 

beginning when he first got cancer. 

Most importantly, he would not be able to receive the stem cell 

transplant that he needed to save his life. My brother only had a 

very small window of time in which to receive a stem cell transplant. He needed to be scheduled within the next three to four 

weeks or else he wasn’t going to receive it, because there would be 

no point to receive it. He would simply worsen and die. 

My brother was told he was canceled during what the Fortis Insurance Company called a ‘‘routine review’’ during which they 

claimed to discover a material failure to disclose on the part of my 

brother Otto. Apparently, in 2000, his doctor had—his family doctor had done a CT scan which showed an aneurysm and gall 

stones. My brother was never told of either one of these conditions, 


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nor was he ever treated for them and he never reported any symptoms whatsoever for these conditions. 

After months of preparation, both mentally and physically, the 

stem cell transplant could not be scheduled. My brother’s hopes for 

being a cancer survivor were totally dashed. His prognosis was only 

a matter of months without the procedure. 

When I called the hospital to see if, as his sister, an attorney, 

I could schedule the stem cell transplant for him, I was callously 

told, ‘‘Unless your brother brings in cash, he is not going to get the 

procedure without his insurance any longer.’’ 

My brother, who was very, very ill, and was given only a few 

months to live, was accused by the Fortis Insurance Company of 

falsely stating his health insurance history, despite the fact that he 

had no knowledge of ever having any gall stones or aneurysms 

whatsoever. 

Luckily, I am an attorney and was able to aggressively become 

involved in solving this life-threatening situation for him. I contacted the Illinois Attorney General’s office and received immediate 

and daily assistance from Dr. Babs Waldman, the Medical Director 

of their Health Insurance Bureau. 

During their investigation, they located the doctor who ordered 

the CT scan. He had no recollection whatsoever of disclosing the information to my brother about an aneurysm and gall stones, or of 

ever treating him for it. After two appeals by the Illinois Attorney 

General’s office, Fortis Insurance Company overturned their original decision to rescind my brother’s coverage, and he was reinstated without any lapse. 

Without the help of the Illinois Attorney General’s office, this 

would not have been possible whatsoever. What the Fortis Insurance Company did was unethical. To deny a dying person necessary medical treatment, based upon medical conditions a patient 

has never had any knowledge of, has never complained about, and 

has never even been treated for, is cruel. 

It is our family’s hope that this information will benefit other patients who are in need of life-saving medical treatments, and who 

do not have knowledge or means necessary to fight against the 

health insurance companies. It is, further, our desire to expose 

these practices of the Fortis Insurance Company, so that others 

who are so deathly ill as my brother was do not suffer as the victims of these insurance companies. 

Thank you very much. 

[The prepared testimony of Peggy Raddatz follows:] 


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Mr. STUPAK. Thank you, Ms. Raddatz. 

Ms. Reilling, would you like to testify? You might want to pull 

that mic up. Thank you, and thank you for coming. 

STATEMENT OF PATRICIA REILLING 

Ms. REILLING. Good morning, Mr. Chairman, and members of 

Congress. My name is Patricia Reilling. 

I opened an art gallery in 1987, and in 1990 I took out a group 

health insurance plan with Anthem through the Kentucky Retail 

Federation. In 1994, my policy was changed to a one-person group, 

and I have had the same coverage, with slight changes on occasion, 

until June 30 of this year. I received a letter from Anthem at the 

beginning of June informing me that my coverage would end on 

June 30, 2009, and that was the first time I had heard anything 

about it. 

To be honest, I hadn’t even opened that letter for at least four 

or five days, because I had also received the information I get from 

my insurance agent every year around this time telling me about 

the renewal rates for the coming year. And this time the letter was 

very positive and said there were no change in the rates, I would 

have the same rates, and that was just great. 

And I also received a bill for my July premium, so I had opened 

those, and so I wasn’t really thinking that this letter from Anthem 

was going to be anything that, you know, was very urgent. 

So when I opened that, I was just—I was totally shocked, and 

it didn’t make much sense to me. And I called the agent, and then 

we started talking about it. But if you don’t mind, I would like to 

back up a little bit and tell you some of the background concerning 

my health and the reason that it has been so devastating for me. 

I have always been really healthy. I hadn’t been in a hospital 

since my son was born, which was several years ago. And I could 

be in a room full of people that had the flu, I mean there could be 

hundreds, and I wouldn’t even get the sniffles. And I did have a 

bad back. I mean, I have a bad back, and I at one time had some 

tests, and I see a pain management doctor about three or four 

times a year, and I am on prescriptions meds for this. That is the 

only thing in these actually almost 20 years that I have been with 

Anthem. 

Other than that, I usually describe myself as being healthy as a 

horse, which is not really flattering, but it is pretty much true, 

until March of 2008 when I discovered a lump in my breast. After 

visiting my primary care physician, I went for a mammogram and 

ultrasound. And when the technician was finished, she said she 

had to check with the radiologist to see if she had everything she 

needed. 

After a couple of minutes, much to my dismay she was not the 

one who came back in, but it was the doctor who came in and sat 

down on the table to explain that they had found lumps in both 

breasts, and that he was absolutely certain that they weren’t cysts, 

and that I needed to go to a general surgeon right away for biopsies. 

So even before the surgeon performed the biopsies, he told me 

that he was certain that it was cancer, and that he would need to 

remove both breasts. He did the biopsies, but he had difficulty loVerDate Mar 15 2010 05:15 Aug 04, 2012 Jkt 074091 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 E:\HR\OC\A091.XXX A091

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cating one of the tumors, and he needed to do one of the biopsies 

again, so he ordered an MRI. 

Well, I very soon, to my amazement, received a letter from Anthem that denied the MRI with the explanation that nothing— 

something to this effect, that nothing in my health background or 

my family history indicated that I would be likely to have cancer. 

And considering the fact that I don’t even know anything about my 

family history, I thought that was really astonishing. 

So I ended up having to go through another biopsy, which was 

really painful, because the doctor ended up having to do a lot of 

hunting and digging because the point was that he couldn’t find it 

in the first place. So the outcome, of course, was that I did have 

cancer in both breasts. So April 7, I had the bilateral mastectomies. 

I made a rather long but full recovery, and on December 2, 2008, 

I was admitted to Baptist East Hospital again for reconstructive 

surgery, and I was there for about five days. 

And after the last drain was removed at my plastic surgeon’s office, and I am probably being a little graphic, but a lot has happened, and if you all don’t mind I don’t, so it was around January 

7 that I returned to her office. And on the 14th—that was when 

they took the last drain out. 

On the 14th, when I went back, it was very obvious that I had 

a very serious abdominal infection, and she wanted to admit me to 

the hospital right then. I couldn’t, because I had had a little breakfast, so the next morning at 5:00 a.m. I was at the hospital and 

I was admitted for emergency abdominal surgery for a very 

invasive case of MRSA staph infection, which I had contracted during the reconstructive surgery in December. 

The incision from my December surgery was reopened, and my 

abdomen was flushed with antibiotic fluid, and the incision was 

closed. And then, two days later I had another emergency surgery, 

and, again, the same thing happened, they flushed my abdomen 

out. But I was so ill and had gone in so ill that they had to give 

me blood transfusions and potassium, and I was pretty much at 

death’s door. 

And this time they actually had to remove the interior part of my 

navel and sew up my belly button, which this is—I am using really 

intricate medical terms here, but this is what she—how she described it to me, because this infection had eaten away all of the 

interior part of my navel. And I remained in the hospital for seven 

days, and went home, had to stay with a relative for a week because I couldn’t take care of myself. 

And, basically, I have not regained my strength since that time. 

It has flared up in a major way about three times since then, every 

time I go off the antibiotics. Now the area where the abdominal 

muscles were attached during my reconstruction surgery have all 

been comprised from this infection, and they no longer support my 

innards, again using the most sophisticated medical terms. And I 

really can’t stand for more than 15 or 20 minutes. So the infectious 

disease doctor feels that the infection is deeply embedded in the 

scar tissue and is going to require surgery in order to clear that 

up. 

So because of the MRSA staph infection, I have never been able 

to complete my surgeries for my cancer. And now even the surgery 


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that I had has been compromised, and that is going to have to be 

redone. And, obviously, with no insurance, that is impossible. So I 

can’t even get rid of this infection, because I don’t have any coverage. 

I was told that recovery from this reconstructive surgery should 

be about six weeks. I have been totally out of commission for eight 

months, have not been able to work, and I work for myself. That, 

combined with the recovery time for the mastectomies, that has actually—it has been really devastating. 

The MRSA was difficult enough to deal with, but when I received 

notification that my insurance had been canceled with barely a 

month’s notice, the world came crashing down. My medications 

alone—and this is generic medications—are close to $2,000 a 

month. 

So they said—I had an appointment—just to give you an example, I had an appointment with an infectious disease doctor to see 

her again, and when I went to see her at her office they told me 

that it would cost me $280, because I didn’t have insurance. So 

they made an appointment with her for me at the clinic, because 

she is with U of L. 

And my appointment was at 9:00. I didn’t see her until well after 

11:00. I didn’t get out of there until after 12:00, and it was not at 

all the same as when I saw her in her private office. 

The reason I mention it is because I have always been a very 

compassionate person, and I have always tried to put myself in 

someone else’s shoes. But I have certainly been getting an in-depth 

education in the difference between the haves and the have-nots. 

This has all been a really eye-opening experience. 

You can imagine it is not easy to stand up in front of the world 

and tell some of the most intimate details of your life, but never 

in my wildest dreams did I imagine that I would find myself in this 

situation. I started out with a successful career as a copywriter, I 

ran a manufacturing company in New York, and then I opened my 

art gallery, and all it took was for me to get sick to have everything 

come crashing down. 

If I hadn’t gotten the staph infection, things would have been a 

little tight for a while, but life would have gone on. As it is now, 

I have gone from driving a Mercedes and traveling around the 

world and going to New York to get my hair done to spending every 

waking moment calling agency after agency trying to get assistance 

from pharmaceutical companies to get my prescriptions, trying to 

find out who can help me pay my utility bills, and who knew that 

even food stamps are on plastic these days. I used to sell my 

clothes in consignment stores; now that is where I buy them. 

I guess one of the points I would like to make is that it can happen to almost anybody. If you get sick and you lose your insurance, 

you can be in serious trouble in an amazingly short period of time. 

I have had this same policy with Anthem for nearly 20 years. 

After having that policy, 15 years of which was considered—I was 

considered a one-person group, and I never missed a payment—I 

really can’t understand how I could receive a letter that gave me 

less than 30 days after they canceled me. 

So I called my agent who told me that Anthem was no longer 

going to allow one-person groups, which I thought was a little odd 


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since I have been a one-person group for almost 15 years. So I 

started calling around. I also thought since I was in the middle of 

cancer treatment, and this MRSA, I couldn’t understand how I 

could be dropped. 

So I called the insurance company, and I finally reached someone 

who wouldn’t give me an answer, never said anything about their 

policy of canceling one-person groups, but they said that they had 

sent me a letter in April and that they had sent me a letter in 

May, and they told me that I would have been given an opportunity to at least dispute this, but they had not heard anything 

from me. Consequently, I was canceled. 

Well, I never got the letter. So I called my agent, and she said, 

‘‘Oh, yes, I knew about that. But I knew that you wouldn’t be able 

to afford the policy,’’ the conversion policy, which was more than 

double what I was paying. ‘‘So I didn’t call you. I didn’t let you 

know about it.’’ 

Maybe I wouldn’t have been able to afford that. I wouldn’t have. 

But I would have at least had time to try to look for an option. I 

would have had time to try to get in touch with pharmaceutical 

companies to get the drugs. And she did forward the letters to me, 

and they never did send them to me. Those letters were addressed 

to the agent. They were never addressed to me. They said, ‘‘Dear 

Customer,’’ but the addresses on the letters were both the insurance agent. 

And, actually, the information in the letters, that never said anything about canceling one-person groups either. Nowhere in any of 

these conversations did it say anything about that. So it didn’t— 

it just—she had taken good care of me for almost 20 years, but I 

don’t know what happened through all of this. But the fact that the 

results of an error like this being so monumentally disastrous and 

without recourse can obviously be acceptable to the insurance companies seems not only unbelievable but, quite honestly, inexcusable 

to me. 

In my appeal to the insurance company, all I asked was that 

they continue my coverage until my treatment could be concluded, 

and their answer said something about—oh, and this came from 

the president of the company, the president of Anthem. She said 

that she hoped that my health would improve and that I would regain my previous lifestyle, and she said that there was nothing 

they could do about their policies. 

How they expected me to return to my good health and lifestyle 

I don’t know, but maybe I should have asked to speak to the psychic who knew that my family’s health background had predetermined that I wouldn’t have cancer. I don’t know. 

But I just wanted to thank President Obama and all of our Congressmen and their hard-working staff members for their time and 

efforts to make changes in our system, so that this type of thing 

will become a bad memory. 

Just to add a light note. When I was typing this up the night 

before last, I got a phone call. And I looked at my caller ID and 

it said Anthem Blue Cross/Blue Shield. Now this is 26 days after 

I have been dumped by the company. And it is—for a minute this 

Pollyana that lives inside me is thinking, ‘‘Oh my gosh, they are 

calling me and they are going to reinstate me.’’ 


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Then, the realist in me says, ‘‘You are an idiot. That isn’t possible.’’ And this lovely recording of this woman’s voice comes on and 

says, ‘‘Have you had a mammogram lately?’’ And I am thinking 

this is really adding insult to injury. And it goes on and asks about 

other tests and how it is very important for me to do these 

preventatively and everything. And I thought, if only you were a 

real person and I could say, ‘‘I would love to have these other tests, 

but I don’t have insurance.’’ 

So thank you very much. 

[The prepared testimony of Patricia Reilling follows:] 


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Mr. STUPAK. Thank you for your testimony. 

Ms. Beaton, your testimony, please. 

STATEMENT OF ROBIN BEATON 

Ms. BEATON. Mr. Chairman, members of the committee—— 

Mr. STUPAK. Can you just pull that mic up? It is hard to hear 

you. I know you have a soft voice. 

Ms. BEATON. Is that good? 

Mr. STUPAK. That is better. Thank you. 

Ms. BEATON. Mr. Chairman, members of the committee, I am 

very honored to be here today to share my story. My name is Robin 

Beaton. I was registered nurse for 30 years. I had group insurance 

and was in very good health. I retired from nursing and opened a 

small antique business. My father always taught our family how 

very important insurance was. So at my 87 year-old Dad’s insistence, I obtained an individual health policy with Blue Cross and 

Blue Shield in December 2007. 

In May of 2008, I went to a dermatologist for pimples. A word 

was written on my chart, which was interpreted incorrectly as 

meaning precancerous. In June 2008, I was diagnosed with 

invasive HER–2 genetic breast cancer. This is a very aggressive 

form of breast cancer. In the beginning, I was told I needed immediate surgery. The doctor said my tumor was two centimeters. Two 

centimeters is like probably that big. The doctor said that he would 

perform a lumpectomy. When you don’t have a large tumor, you get 

to have a lumpectomy. In the beginning, I was going to have a 

lumpectomy. 

Blue Cross and Blue Shield precertified me for the surgery and 

for the hospital stay. The Friday before the Monday I was to have 

my surgery, Blue Cross and Blue Shield called me on the telephone 

and they told me that my chart was red-flagged. What does ‘‘redflagged’’ mean? That means that they are going to investigate you. 

They were doing it due to the dermatologist’s report, due to the 

pimple report. 

My dermatologist called Blue Cross directly to report that this 

was only pimples, it was nothing related to cancer. He asked Blue 

Cross and Blue Shield to please not hold up my cancer surgery. 

Blue Cross and Blue Shield the next day stated that they were 

launching a five-year medical investigation into my medical history. This would take approximately two to three months. 

I was frantic. I was totally alone as my family lives in Jacksonville, Florida. The hospital wanted a $30,000 deposit, and I knew 

I could not pay for surgery myself. I had no idea what to do. I had 

no idea where to turn or exactly what to do to get surgery. I met 

a lady who told me, she said, ‘‘You need to call your congressman, 

Joe Barton, for help.’’ 

I called Joe Barton’s office and told him of my situation. Joe Barton’s office went to work immediately to help me. The next day I 

received a letter from Blue Cross and Blue Shield permanently 

canceling my insurance, stating that my insurance was canceled 

back to the date that it began. 

Can you imagine having to walk around for months with cancer 

growing inside your body and having no insurance? Joe Barton and 

Christy Townsend worked non-stop every day calling Blue Cross 


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and Blue Shield trying to get my insurance reinstated, so that I 

could have my cancer surgery. They had no success at this point. 

I began going everywhere looking for help—county hospitals, 

agencies, foundations, anywhere that I could go where people 

would listen to me tell my story and see if I could get help. I was 

placed on a waiting list. When you have aggressive invasive breast 

cancer, you don’t have time for waiting. My medical records were 

lost three times at the county hospital. The process was unending, 

searching for help. 

The sad thing is Blue Cross and Blue Shield took my high premiums, and the very, very first time that I ever filed a claim with 

them, the very first time, and was suspected of having cancer, they 

took action against me, searching high and low for a reason to cancel my policy, so they would not have to pay for my cancer. 

A nurse who attends my church, her main job is eight hours a 

day she reads medical charts, and what she does is she looks for 

reasons for Blue Cross and Blue Shield to cancel insurance. When 

she heard about my story, what they had done to me, she came to 

me and she said, ‘‘I am so sorry this happened to you.’’ She said, 

‘‘I am just so sorry.’’ 

Blue Cross and Blue Shield has control over life and over death. 

People have to be able to count on what they pay for. Blue Cross 

and Blue Shield will do anything to get out of paying for cancer— 

anything. The sad fact is anyone with a catastrophic illness not 

part of a group stands a much higher chance of being canceled and 

left out in the cold without insurance. 

I go to a cancer support group every week, and have since I very 

first found out I had cancer. Four of the girls in my group had their 

insurance canceled. Two of them have had to declare bankruptcy. 

It is very difficult to speak out, because I live in fear every day that 

my insurance will be canceled again. 

I looked everywhere for help, and no one-no one—would help me. 

No help was found until Joe Barton and Christy Townsend, after 

working a very, very long time, got my insurance reinstated. After 

being diagnosed in June 2008 with aggressive invasive breast cancer, I was placed back on the surgeon’s waiting list to get my cancer surgery. My tumor grew from two to seven centimeters. Instead 

of having a small lumpectomy, I had to have a radical double mastectomy, and I had to have all of my lymph nodes taken out, every 

one of them. 

Delaying cancer treatment only worsens the condition, costing 

more to treat, treatment much more intensive, and treatment not 

being as effective. Also, the outcome is not as good. Once you have 

cancer, you always have cancer. It is a neverending battle. 

I go to chemotherapy every three weeks, and I will do this for 

the next year. Last week I had my second surgery, a two and a half 

hour surgery, which was very hard, to be cut on again. I had that 

just last week. 

Cancer is expensive, and no one wants to pay for it. This is 

America. People who purchase individual policies and pay their 

premiums on time, they deserve to receive what they have paid for. 

I pray with all my heart that no one has go through the sheer 

agony that I have endured for this last year. I did not deserve to 

have my insurance canceled. Blue Cross set out to get rid of me. 


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They searched high and they searched low until they found enough 

to cancel me. 

I owe my life to Joe Barton and his staff. I gave up. I completely 

gave up. But they never gave up. They never gave up on helping 

me. Only because of them was I able to get help. That was the only 

reason I got help. If it wasn’t for them, I would be dead today. 

I pray that you will listen to my story and help people like me 

who are powerless against big insurance companies. 

And I thank you so much for what you all are doing. I just admire you all so much, and I thank you for listening to me. 

Thank you. 

[The prepared testimony of Robin Beaton follows:] 


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Mr. STUPAK. Thank you, Ms. Beaton. 

We are going to go to questions for this panel. Let me begin. 

Ms. Beaton, when your insurance policy was rescinded, you needed a mastectomy to save your life, is that correct? 

Ms. BEATON. I needed first a lumpectomy in the very beginning. 

I forgot to say that. When I went to Washington, truly honestly I 

was only going to have to have a lumpectomy, which is where they 

go in and remove the small tumor. But due to the waiting, I had 

to go from a lumpectomy to a double radical mastectomy and the 

lymph nodes. So that is how much my cancer spread. 

Mr. STUPAK. So in that delay, you were going for a lumpectomy, 

you ended up having a double mastectomy. 

Ms. BEATON. Yes. Everything. 

Mr. STUPAK. What would have happened if Congressman Barton 

was not able to get your insurance reinstated? What would you 

have done? Would you have had the surgery? 

Ms. BEATON. I went to the county hospital, and they placed me 

on their waiting list to get a mastectomy, to get a lumpectomy at 

first and then it turned into a mastectomy. But anyway, at the 

county hospital you have to wait. And to be honest with you, they 

lost my records three times, and they never called me back. In 

other words, I kept calling, and I kept calling. 

Mr. STUPAK. So you don’t know how long you would have had to 

wait for the county hospital—— 

Ms. BEATON. I had to wait—I probably would have waited a long 

time, a lot longer, to get my—I probably wouldn’t have lived. 

Mr. STUPAK. You also stated in your opening statement four of 

the women in your cancer support group had their insurance canceled because of cancer. Two of the four had to declare bankruptcy. 

Ms. BEATON. Yes. 

Mr. STUPAK. Without using any names here, can you tell us any 

details about their specific interactions with their insurance companies? 

Ms. BEATON. Yes. Both of them had individual policies, and both 

of them had paid their premiums. One girl had her insurance for 

almost six years, and the other girl had her insurance for three 

years. And just the moment that she put in the first claim for cancer, they started doing an investigation. It was almost like repeating my story over. 

And they did an investigation into her history, and they found 

a little tiny thing she forgot to write down on her application. And 

they rescinded her insurance, canceled her, you know. She had to 

go apply for the Safe Health—both of them were on Safe Health. 

So that is the sad thing—when private insurance gets rid of people, eventually they will get help, but the taxpayer is going to have 

to pay for it. And that is exactly what happened. Both of them were 

on disability and on I guess you would call it Medicaid or Medicare. 

And I have to listen to—every week I hear them talking about the 

terrible time they are having, and they have both lost their house, 

they have lost their home. 

Mr. STUPAK. To be on Medicaid, if you are under 65, as all of us 

know up here because we deal with it all the time, you either have 

to spend down and have very little assets or you have to be at least 

disabled for two years before you can even qualify for Medicare. If 


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you had to wait two years and become disabled in order to qualify 

for Medicare to pay for your surgery, you probably wouldn’t be here 

today. 

Ms. BEATON. No. One of the girls has brain cancer, and the other 

has breast cancer, which spread to her lungs. So, you know, if I 

went around the room and told you all the people in my cancer 

group and the stories, those are just the four most significant ones. 

But every one of them has had trouble with their insurance companies, getting them to pay for stuff, not wanting to pay for scans, 

and just the cost of cancer is just overwhelming. 

Mr. STUPAK. Well, you were a nurse, Ms. Raddatz is an attorney, 

Ms. Reilling is a professional person, who is obviously quite successful. We have a rather sophisticated panel here, and it seems 

like each of you had to intervene in a certain way to—probably 

more acuity or more knowledge on how the system works in order 

to get your insurance or get some form of coverage. 

Ms. Raddatz, if you may, that binder right in front of you, the 

brown one, Tab Number 5, I want to ask you a question about your 

brother. Tab 5 is a letter your brother sent to the Illinois Attorney 

General after his health insurance was rescinded, and this was 

right before he was supposed to have the bone marrow transplant, 

correct? 

Ms. RADDATZ. That is correct. It was a stem cell transplant, yes. 

Mr. STUPAK. In there he writes, ‘‘I have been through chemotherapy, and I am being prepared for a stem cell transplant within 

three or four weeks. This is an urgent matter. Please help me so 

I can have my transplant as scheduled. Any delay could threaten 

my life.’’ 

So in your brother’s case he needed this transplant to save his 

life, is that correct? 

Ms. RADDATZ. That is correct. 

Mr. STUPAK. And if the rescission stood, in other words if his policy was not reinstated, would he have been able to get that transplant? 

Ms. RADDATZ. No. 

Mr. STUPAK. So the insurance company’s decision was literally a 

matter of life and death for him? 

Ms. RADDATZ. It absolutely was, because there was a very small 

window of opportunity for him to have it. And he couldn’t just go 

shopping for another method of having it. At the last hearing, 

someone brought that up. ‘‘Well, how come you didn’t try to get 

some alternative means of treatment?’’ Well, this is a stem cell 

transplant. There are only certain doctors that do this, and, first 

of all, you prepare for this for months with a very specific protocol. 

It is a very sophisticated procedure. It is a life-saving procedure; 

thank goodness that it exists and that it is saving people’s lives. 

But you have to do it within that window of opportunity. If you 

don’t do it, he would have died. 

Mr. STUPAK. So, then, you intervened with the Attorney General, 

and the Attorney General wrote a couple of letters. And finally, 

after the second or third letter, they reinstated his policy, because 

he was denied for something he had no knowledge of, correct? 

Ms. RADDATZ. That is absolutely correct. 


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Mr. STUPAK. OK. And your brother, unfortunately, died. But did 

the stem cell transplant extend his life? 

Ms. RADDATZ. It certainly did. If he didn’t receive the stem cell 

transplant, after, like I said, he was told he wasn’t—I mean, imagine you are told that you are dying, that you only have a few 

months to live, but there is a doctor who can give you a stem cell 

transplant and help you, and he is preparing you for it. 

And so you are somewhat hopeful that your life will be extended, 

and now all of a sudden, no insurance, no stem cell transplant. Yes, 

he had the stem cell transplant eventually, and it extended his life 

approximately three and a half years, which, you know, he did pass 

away just 12 hours short of his 64th birthday on January 6 of this 

year. 

But those three and a half years, to myself and our family, were 

precious. We spent the last 30 days with him in the hospital every 

day, and those last 30 days, for anyone who has ever been in that 

situation, every month—every year, every month, every day, every 

hour is precious, for your loved one and for your family. And it was 

successful. And as a matter of fact, he was preparing to have a second stem cell transplant when he did pass away. 

Mr. STUPAK. Thank you. 

Ms. Reilling, you were with Anthem insurance for 20 years? 

Ms. REILLING. Yes. 

Mr. STUPAK. And Anthem is really—is our ballpoint insurance 

company? 

Ms. REILLING. Yes. I think they were fairly recent with—— 

Mr. STUPAK. And of those approximately 20 years, 15 you were 

in this single-person group policy? 

Ms. REILLING. Yes. 

Mr. STUPAK. Did they ever tell you this single-person group policy was coming to an end, they were changing their policies on single-person group policies? 

Ms. REILLING. No. As I said, supposedly, these letters that were 

supposedly sent to me in April and May, but when I did see those, 

which were sent to me in June after the fact from my agent, they 

never said anything about them either. 

Mr. STUPAK. Well, were those letters addressed to your agent or 

to you? 

Ms. REILLING. To the agent. They referred to me, but they were 

never sent to me. And they did not say anything about that either. 

Mr. STUPAK. So you weren’t rescinded. They failed to renew your 

policy. 

Ms. REILLING. Oh, no, they canceled me. 

Mr. STUPAK. Right. 

Ms. REILLING. They said, ‘‘You will be canceled as of June 30.’’ 

Mr. STUPAK. And then, they offered you a single, individual policy, correct? 

Ms. REILLING. Well, yes, because we applied for another policy 

that was—my agent applied for something that would have been a 

reasonable policy, knowing that they were—she knew that they 

would not allow me to have that, because I was going to try to get 

a State policy, which is like a high-risk pool. 

Mr. STUPAK. Sure. 


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Ms. REILLING. So they—but they didn’t allow—they did deny me 

that. 

Mr. STUPAK. So that you—— 

Ms. REILLING. But they didn’t tell me why. 

Mr. STUPAK. Did you submit an application for an individual policy? 

Ms. REILLING. Yes. 

Mr. STUPAK. And you were denied? 

Ms. REILLING. They said, ‘‘We would love to give you insurance. 

We are pleased to give you insurance. However, we will not give 

you the insurance that you applied for, the policy that you applied 

for. However, we would be glad to give you this other policy,’’ which 

is close to $1,300—well, one that was close to $1,200 a month and 

one that was close to $1,300 a month, which is—with a $2,500 deductible, which is totally out of my reach. 

And the reasons that they gave for denying me the policy that 

I applied for make no sense whatsoever, and they actually didn’t 

tell me. 

Mr. STUPAK. Do you believe they failed to renew your policy because they are closing this single-person group policy status they 

had, or do you believe it is because you were sick? 

Ms. REILLING. That makes no sense. I had it for almost 15 years. 

The only thing that—to me, I almost never made any claims. I 

mean, the only thing was is I had this ongoing treatment for my 

back that, as I said, I only went to the doctor every three to four 

months, and that was because I had to do that to get my medications renewed. And other than that, I haven’t been sick for as long 

as I can remember. 

Mr. STUPAK. So you didn’t cost them any money until the last 

year. 

Ms. REILLING. No. And I totaled it up, and I know that I have 

spent well over $200,000 on my premiums. And even with my surgeries, they are still way ahead. 

And I did want to mention something that had to do with what 

Ms. Beaton said. When she was talking about the fact that if—if 

the insurance companies would approve some of these things that 

are asked for, it would save them money. There was a test that my 

oncologist had me go for, and it actually allowed them—the results 

of that test allowed me to not have chemotherapy, which was a 

wonderful, wonderful thing for me. It is a new test. It is a relatively new test. It is expensive. It is $2,000-something. 

However, it saved the company, because had I not had that test, 

I was definitely going to have to have chemotherapy and possibly 

radiation. They would not—no, it was close to $3,000. The insurance company denied payment for it, and we are still fighting it, 

and this goes back to 2008. They are still denying it. They paid 

something like $750, and they will not pay any more, and we have 

had, you know, time after time we are trying to—— 

Mr. STUPAK. Sure. 

Ms. REILLING [continuing]. Go through that. So when you talked 

about the cost effectiveness, somebody is not paying attention, because, yes, that is an expensive test, but it is preventing much 

more expensive treatment. So it doesn’t make any sense. 


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And the other thing is is the infection that I have now, that is— 

I can’t see my son, because he is diabetic, and he has an insulin 

pump, which has a needle going into his stomach. So this staph infection is threatening to him, so I can’t be around my son. I have 

a grandson, who is so afraid of the swine flu, that now when he 

hears about this I can’t see him. 

And I can’t go on with my life, because I can’t treat this infection. So it is just—it is crazy that you can’t go on with your life 

if you do not have your insurance. And I am being—you know, I 

never—I didn’t do anything wrong. 

Mr. STUPAK. Sure. So it is not just a financial, but as we have 

seen from each of you, the emotional toll it takes on families is tremendous. And each of you brought forth a form of cancer that your 

brother had or you had personally. 

And in documents obtained by the committee—I said we have 

looked at over 116,000 documents, and it shows that cancer is one 

of the conditions that automatically triggers an investigation by 

these insurance companies, whether it is Assurant or WellPoint or 

any of these. In fact, here is a list of Assurant’s. There is about 

1,400 different codes they use. So once you apply for it, it then triggers it in their computers. Then, they go through and scour and try 

to find some reason to deny you, because of an expense. And you 

have 1,400 by one company, 2,000 codes by another, so that—— 

Ms. REILLING. The wording of—— 

Mr. STUPAK [continuing]. Pretty much means you have—— 

Ms. REILLING. The wording of why they denied me this new policy that I tried to apply for, they said ‘‘ongoing treatment for’’ and 

then—— 

Mr. STUPAK. They list it. 

Ms. REILLING [continuing]. They used—well, no, they wouldn’t 

say what it was. They mentioned my back, but of course they have 

been treating me for that for over 20 years. Then, they said—I 

don’t remember the word, it is in papers that I gave you all, but 

conditions, something like ‘‘unnamed conditions.’’ 

Well, the only other condition is the MRSA staph, which I got 

when I was in the hospital—— 

Mr. STUPAK. Right. 

Ms. REILLING [continuing]. And cancer. It seems that it is not 

right for them to deny me that. And the MRSA, the thing that is 

frightening to me, is this has already been eating away at my insides. I mean, they have done emergency surgeries for that. You 

know, so the longer I go not being able to have a surgery that is 

supposed to help get rid of that, the longer I am at risk of it going 

ahead and just munching its way through to my insides. And it is 

very frightening, not to mention the fact that I can’t do anything, 

and I can’t work and I can’t make a living. 

So, you know, with just the strike of a pen, they can totally ruin 

people’s lives. 

Mr. STUPAK. Thank you. 

Mr. Hill, questions, please. 

Mr. HILL. Thank you, Mr. Chairman. And, again, I want to 

thank the chairman for coming to Indiana to hold these hearings 

to try to get to the bottom of the problems that we are having in 

health care. 


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I am going to have to leave around noon, which is a little earlier 

than when the committee is going to have to adjourn, because I am 

traveling back to Washington today, as a member of the Energy 

and Commerce Committee, to carry on discussions about what we 

should be doing with this bill that is before us. 

One of the things that is a given is the fact that when we pass 

health care—and I believe that we will, although it is going to be 

a struggle to do it. The legislative process grinds slowly. But one 

of the things that we will be addressing is preexisting conditions. 

So when we pass health care, we will no longer have to have meetings like we are having, committee meetings right now, because 

your situation will not be relevant anymore, because preexisting 

conditions will no longer be an issue. 

And that is one of the most important reasons why we need to 

pass health care legislation this year. Everybody has a story to tell. 

I have my own story. My youngest daughter, Libby, has a blood 

disorder. She is 22 years of age, and she is heading off to Michigan 

Medical School. And she very soon is going to be on her own. She 

is on our policy now. 

What will happen to her now that she has this preexisting condition when she has to buy her own insurance policy? We are all very 

nervous about it. And so unless we get a company or somebody 

that accepts preexisting conditions, she is going to be out of luck. 

And so we all—the three of us here, and the members of Congress, 

realize the importance of passing legislation that is going to correct 

this inequity. 

Now, having said that, I do have a few questions. Ms. Beaton, 

you say that you obtained an individual policy with Blue Cross and 

Blue Shield in December of 2007. And then, in May 2008, which 

is approximately five months later, you were diagnosed with acne, 

which was precancerous. 

Ms. BEATON. But it wasn’t precancerous. It was just a misinterpretation of a word. But what it did to them is it red-flagged my 

chart. In other words, it brought suspicion on me, because the 

word. The doctor—he was the nicest man. He called Blue Cross 

and Blue Shield directly, and he begged them, he said, ‘‘Please,’’ he 

said, ‘‘this is a misunderstanding.’’ He said, ‘‘This lady came to see 

me for pimples or acne.’’ He said, ‘‘She doesn’t have anything related to cancer.’’ 

Mr. HILL. And who said that? 

Ms. BEATON. Dr. Kent Afergutten. 

Mr. HILL. This is your dermatologist? 

Ms. BEATON. Yes, sir. 

Mr. HILL. OK. And then, the insurance company told you on the 

Friday before you were to have cancer surgery that ‘‘They were 

launching a five-year medical investigation into my medical history, and this would take approximately three months.’’ 

Ms. BEATON. Yes. 

Mr. HILL. Did that delay your surgery? 

Ms. BEATON. Absolutely. It delayed it from June until October 2, 

because what I had to do is I had to provide them every doctor, 

every hospital, every pharmacy, anything I had that was related to 

my medical history for the last five years. And can you imagine 

having to go back in your medical history for five years? You know, 


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you don’t remember things. Because they said if I forgot one thing, 

if there was one thing that I forgot, that I didn’t disclose, that I 

would automatically be canceled. 

So I searched, and, I mean, I went through all of my records. It 

took me like weeks to do that. And I gave them every pharmacy 

I had ever been to, because I don’t use always the same pharmacy, 

I go to different pharmacies. I had to give them every pharmacy, 

every doctor, every hospital, every emergency room I had ever been 

to. And then, what they do is they write—they have to get permission from you to get it. They get your medical records, and they go 

through with a fine-tooth comb those medical records. 

So, yes, it took from June when I was supposed to have my surgery, June, July, August, September, October 2 I had my surgery. 

And just like I said, the most significant thing is, if you can look 

on a picture how big two centimeters is, how small it is, to know 

that I was going to have to have a lumpectomy, and then to have 

to have both of your breasts removed and all of the lymph nodes, 

I will never be able to do anything with this arm again, like have 

blood drawn, have IVs, or anything out of this arm for the rest of 

my life. So, yes, it affected me with all of my heart. 

My tumor grew, it spread, and, you know, you never know, but 

if they could have done my surgery really quickly, perhaps none of 

that would have happened. 

Mr. HILL. OK. Who made the decision to delay your surgery? 

Ms. BEATON. Blue Cross and Blue Shield. 

Mr. HILL. Did the hospital not want to, or the doctors not want 

to, perform the surgery because it was in doubt whether or not you 

had coverage or not? 

Ms. BEATON. Yes. They said that I would have to pay a $30,000 

deposit, and I didn’t have that kind of money, and neither did my 

mother and father. So they wanted a big deposit, and I didn’t have 

it. 

Mr. HILL. So the matter got worse, and then you had to call upon 

Joe Barton to help you get it fixed and he did. 

Ms. BEATON. He did. If you only knew how hard he worked every 

day. He went all the way to the president of Blue Cross and Blue 

Shield. He called them every day on the speakerphone and talked 

to them, and every time they called he would call me and say, ‘‘No 

luck. We haven’t had any luck, but we are still trying. We are not 

giving up.’’ They gave me a report every day, so I wouldn’t give up. 

To be honest with you, I did give up. I gave up. I went to the 

county hospital. I applied to Susan G. Komen Breast Foundation. 

I applied at Promise House. I applied anywhere I could to get help, 

and their funds are limited everywhere you go, because there are 

so many people who have breast cancer these days. So I was very 

limited in the help that I could receive. 

Mr. HILL. OK. 

Ms. BEATON. I was on different waiting lists. 

Mr. HILL. Ms. Raddatz, your brother’s cancer treatment, was it 

delayed at all? 

Ms. RADDATZ. It was not delayed, no. 

Mr. HILL. OK. But you had to go through several hoops in order 

to get—make sure that he was going to have coverage. 


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Ms. RADDATZ. Oh, yes. I mean, when we got the news that it was 

canceled, we were just horrified. I can’t even tell you how upsetting 

that was, because it was all scheduled. I mean, it was ready to be 

scheduled—excuse me—but he had done all of the protocols, he was 

ready to go. And so I literally was not working at my law practice 

for weeks. I was at my office, but daily I was working on solving 

my brother’s health insurance rescission problem. And I was—I am 

attorney, and I still didn’t know how to solve it straight up. 

Mr. HILL. Right. 

Ms. RADDATZ. It took me several weeks, and many, many phone 

calls to other attorneys, judges, experts, and finally we made it to 

our Attorney General’s office. And I understand in Illinois we are 

very lucky to have the Health Services Section in our Attorney 

General’s office, Lisa Madigan’s office. There are many states that 

do not have those services available for citizens to go to. 

And even if it is available, most people, when they get that type 

of news, they don’t know what to do. They are sick. Their spirits 

are low. A lot of them are not working. They don’t know what to 

do, and they don’t know where to turn. And many of these people 

just give up. 

Mr. HILL. OK. Ms. Reilling, in reading through your testimony 

and listening to your testimony, I am making the assumption that 

Anthem did pay for some of your treatment. 

Ms. REILLING. Yes. 

Mr. HILL. And that somewhere midway through all of your treatments they decided to cancel you. 

Ms. REILLING. Yes. 

Mr. HILL. And the reason that they gave for canceling you is that 

the policy was not going to be offered anymore. 

Ms. REILLING. Well, to my knowledge, I was not given any reason, because I never received the letters that they supposedly sent. 

So I just suddenly got a letter on around June 1 that said, ‘‘Your 

policy will be ending—we will be canceling your policy as of June 

30.’’ 

Mr. HILL. OK. 

Ms. REILLING. I had no explanation. 

Mr. HILL. Do you have insurance now? 

Ms. REILLING. No. 

Mr. HILL. None at all. 

Ms. REILLING. No. 

Mr. HILL. Do all three of you feel like that the insurance companies were manipulating the reasons as to deny coverage to you all? 

Ms. BEATON. Absolutely. 

Mr. HILL. Now, that is an opinion of course. 

Ms. BEATON. Absolutely. 

Mr. HILL. But you all three feel that way. And, Ms. Beaton, do 

you have any insurance coverage now? 

Ms. BEATON. I only have insurance because of one reason. 

Mr. HILL. Joe Barton. 

Ms. BEATON. That is the only reason. 

Mr. HILL. OK. Thank you. 

Ms. BEATON. They didn’t want to give me back my insurance. He 

told me that—I had never met Mr. Barton. I met him for the very 

first time in Washington. He helped me not even knowing who I 


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was, just because I was a constituent in his area. And the first 

time I met him I just broke down and said, ‘‘I could never thank 

you enough for helping me.’’ But he went all the way to the top and 

he told me, he said, ‘‘They did not want to reinstate you.’’ He said, 

‘‘I really had to fight them.’’ He told me that. 

Ms. RADDATZ. May I respond? 

Mr. HILL. Sure, Ms. Raddatz. 

Ms. RADDATZ. Yes. Not only—we also know after our last hearing 

in Washington that now, knowing all of this information, they still 

agree that they will continue their practices of rescinding. So it 

didn’t really matter that we already—Ms. Beaton and myself told 

these stories, and many other stories were told to them in person 

in Washington, D.C. last month, they still admitted that they 

would just continue those practices. 

So, you know, until Congress stops them from doing it, they are 

just going to keep going on, because they know it is legal right now 

for them to do that. It is legal for them to rescind people who are 

dying and take away their insurance policies after good American 

citizens have paid their hard-working dollars. In my brother’s case, 

he was paying $900 a month for his policy. And it is OK for them 

to do that. 

And not only have they done it, but they came right out in Congress and in front of the whole world on C–SPAN and said, ‘‘We 

are just going to keep doing it.’’ So they are basically saying, ‘‘Look, 

Congress, either stop us from doing it or we are just going to keep 

doing it, because that is what we do. We make our—that is how 

we make our living. We make our livings by rescinding people and 

making more money.’’ 

Mr. STUPAK. That is a good point. 

And as Congressman Hill indicated, he is going to have to leave 

a little early here, because he has got to go back. We are trying 

to do health insurance—or I should say health coverage for all 

Americans through our Energy and Commerce Committee. 

Congressman Yarmuth, who is going to be going back, is going 

to ask questions next. They already passed it through Ways and 

Means Committee, but the Energy and Commerce Committee is 

the main policy, health policy for the Congress, and we have been 

working on this. 

We were actually supposed to do one of these hearings last week, 

as you know, Ms. Raddatz, in Chicago. We had to cancel because 

of health care meetings. We thought about canceling this one, but 

I couldn’t do that twice to you, so we kept this hearing going. I will 

stay and keep this hearing going. I know Mr. Hill is going to go 

back and protect our interest, and we have a lot of questions. 

If my memory serves me correct, it is Section 162 which would 

prevent rescissions without an independent third-party review. But 

I think after this hearing, and after our next panel, I think we 

have to go even further and put a time limit as to when that review would take place, so many days, and a few other things. So 

these hearings not only helps us, but, unfortunately, it is a very 

busy time for all of us with health care. 

And, Congressman Hill, by the end of the year I think you will 

see at least enactment of a national health insurance plan to cover 

all Americans, where preexisting injuries would not be a condition 


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to eliminate people’s coverage, and will do something with this rescission. 

But with that, let me turn it to Congressman Yarmuth for questions, please. 

Mr. YARMUTH. Thanks, Mr. Chairman. I am just going to ask a 

couple of brief questions. 

Ms. Beaton, you talked about your cancer support group and the 

four women who are with you in that, and two of them have gone 

bankrupt and they had had their coverage canceled. Were the situations similar? Were these all cases of rescission as far as you 

know? 

Ms. BEATON. Yes, every one of them was. 

Mr. YARMUTH. Were they able to—are they currently insured at 

all? They are not insured? 

Ms. BEATON. Not at all. They all are on state assistance, every 

one of them. Every one of—the one girl lost her house, and now she 

is living in government-subsidized housing. She had a nice house, 

and she lost her house. She lost everything and has to live in government housing now. 

Mr. YARMUTH. Did they receive their treatment in any way, or 

were they—did they rely on charitable care or something? 

Ms. BEATON. They relied on charitable care, which is like mine. 

They didn’t get immediate care; they had to wait. And when you 

go through a county hospital around Dallas, there are so many people there, you wouldn’t even believe. Every time you go to a clinic 

appointment it is the whole day. You go—no matter if you have an 

8:00 appointment, you wait all day long with a room just like this 

big just full of people. You can’t even imagine how long you have 

to wait. 

And then, when you get in a room, you finally think you are 

going to get to see the doctor, well, guess what, you wait another 

couple of hours. So it is an all-day thing. There is no way you can 

work. There is no way you can keep a regular job or do regular 

things, because your whole time is going to waiting to see a doctor. 

It is a very bad situation. 

Mr. YARMUTH. Congressman Barton was able to keep your coverage in force. Has there been a change in your premium rates 

since then? 

Ms. BEATON. Yes, they went up quite a bit. They went up. They 

said it wasn’t anything related to that. They said that they were 

going up on everybody’s policy, but they sent me a letter, and, yes, 

they went up. Right away they went up. 

Mr. YARMUTH. How much did they go up, do you remember? 

Ms. BEATON. It was like $200 a month. And it was already a real 

high premium, because of my age. I am 59. 

Mr. YARMUTH. Right. 

Ms. BEATON. So to me it was a lot of money. It was all I could 

do. And to be honest with you, I never would have—when Mr. Barton called and told me my insurance was reinstituted, you know 

what I told him? I said, ‘‘I don’t want it. I don’t want it back.’’ I 

said, ‘‘I have lost my trust.’’ 

And by that time, I had applied to a state program, and I had 

gotten accepted for the state program where they pay 100 percent 

for women with breast and cervical cancer, and I told him, I said, 


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‘‘I don’t want Blue Cross and Blue Shield back.’’ I said, ‘‘Why 

should I want them back? What they did to me, what they cost 

me.’’ But he told me, he said, ‘‘You will never be able to have insurance again. You will be uninsurable because of the cancer.’’ He 

said, ‘‘Take it back.’’ He said, ‘‘It is your last chance in your life 

to get regular insurance.’’ 

So because of his great wisdom, I only took it back because of 

him, because I lost every bit of my trust. I hated them. 

Mr. YARMUTH. Ms. Reilling, we have a copy of a letter that you 

received on July 1 of this year, just a few weeks ago, offering you 

the alternative individual coverage, and stipulating the reasons 

that you were denied coverage and denied your application, which 

I assume was to resume your one-person group insurance coverage, 

is that right? 

Ms. REILLING. No. Actually, my agent, she just kind of ignored 

that whole thing and acted like—she is the one who told me that 

Anthem was discontinuing one-person groups. I never heard it—I 

have never heard it from the company, so she applied—— 

Mr. YARMUTH. For an individual policy. 

Ms. REILLING [continuing]. For an individual policy, but one that 

was close to what I was paying, and that was what they denied. 

Mr. YARMUTH. And they denied that. 

Ms. REILLING. And they offered me one that was—— 

Mr. YARMUTH. One that was more expensive and mentioned—— 

Ms. REILLING. A whole lot more expensive. 

Mr. YARMUTH [continuing]. The preexisting conditions and your 

treatment for protected health information, it says in the letter—— 

Ms. REILLING. Yes. 

Mr. YARMUTH [continuing]. Under Tab 23. I understand why 

they didn’t want to put it in the letter, because that—it is your personal information, even though to you it might have not been a 

congressional—— 

Ms. REILLING. But the only—— 

Mr. YARMUTH [continuing]. So they want to protect you. 

Ms. REILLING [continuing]. Thing it could be, though, is the cancer and the MRSA. 

Mr. YARMUTH. Right. 

Ms. REILLING. Because that is the only thing I have been treated 

for. 

Mr. YARMUTH. Right. Do you know if this offer—the offer that 

they made, whether there would be any exclusions as to coverage? 

Ms. REILLING. No, because, as I said, I didn’t even—— 

Mr. YARMUTH. Couldn’t afford it anyway. 

Ms. REILLING. I didn’t know about any of this, and my agent just 

turned it down. And, actually, she was only applying for it as a 

means to getting me to apply for Kentucky Access, which required—it wasn’t enough for me to just have been dropped by the 

insurance company, I had to have applied and been denied, which 

is why I have gone so long without insurance. 

However, when I found out what the rates are for Kentucky Access, I can’t afford those either. It is $800 a month, and that is a 

public—I mean, a State program. 

Mr. YARMUTH. Right. OK. Thank you very much. 


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Thanks to all of you for telling your stories. They were, again, 

very important in putting a face on the types of situations that we 

are trying to correct and on efforts to reform health care delivery 

and insurance in the country. Appreciate it. 

I yield back. Thanks, Mr. Chairman. 

Mr. STUPAK. Thanks, Mr. Yarmuth. 

We had asked Assurant Health Insurance to come. They refused. 

I do not want to use the subpoena power, even though this committee has it. But, Ms. Raddatz, that was your brother’s health insurance, but I want to ask a question anyway, if I could. 

Your brother’s individual health policy was Fortis, which is really 

Assurant Health. Is that right? 

Ms. RADDATZ. Yes, that is correct. 

Mr. STUPAK. OK. I would like to play a television ad that 

Assurant is running across the country right now and get your reaction to it. Would you show us that ad, please? 

[Video presentation begins.] 

‘‘Female Speaker: My employer doesn’t offer medical insurance. 

So we needed an affordable health plan that fit our family’s needs. 

Female Speaker: When I started my own business, I didn’t think 

I could afford health insurance. I just wanted to be able to see my 

personal doctor once a year. 

Male Speaker: When I retired, we were years away from Medicare. 

Female Speaker: But we still needed protection. What if something serious happened? 

Female Speaker: So a friend recommended Assurant Health. We 

were able to protect our entire family. They even have a dental 

plan. 

Female Speaker: I saved hundreds of dollars by only paying for 

benefits I want. I even got a 50 percent discount just for being 

healthy. 

Male Speaker: We have got $6 million in medical coverage, and 

can even see the specialist we choose. 

Female Speaker: Without a referral. 

Male Speaker: For over 100 years, Assurant Health has been meeting the needs of individuals like you. Plans start under $100 

per month. 

Male Speaker: Call now and speak with your local agent, Carl 

Heath, Jr., for your no obligation quote. Call 1–410–288–0772 

now.’’ 

Mr. STUPAK. In this ad, it shows people who might need insurance, as they say in the ad, ‘‘like you,’’ a family, small business 

owner, retiree, and they all look relatively healthy. But what the 

ad never mentions is that Assurant will not provide insurance to 

people with preexisting conditions, because these people get too expensive and it would reduce their profits. 

So let me ask you, from your experience, does this company have 

an interest in keeping sick policyholders on its rolls? Ms. Raddatz? 

Ms. RADDATZ. In keeping sick policyholders? 

Mr. STUPAK. Yes. 

Ms. RADDATZ. Absolutely not. All they want are healthy people, 

so that they can collect insurance premiums and not have to pay 

out any claims. They don’t want sick people. When you become 


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sick, they cancel and rescind your policy. And so as they state in 

the commercial, how dare they? What if something serious happens? Something did serious happen to my brother, and they rescinded him. 

Mr. STUPAK. Let me show you another clip on another Assurant 

TV ad. 

[Video presentation begins.] 

‘‘Male Speaker: Unlike other health insurance companies that 

focus on corporations and treat everyone the same, Assurant 

Health is there for the individual. So if you need health insurance, 

call the number on your screen, visit our Web site, or contact your 

local agent. 

Male Speaker: Call now to find out’’—— 

Mr. STUPAK. They say they are not treating everyone the same, 

and they are there for the individual. Were they there for your 

brother Otto? 

Ms. RADDATZ. Absolutely not. 

Mr. STUPAK. Do you find these ads misleading about how 

Assurant covers individuals? 

Ms. RADDATZ. I would say they are misleading, they are upsetting. I would say to people, ‘‘Run, do not buy insurance with a company that doesn’t stand behind the people that need them.’’ 

Mr. STUPAK. And as I said, there is 1,400 reasons or excuses why 

they cancel you once you become sick. 

Let me ask you, Mr. Baron, Hill, do you have any further questions? 

Ms. BEATON. Can I say something real quick? 

Mr. STUPAK. One minute. 

Mr. Hill, questions? 

Mr. HILL. The only question I might have is—maybe this is for 

the representatives from the insurance companies, but my guess is 

that once you are denied insurance coverage, it is almost impossible for another insurance company to pick you up. I don’t know 

if you have had that experience or not, Ms. Beaton. I know you—— 

Ms. BEATON. They never pick you up. Never. Never. 

Mr. HILL. There is just like a zero chance for you being able to 

get coverage. 

Ms. BEATON. Right. Have you ever been refused insurance? They 

ask that on the questionnaire. It is one of the questions they ask 

you. If you have ever been refused insurance or canceled, they just 

kick you right out. 

Mr. HILL. OK. 

Ms. BEATON. All I wanted to say is I admire you so much for getting those commercials. I wish you would have brought the Texas 

Blue Skies Blue Cross/Blue Shield commercial that has been airing 

every day, about 15 times a day. I want to just puke every time 

I hear it. They have you humming a little tune, you know, about 

America and blue skies and everything is wonderful, ‘‘We will always be here for you,’’ and every time I listen to that commercial 

on TV, how they are spending millions of dollars for those commercials, I just say—I want to say, ‘‘You are lying. You are liars.’’ 

You know, they are spending all that money on Blue Skies commercials. Sometime you can get one of those Blue Skies’ commerVerDate Mar 15 2010 05:15 Aug 04, 2012 Jkt 074091 PO 00000 Frm 00043 Fmt 6633 Sfmt 6633 E:\HR\OC\A091.XXX A091

tjames on DSK6SPTVN1PROD with HEARING
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cials for Blue Cross/Blue Shield and it will make you sick to your 

stomach. 

Mr. STUPAK. Well, there is no doubt the—from 2000 to 2007, according to SEC filings, the profits for insurance companies has 

gone from $2.4 billion to $12.9 billion. That is a 428 percent increase during the last seven years. And we see it on the backs of 

people like you, and so hopefully we do get national health care, 

so we don’t have to worry about that. 

Let me, once again, thank this panel for your heartfelt testimony. 

Thank you for traveling here at your expense to be with us. 

Ms. Beaton, have a safe trip back to Texas; Ms. Raddatz, back 

to Illinois; and, Ms. Reilling, back to Kentucky. Thank you very 

much for being here. 

Ms. RADDATZ. Thank you all for caring enough to do this. Thank 

you so much. 

Mr. STUPAK. Thank you. We will dismiss this panel. 

Ms. REILLING. Thank you. 

Ms. BEATON. Thank you. 

Mr. STUPAK. I would now like to call our second panel of witnesses. On our second panel we have Mr. Richard Collins, who is 

the Chief Executive Officer at Golden Rule Insurance Company, 

which is owned by UnitedHealth Group; Mr. Brian Sassi, who is 

Chief Executive Officer for Consumer Business at WellPoint, Incorporated; Ms. Carol Cutter, who is the Commissioner of the Indiana 

Department of Insurance; Professor Eleanor Kinney, who is a Professor of Law at Indiana University in Indianapolis. 

Thank each and every one of you for coming and for adding to 

today’s hearing. As I told the last panel, it is the policy of this 

Committee to take all testimony under oath. Please be advised you 

have the right under the rules of the House to be advised by counsel during your testimony. If you wish to be represented by counsel? 

[Witness responses.] 

Mr. STUPAK. Let the record reflect each indicated they did not 

wish to be represented by counsel at this time. If at any time during your testimony you wish to consult with counsel, you can. 

Counsel cannot testify, but you can consult with them before answering a question. 

Since you are all standing, please raise your right hand and take 

the oath. 

[Witnesses sworn.] 

Mr. STUPAK. Let the record reflect that the witnesses replied in 

the affirmative. You are now under oath. We will now hear your 

5-minute opening statement. You may submit a longer statement, 

extra documents, for inclusion in the official hearing record. 

Mr. Collins, if you don’t mind, we will start with you, go from 

my left to right. 

Mr. COLLINS. Yes, sir. Thank you, sir. 

Mr. STUPAK. Thank you. 


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STATEMENTS OF RICHARD COLLINS, CHIEF EXECUTIVE OFFICER, GOLDEN RULE INSURANCE COMPANY, UNITEDHEALTH 

GROUP; BRIAN A. SASSI, PRESIDENT AND CHIEF EXECUTIVE 

OFFICER, CONSUMER BUSINESS, WELLPOINT, INC.; CAROL 

CUTTER, COMMISSIONER, INDIANA DEPARTMENT OF INSURANCE; AND ELEANOR KINNEY, CO–DIRECTOR, WILLIAM S. 

AND CHRISTINE S. HALL CENTER FOR LAW AND HEALTH, INDIANA UNIVERSITY SCHOOL OF LAW 

STATEMENT OF RICHARD COLLINS 

Mr. COLLINS. Chairman Stupak, Congressman Hill, Congressman 

Yarmuth, and members of the Subcommittee, thank you for inviting me today as we continue our dialogue on individual health insurance. 

My name is Richard Collins. And I am the CEO of Golden Rule 

Insurance Company, a UnitedHealth Group business that provides 

health insurance policies to individuals and their families. Golden 

Rule is headquartered in Indianapolis and employs 750 individuals 

in the State of Indiana. It has been offering this important coverage option for more than 60 years. 

As part of our continuing commitment to the outstanding workforce of the State of Indiana, we recently completed the initial 

phase of a new 24,000-square foot, state-of-the-art customer care 

center in Vincennes. The center currently employs 90 individuals 

with the capacity for 300 additional full or part-time jobs. 

Our company mission is to improve the health and well-being of 

all Americans. In the individual insurance market, we accomplish 

this by offering innovative and affordable products that meet the 

diverse health care and financial needs of our customers. 

We also have a responsibility to treat all of our customers fairly, 

and I can assure you we take this responsibility very seriously. In 

our current system of health care delivery, the individual insurance 

market operates primarily for families who do not have access to 

group coverage or to government health benefit plans, such as 

Medicare. 

Unfortunately and for a variety of reasons, some individuals 

choose not to purchase private health insurance until they have a 

significant health event. This decision not only has an enormous 

physical and financial impact on these individuals and their families but raises the cost of health care for everyone. 

We have long advocated that this country needs comprehensive 

health insurance reform that includes modernizing the delivery 

system, tackling the fundamental drivers of health care cost 

growth, strengthening employer-based coverage, and providing 

well-targeted support for low and middle-income families. 

To be effective, we believe modernization of the individual insurance market needs to contain all of the following elements. First, 

individuals must be required to obtain and maintain health insurance coverage so that everyone participates in both the benefits 

and the costs of the system. 

Second, insurers should be able to set rates within the limited 

parameters of age, geography, family size, and benefit design just 

as they do in the group insurance market. However, let me emphasize this point. Rates should not vary based on health status, and 


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coverage should be guaranteed, regardless of preexisting conditions 

for those that maintain continuous coverage. 

Third, low and middle-income families should receive some form 

of subsidy to ensure that they have access to the same care as all 

Americans. 

Fourth, insurers should be able to offer a wide spectrum of plan 

designs to allow American families the flexibility to choose a plan 

that fits their budget. And, lastly, the tax treatment for individual 

insurance premiums should be on par with employer-sponsored 

coverage. 

Until comprehensive reform is achieved, we believe that the medical underwriting of individual insurance policies will continue to 

be necessary. If these changes are instituted, most of the reasons 

for individual medical underwriting of individual health insurance 

as well as most of the reasons that individual policies are rescinded 

or terminated would cease to exist. 

As you know, the practice of rescission has been recognized by 

the laws of virtually every state. Rescission is an unfortunate but 

necessary recourse in the event of a material and at times intentional or fraudulent misstatement or omission on an insurance application. 

Our use of rescission is rare. Less than one-half of 1 percent of 

all of individual insurance contracts in 2008 were terminated or rescinded. And in each case the affected customer was afforded the 

right to appeal. Our practice is to rescind coverage only in the 

event an applicant made a knowing material misrepresentation or 

omission on the application for insurance. 

In the event that we determine it is necessary to rescind coverage after a thorough investigation of the facts and in compliance 

with existing stare laws and regulations, we follow practices and 

procedures designed to ensure a fair and transparent process for 

the individual. 

Under our current system, failure to act on these cases would be 

fundamentally unfair to individuals and working families that play 

by the rules, and it would further limit our ability to provide quality and affordable health care for every American. And affordability 

is by far the biggest barrier to access. 

We look forward to working with the Subcommittee and the Congress and state and federal regulators on ways to continue to expand access to affordable health insurance coverage in the individual market. Thank you. 

[The prepared statement of Richard Collins follows:] 


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Mr. STUPAK. Thank you. 

Mr. Sassi, your opening statement, please, sir? 

STATEMENT OF BRIAN SASSI 

Mr. SASSI. Thank you Chairman Stupak and members of the 

Committee for inviting me to testify before you today. I am Brian 

Sassi. And I am President and CEO of the Consumer Division of 

WellPoint. 

There seems to be a lot of confusion about why an insurance 

company might rescind a policy. Some have said that insurers rescind policies because they don’t feel like paying when someone 

gets sick. This is simply not true. The decision is about controlling 

corporate fraud and material misrepresentations that contribute to 

spiraling health care costs. 

At WellPoint, we do not rescind a policy coverage just because 

someone on the policy gets sick. My company employs over 42,000 

people nationwide: 4,500 here in Indiana and 1,300 across the river 

in Kentucky. For anyone to suggest that I or my fellow associates, 

each of us with our own personal experiences with illness, would 

rescind a person’s coverage just because he or she got sick is an 

unfair accusation. I hope, Mr. Chairman, that as you complete your 

inquiry, you will be able to help correct this misperception. 

We take contract rescissions very seriously because we understand the impact these decisions can have on families and individuals. We have put in place a thorough process with multiple steps 

to ensure that we are as fair and as accurate as we can be in making these difficult decisions. And to be clear, we do not rescind policies based on a condition for which the policyholder was unaware 

at the time that he or she had applied for coverage. 

I want to emphasize that rescission is about controlling fraud 

and material misrepresentations that contribute to spiraling health 

care costs. By some estimates, health care fraud in the U.S. exceeds $100 billion per year, an amount large enough to pay for covering nearly half of the 47 million uninsured in this country. 

Rescission is one tool employed by WellPoint and other health insurers to protect the vast majority of policyholders who provide accurate and complete information from subsidizing the costs for 

those who do not. The bottom line is that rescission is about combating costs driven by these issues. 

If we fail to address fraud and material misrepresentation, the 

cost of coverage would increase, making coverage less affordable for 

existing and future individual policyholders. I would like to put 

this issue in context. 

While most people in this country who are under the age of 65 

receive coverage through their employers, 15 million Americans 

purchase coverage in the voluntary individual market. In a market 

where individuals can choose to purchase insurance at any time, 

health insurers must medically underwrite applicants for current 

health risk. 

If an individual buys health coverage only when he or she needs 

health care services, the system cannot be sustained. While we understand and appreciate that this is a critical personal issue, individual market rescission impacts an extremely small share of the 

individual market membership. 


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In our experience, we believe that more than 99 percent of all applicants for individual coverage provide accurate and complete information. In fact, as a percentage of new individual market enrollment during 2008, we rescinded only one-tenth of 1 percent of the 

policies that year. 

Here in Indiana, the issue of rescission in health insurance also 

affects an extremely small number of individuals. In 2008, we enrolled over 66,000 new individual market members but rescinded 

only 116 individuals. 

Rescission is a longstanding insurance contract remedy in America. The concerns regarding rescission surfaced in the California 

media in 2006, generating the public concern which we are discussing here today. Our main point today is the same as it was 

then. A voluntary insurance market for health insurance requires 

that we protect our members from costs associated with fraud and 

material misrepresentations. Otherwise the market cannot be sustained. 

In response to the public concern over the practice of rescissions, 

WellPoint in 2006 undertook a thorough review of our policies and 

procedures. Following that review, WellPoint was the first insurer 

to announce the establishment of a variety of robust consumer protections that ensure rescissions are handled as accurately and as 

appropriately as possible. 

These protections include: creating an application review committee, which includes a physician that makes rescission decisions; 

two, establishing a single point of contact for members undergoing 

a rescission investigation; and, three, establishing an appeal process for applicants who disagree with our original determination 

which includes a review by an application review committee not involved in the initial decision. And in 2008, WellPoint was the first 

in the industry to offer a binding, external, independent third party 

review process for rescissions. We have put all of these protections 

in place with multiple steps because we cover millions of Americans and want to be as fair and as accurate as we can be. 

In response to policy-maker interest in enacting consumer protections related to rescission, WellPoint is proposing a set of rescission 

regulations with new consumer protections. I have outlined these 

in my written testimony. 

In addition, the health insurance industry has proposed a set of 

comprehensive and interrelated reforms to the individual health insurance market as a whole. The centerpiece of this proposal is the 

elimination of medical underwriting combined with an effective and 

enforceable personal coverage requirement. This would render the 

practice of rescission unnecessary. 

We appreciate that the health care reform bills under consideration in the House envision such a system. However, unless Congress creates a strong and effective personal coverage requirement 

and allows younger individuals to receive sufficient discounts, 

many only buy coverage when they need services, which will dramatically drive up the costs for everyone. 

As currently written, the health care legislation under consideration in the House does not accomplish this. We would welcome the 

opportunity to work with you to find common ground on this issue 

to make certain that these insurance market reforms achieve the 


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object so that we can make quality, affordable health coverage 

available for all Americans. 

Thank you for the opportunity to discuss this issue and these 

proposals with you. I look forward to your questions. 

[The prepared statement of Brian Sassi follows:] 


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Mr. STUPAK. Thank you, Mr. Sassi. 

Ms. Cutter, your opening statement, please? 

STATEMENT OF CAROL CUTTER 

Ms. CUTTER. Thank you, Mr. Chairman. 

Chairman Stupak, Representative Hill, Representative Yarmuth, 

thank you for the opportunity for the Indiana Department of Insurance to make comments today in terms of procedures we follow 

that are set up according to State legislature rules and law, also 

through our HIPAA process that was passed by the federal government back in 1996. 

As you know, individual health policies are legal contracts that 

contain certain provisions. And all insurers who write policies in 

Indiana must include those particular provisions in their form filings and are submitted to our department for review before that 

contract or policy is allowed to be sold or offered to any consumer 

residing in Indiana. 

These provisions have been adopted over the years by our State 

legislature and tend to be fairly consistent among the 50 states. 

The National Association of Insurance Commissioners, which is a 

trade association for insurance commissioners throughout the 

State, also helps state departments of insurance develop language 

for statutes and regulations or models for the language that may 

be used for guidance as well. 

There are thirteen provisions currently in Indiana code. They are 

the entire contract, time limit on certain defenses or incontestability, grace period, reinstatement, notice of claim, claim forms, 

proofs of loss, time of payment of claims, the actual payment of 

claims, physical examinations and autopsy, legal actions, change of 

beneficiary, and guaranteed renewability provisions. 

Of these provisions, the second one, which is that time limit on 

certain defenses or incontestability, is the provision that prohibits 

an insurer from denying a claim or voiding coverage once the policy 

has been in effect for 2 years or more from the date of issue, unless 

fraud has occurred. 

Thus, an insurer is allowed to rescind coverage only within the 

2-year window following issuance of that policy for any 

misstatement or preexisting condition that wasn’t indicated on the 

application for coverage. 

HIPAA supports this very same action within the ‘‘guaranteed 

renewability of individual health coverage’’ wherein it states that 

an insurer may non-renew or discontinue coverage due to nonpayment of premium, fraud or intentional misrepresentation of material fact, or withdrawal of the insurer from the marketplace, if 

the insured moves outside the service network, or there is a termination of membership in the association that offered the insurance. 

So in Indiana, we follow not only the laws under the State legislature that have been given to us but also under the federal HIPAA 

law. 

There are no provisions in Indiana code which disallow the rescission or specify the procedures under which that event is to 

function. However, Indiana does have two alternatives that allow 

insurers to offer individual policies that do contain exclusions for 

specific conditions, called waivers, if the applicant chooses to accept 


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it. This allows people who would normally be declined for coverage 

or refuse coverage the ability to pick a policy that may have a 

waiver for a health condition that that applicant does not believe 

would be recurring in the future. 

A second safety net that Indiana offers is the Indiana Comprehensive Health Insurance Association, which is our State risk 

pool, which does open its doors to anyone who is refused coverage 

by an insurer in the State of Indiana or have a condition that is 

considered uninsurable by an individual carrier. 

Our policy analysts within the department also review the language contained in any applications that are used by insurers to 

issue health policies to make certain that there are no all-inclusive, 

have you ever, or other questions using medical terminology too 

complex for the average consumer to understand. No insurer may 

use an application without our stamped approval of that form. 

Indiana’s statutes do not require insurers to report the number 

of policies rescinded as part of their annual statements. So our involvement with rescissions begins when the insured files a complaint with our Consumer Protection Area. 

We then investigate the actions surrounding the rescission to see 

if there has been any inappropriate behavior on the part of the insurer. Last year in Indiana, of the 6,000 complaints we investigated, 14 of those complaints were for rescission of individual 

health policies. Of those 14 rescissions, 2 of them were for a medical condition for which the claim that had occurred was not related 

to that particular angle mentioned. 

And so alternative arrangements were made for the insurer to 

provide coverage for that person, instead of actually rescinding the 

coverage. Generally, the rescission complaints we have reviewed 

over the last few years were most always based upon the same 

medical condition for which the insured had submitted a claim but, 

for some reason, had not revealed that information on the application of coverage. 

As noted in prior testimony before this Subcommittee, insurers 

have established outside review procedures when a rescission occurs, which does give the policyholder the opportunity to question 

those actions and retain coverage or receive a waiver rider for that 

condition. The department’s Consumer Protection Unit is specifically described and used for a safety net for consumers who fall 

into these sorts of categories. 

Another concept, which Mr. Collins just referred to and I believe 

the Subcommittee is considering, would be the change on an individual health contract to a guarantee issue basis, with an accompanying coverage, mandate for coverage, which would eliminate the 

need for medical histories for applicants under any circumstances. 

We believe that the insurers currently have the legal ability to 

perform medical reviews within that 2-year contestability period to 

protect the other policyholders from fraudulent claims payments or 

higher premiums. We are always open to discussions for any improvements that could be made in the rescission process itself. 

Thank you for your time. 

[The prepared statement of Carol Cutter follows:] 


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Mr. STUPAK. Thank you. 

And, Professor Kinney, your statement, please. 

STATEMENT OF ELEANOR KINNEY 

Ms. KINNEY. Thank you. Thank you, Chairman Stupak, Mr. Hill, 

Mr. Yarmuth. It is an honor for me to be here to testify today. And 

I will try to be a little bit briefer than my statement, which has 

already been submitted for the record. 

I was asked by Mr. Gordon to kind of look at Indiana and the 

situation generally. In Indiana, the task force at Indiana University while the Indiana University Health Reform Faculty Study 

Group did do an in-depth study of the situation in Indiana with respect to health coverage. 

I fear that the situation with requiring people to rely on the private market is increasingly—specifically, I think there are situations where we are losing health insurance coverage through employment. And, in particular, we have witnessed a fairly precipitous drop of insurer-sponsored coverage over the years. And we 

find that employers compared to other states offer less insurance. 

Also, with the economic times, people are losing jobs in Indiana, 

like other states. And, thus, they have to rely on the private individual insurance market for their health insurance. And this puts 

people with serious conditions or health problems in a difficult position when it comes to getting adequate health insurance coverage. And I think it is one reason why we need comprehensive 

health reform, which I think all of us uniformly believe is the case. 

One would say, ‘‘Well, somebody with a health problem creating 

an existing condition can go to the Indiana Comprehensive Health 

Insurance Association.’’ And, indeed, they can, but on page 3 of my 

testimony, I have put together a chart of what that would cost for 

somebody in Marion County, which is Indianapolis; and 

Venderburgh County, which is down in Evansville on the coast. 

I don’t know about your all’s financial circumstances, but I would 

find that having to pay some of these premiums prohibitively expensive. And then if you look at the information on the plans which 

were available on the Web site, you get health insurance coverage 

that is pretty skimpy in terms of the co-insurance involved. In 

other words, there is lots of money that would have to be paid out 

of pocket before benefits chip in. So it is questionable in my judgment whether this is really a sufficient answer to the problem of 

people with serious health insurance problems. 

We have also done work in the Center for Law and Health in the 

past that shows that these kinds of practices with insurance companies have occurred and people with serious illness have experienced cancellation of insurance policies. And I have got that research on page 4 of my testimony. 

It is clear that HIPAA, which I think, in part, was designed to 

address the problem of non-renewal and cancellation, really hasn’t 

done the job when it comes for revision. 

I think that strategies for reform, which I was also asked to address, must address the unfair aspects of the process of rescission 

and post-claims underwriting. 

In review, in getting ready to come here today, I looked at the 

National Association of Insurance Commissioners’ principles on 


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health reform. And one of their principles on health reform quoted 

on page 6 of my testimony is addressing adverse selection. And I 

think it is very important to appreciate that adverse selection is an 

important problem in the private health insurance market. And it 

is not realistic for us to assume that that is not an important problem for insurers. It will be addressed if we have comprehensive 

health insurance with individual mandate. 

And, finally, I would commend the Committee, not only for H.R. 

3600 and the provisions in that bill intended to address rescission 

practices and post-claim underwriting, but for the tremendous job 

in laying out issues associated with this very, very difficult condition. 

I think that you have done a good job with increasing the evidentiary standard that would be applied in making a rescission decision as well as require external review. I am interested to see 

that insurers that have testified here today have also talked about 

external review. 

Another provision you might want to think about that I see has 

been bantered around in the NAIC model of long-term care, health 

insurance regulations of long-term care, insurance regulations, is a 

prohibition against post-claims underwriting. It seems to me that 

if an insurance company has the chart for a specific period of time, 

it might be closer than a shorter period of 2 years, then they ought 

to be able to look at the chart, see if they want to provide a policy 

and let the policyholder know that they are not going to be able 

to be there for them in the event of another serious illness. 

Thank you. I will take your questions. 

[The prepared statement of Eleanor Kinney follows:] 


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Mr. STUPAK. Well, thank you, Professor. 

And before I turn to my two colleagues, let me just ask one quick 

question. Mr. Collins, on behalf of Golden Rule Insurance Company 

and UnitedHealth Group, would you commit today that your company will never rescind another policy unless there is a potential 

fraud misrepresentation in the application? 

Mr. COLLINS. We would commit that we will not rescind a policy 

if there is a knowing and material misrepresentation or omission 

on a health insurance policy. 

Mr. STUPAK. So, in other words, your answer is no? 

Mr. COLLINS. No, sir. There is quite a bit of overlap in those two 

standards between knowing and intending. The standard that we 

follow is a knowing material omission, misstatement or—— 

Mr. STUPAK. So if I just forget to check a box, I can be rescinded, 

right? 

Mr. COLLINS. Well, our—— 

Mr. STUPAK. That is an omission. 

Mr. COLLINS. Well, sir, our applications are designed to elicit relevant information needed to underwrite a policy form. 

Mr. STUPAK. Anyone who went through applications in Washington could explain it, the terms. 

Mr. COLLINS. Sir, I can explain the terms of ours. I believe you 

are referring to somebody else who testified. 

Mr. STUPAK. So to my question of intentional fraud, unless there 

is intentional fraud, you reserve the right to rescind an application 

for whatever reason your policy states? 

Mr. COLLINS. We follow state laws. 

Mr. STUPAK. Every state is a little different. 

Mr. COLLINS. And we have an obligation to our policyholders to 

honestly fill out the application, to fill out the application completely. Our people made it up. We have a condition excluded from 

coverage or some who are even designed to treat them the same 

as people who did not fill out an application completely or remain 

during this representation in the application. 

Mr. STUPAK. My concern is that your definition of knowing is you 

assume you know everything in your medical records for the last 

5 years. Lay people really don’t. 

So let me go to Mr. Sassi. Are you willing to commit that 

WellPoint today that your company will never rescind another policy unless there is intentional fraud, misrepresentation in the application? 

Mr. SASSI. Like Mr. Collins, WellPoint follows state law. In the 

vast majority of states in this country—— 

Mr. STUPAK. It is a very simple—— 

Mr. SASSI. No, it isn’t, sir. 

Mr. STUPAK [continuing]. ‘‘Yes’’ or ‘‘No’’ answer. 

Mr. SASSI. Well, it is not a simple question because with the misrepresentations of the law. And so in most states, it is a no-win 

standard. And if someone knowingly misrepresents their health 

status and it is material to whether we could offer a policy, then 

we will rescind that but only if it is material in the interim and 

it is not just—— 

Mr. STUPAK. Even if it is unintentional, just because they knowingly missed something, you could rescind them, right? 


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Mr. SASSI. If it is material, then it would have not already covered—— 

Mr. STUPAK. Sure. If they knowingly—— 

Mr. SASSI. If someone has been unaware of their medical condition—— 

Mr. STUPAK. Sure. 

Mr. SASSI [continuing]. Then we would not rescind. 

Mr. STUPAK. You have 1,400 codes to trip up people, right? These 

are your codes. Don’t you have 1,400 codes which trigger a review 

of an application post-underwriting, as the professor said? 

Mr. SASSI. I would contend that we do not participate in postclaim underwriting. 

Mr. STUPAK. You have 1,400 codes that trigger a review of policies, right? You have 1,400 and Assured has 2,000 different codes. 

Once you trigger one of those codes, there is an automatic review 

to try to get out and rescind that policy? 

Mr. SASSI. Not necessarily, only if it is—— 

Mr. STUPAK. But there are 1,400 codes, right? Can you say ‘‘Yes’’ 

or ‘‘No’’ to that? 

Mr. SASSI. Yes. And there are—— 

Mr. STUPAK. OK. 

Mr. SASSI [continuing]. Tens of thousands of medical conditions. 

Mr. STUPAK. Mr. Hill for a question, please? 

Mr. HILL. Thank you, Mr. Chairman. I have got a few questions 

for you particularly, Mr. Sassi, but I also have a general question 

I want to ask. 

Do either one of you offer incentives to your employees when 

they are able to find some reason they need to file this rescission? 

Mr. COLLINS. Absolutely not, Congressman. 

Mr. SASSI. WellPoint does not have a policy to offer incentives or 

a pay/borrow system to employees. 

Mr. HILL. How would you respond to the one woman who said 

that she had a friend of hers in church whose job it was to find 

reasons we cancel policies? Any explanation of that? She gave her 

testimony under oath. So it has to be an accurate statement. 

Mr. COLLINS. Well, sir, I really can’t explain Ms. Beaton’s testimony about the practices of Health Care Services Corporation, 

which is a Chicago-based Blue Cross/Blue Shield parent company 

with Blue Cross in Texas. 

Mr. HILL. You don’t have anybody on staff to look at this kind 

of thing, do you? 

Mr. COLLINS. Well, sir, we have processes, as all insurance companies do, including group insurance companies, to monitor for preexisting conditions that may or may not be covered under our policies. 

Mr. HILL. Well, let me ask the question a different way, then. 

That person sends in a claim, whatever it might be, heart surgery, 

cancer, whatever it is. When they send in that claim, is there a 

person in your company that begins a review of that person’s medical records before they pay that claim? 

Mr. COLLINS. There is not a person that starts an investigation 

based on a single item that comes into the company. No, sir. 

Mr. HILL. Mr. Sassi. 


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Mr. SASSI. We do have people that look for fraud and situations 

that—— 

Mr. HILL. After a claim is filed? 

Mr. SASSI. Well, we do not have departments of people that just 

review claims to determine fraud. In the individual market, we do 

exclude coverage for certain preexisting conditions if those conditions exist. So we do have checks and balances. 

Mr. HILL. I think your answer is yes, you do do an investigation 

of that person’s medical records after a claim is filed? 

Mr. SASSI. Yes. An investigation does not turn into a rescission 

in the individual market. Over 92 percent of rescission investigations are closed with no action. 

Mr. HILL. And, Mr. Collins, that is not your policy? Is that what 

you are saying? 

Mr. COLLINS. Well, my point was, sir, that based on a single data 

point, we are not doing investigations. We clearly will review 

claims for applicability to the policy, whether they are covered in 

the policy. 

There are extensive computerized claim reviews that happen. 

Throughout the industry, whether it is group insurance, whether it 

is individual insurance, there are—every claim goes through a computerized system that reviews the appropriateness of the claim and 

whether the claim is eligible, whether the person is eligible, the 

provider is eligible who is submitting the claim. 

Mr. HILL. Let me ask the question in a third way. Does a claim 

trigger an investigation? 

Mr. COLLINS. There are many ways that rescission investigations 

could start. Sometimes rescissions are started with a call from a 

provider, a precertification call. Sometimes it is because a claim is 

submitted, but there are multiple ways, multiple routes in which 

we get intelligence that there is a claim that may have been preexisting, which may or may not have been disclosed on an application. 

Mr. HILL. And is a claim one of those triggers? 

Mr. COLLINS. There are multiple aspects that we look at, but a 

claim—— 

Mr. HILL. Is a claim one of them? 

Mr. COLLINS. Yes, sir. 

Mr. HILL. Mr. Sassi, you are the CEO of WellPoint’s consumer 

business. And your company has provided the Committee with 

thousands of pages of documents relating to policies you rescinded. 

I would like to ask about several policies you rescinded here in Indiana. 

In the case you identified as case number 59–71–7, WellPoint rescinded an Indiana resident’s health insurance because he failed to 

disclose a condition called chronic obstructive pulmonary disease, 

or COPD. Are you aware of this claim? 

Mr. SASSI. I am not aware of the specific case. 

Mr. HILL. Mr. Sassi, these are documents you provided to the 

Committee. These are from your own files. Our staff has been going 

back and forth with your team about this case for weeks. Are you 

now saying you don’t know anything about it? 


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Mr. SASSI. I am aware that WellPoint has provided the requested 

documents to the Committee. I have personally not reviewed those 

documents. I am aware that there is a high level of—— 

Mr. HILL. Let me ask you this. The doctor in this case proved 

that WellPoint made a mistake. Why did the policyholder have to 

go out and hire a lawyer to convince you to reinstate the policy? 

Why didn’t you believe the doctor? 

Mr. SASSI. Again, I know nothing about the details of the case. 

Mr. HILL. OK. Well, you know, I wish I could stay and ask questions. It is obvious that the claims procedure does trigger investigations. And you had people that are going through the very small 

details of a person’s medical history in order to find a way of denying that claim. I think it is rather obvious. 

Mr. Chairman, let me thank you for coming to Indiana to hold 

this hearing. It is very important that we get to the root of a lot 

of reasons that have been offered here as to why claims are denied. 

We appreciate your leadership in this particular issue. Again, we 

appreciate you coming here to Indiana. 

Mr. STUPAK. Thank you, Congressman. And we look forward to 

seeing you back later today. 

Mr. Yarmuth. 

Mr. YARMUTH. Thank you, Chairman Stupak. 

Let’s just ask. Chairman Stupak showed you and you acknowledged it, that there are 1,400 diagnostic codes that would prompt 

a retroactive review of the insured. And you said there were 20,000 

diagnostic codes? 

Mr. SASSI. There are thousands. 

Mr. YARMUTH. Thousands more than the 1,400. What would distinguish the 1,400 codes that prompt a review from the rest of 

them? Is there a common distinction? 

Mr. SASSI. I would say they are codes. And this is particularly 

in the individual insurance market, where we receive information 

after a policy is issued. And our claims system would if a claim was 

received—it could be a pharmacy claim, a $20 pharmacy claim— 

that pertained to either a chronic condition that a member might 

have or some type of ongoing condition that would prompt us to investigate whether it was a preexisting condition or not and whether that was disclosed to us or not on the application. 

Mr. YARMUTH. Would it be fair to say—and if not, would you correct me?—that the distinction would be that these are diagnoses 

that would require relatively expensive and long-term payments? 

Mr. SASSI. I would say not in all cases because many pharmacy 

claims that come in for meds are for—— 

Mr. YARMUTH. I’m talking about the condition itself, not the actual individual claim. What we were talking about here—and Jim 

Stupak has a list. I have a list of Blue Cross in California, for instance. And it is individual plans, table of diagnoses, subject to retroaction review. 

And it is not a list of 1,400. It is a list of two pages long. I am 

sure there is a third, three pages long. And it is things like diabetes, neoplasms, or cancers, schizophrenic disorders, asthma, rheumatoid arthritis, emphysema, chronic renal failure, not anything 

like chicken pox. These are things reading across this list that 

would require lengthy, expensive treatment. 


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Would you say that is true? I mean, would a diagnosis in a child 

of chicken pox prompt a retroactive view of the claim or the medical history? 

Mr. SASSI. Most likely not, but from looking at that list, I would 

say not every condition is necessarily an expensive condition. Many 

people have these conditions and for very little cost. 

Mr. YARMUTH. I am not sure it has been said at this hearing, but 

I know that it came out at a hearing in Washington that over the 

past 5 years, there have been approximately 20,000 rescission cases 

that saved according to insurance company data $300 million. That 

averages out. My math is $15 a case. 

If you were to have a situation like some of the ones we heard 

here today—we had two cases of breast cancer on the panel before 

us, before you. Sir, could you give us an estimate, either one, Mr. 

Collins, Mr. Sassi, of what the average expenditure for treatment 

of the cases that you heard today might be? 

Mr. COLLINS. Not off the top of my head, Congressman. No, sir. 

Mr. YARMUTH. Could you give me a range? 

Mr. COLLINS. The range, sir, is like—I really couldn’t, sir, give 

you a reasonable estimate. 

Mr. YARMUTH. Would you think that $15,000 is probably as little 

as in the case of breast cancer the cost of a double mastectomy and 

the ensuing chemotherapy and in some cases reconstructive surgery? Would you say that those situations would cost substantially 

more than $15,000? 

Mr. COLLINS. For all of those conditions together, yes, sir. 

Mr. YARMUTH. So the odds are that if there were 20,000 rescission cases over the last 5 years, the actual savings to the insurance 

companies, even though they might not be able to calculate it because a lot of it is prospective, could be substantially more than 

$300 million. In fact, it could be in the billions of dollars. 

I will ask it another way. Is it unusual for a cancer regimen, a 

treatment regimen, to be in the hundreds of thousands of dollars? 

Mr. COLLINS. No, sir. 

Mr. YARMUTH. Right. I think the problem that a lot of us have 

is we look at the insurance company profits over the last few years 

in light of the rest of the indicators in the economy, we see 

WellPoint’s profits having increased in 7 years by something like 

1,300 percent from 200 and some million to 3. something billion 

and United HealthCare’s profits increasing over 500 percent in the 

same period of time. And we hear cases of rescission in which we 

know that literally hundreds of thousands of dollars per case could 

have been saved. 

And we question whether this is a policy that is being implemented, Mr. Sassi, as you said, to be shared to those people who 

don’t knowingly misrepresent the policies and whether it is strictly 

a financial consideration. 

And, I mean, we know that the premium increases of 100 percent 

in the individual market over that same period of time do not particularly relate to costs in the economy. They don’t relate to salary 

increases. 

So I would say that we are trying to decide what to do. You 

know, I am very pleased to see that we have a pretty good conVerDate Mar 15 2010 05:15 Aug 04, 2012 Jkt 074091 PO 00000 Frm 00076 Fmt 6633 Sfmt 6633 E:\HR\OC\A091.XXX A091

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sensus of the fact that we need to do many of the things that we 

are talking about doing in Congress. 

I would basically say, to what can we attribute these incredible 

profit margins when we are trying to deal with making sure that 

individuals such as the ones we saw here are given the care that 

they need and that they contracted for? 

Mr. SASSI. Well, I can’t speak to the numbers because I haven’t 

seen the numbers, but going back 7 years, I think the large increase in profit numbers is not comparing necessarily apples to apples. 

Seven years ago, WellPoint was a much, much smaller company. 

The last 7 years, we have merged with several other companies. 

And so I think that would account for much of which you—in fact, 

the last 7 years, our profit margins have not been going that well. 

Mr. YARMUTH. Mr. Collins, would you like to comment on that 

as well? 

Mr. COLLINS. Yes, sir. UnitedHealth Group has grown via acquisition, much as WellPoint has. And I think that the point that Mr. 

Sassi made around the comparability of numbers over time is one 

of those things. 

UnitedHealth Group is one of the largest health care organizations in the United States. We touch 70 million American consumers. And we grow value to the system. And people pay us for 

the value that we add to the system. 

We help pull down costs. We help organize the care, the delivery 

of care. We are involved in just about every aspect of delivery. And 

most of the innovation that has come forward in the past 30 or 40 

years around health care delivery has been financed by and facilitated by the health insurance industry. 

So I think that as one of America’s largest businesses, we are entitled to a healthy profit margin. And we have been very prudent 

about our investments through this financial turmoil that we have 

had. And the company has got a good, sound balance sheet. It is 

in good shape to take care of the customers that meet its commitments. And we don’t apologize for that. 

Mr. YARMUTH. Let me just ask two quick questions, Mr. Chairman. And then I will yield back my time. 

In light of what you have said, you indicated that there has been 

a fairly substantial concentration going on in the insurance market 

over the last decade. Is that a fair characterization of what you 

said? 

So that when opponents of what we are trying to do in Congress 

say, ‘‘Well, there is already substantial competition out there in the 

market,’’ what you are saying is that competition has diminished 

over the last decade. Is that true? 

Mr. SASSI. I would say that there has been a fair amount of consolidation within the health insurance industry, but, as the Nation’s largest health insurer, insurance company, we still have on 

average only 30 percent market share. In the vast majority of our 

markets, there is healthy competition amongst literally tens, sometimes hundreds of—— 

Mr. YARMUTH. You have 30 percent of the market share in the 

country. And UnitedHealth has how much? 

Mr. COLLINS. I don’t know off the top of my head. 


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Mr. YARMUTH. A substantial amount, right? And this represents 

substantial competition in your minds? I think your company in 

Kentucky controls 59 percent of the market. Do you consider that 

a healthy, competitive environment or are you just good at it? 

Mr. COLLINS. One of our toughest competitors is located right 

here in Louisville: Humana. 

Mr. YARMUTH. Thank you for that shout-out, yes. 

Mr. COLLINS. On the front lines, sir, I mean, there is quite a bit 

of competition. In fact, there has been a large number of new entrants into the individual health insurance market. 

And I would urge the members of the Committee if they had a 

moment just to go to ehealthinsurance.com and put in your Zip 

code and see what pops up. You will find that there is a wide variety of carriers. There is great transparency in the individual market in terms of price and product. And there is a lot of competition 

in this marketplace. We have had a lot of new entrants. 

Mr. YARMUTH. I would be interested, and I will do that. 

One final question. When you have somebody who has been in 

your individual market for 10 years and they have been paying 

premiums for 10 years and they end up like one of our former panelists and they have a serious illness and their policy ends up being 

subject to rescission, how is that handled? How do you handle all 

the premiums they have been paying you for all of those years? 

Mr. SASSI. WellPoint would not rescind the policy after 2 years. 

So if someone had been paying a premium for 10 years, we would 

not look at that, irregardless of—— 

Mr. YARMUTH. They were not the subject of rescission. OK. What 

if they fell within the 2-year period, if they have been paying for 

2 years? What would you do with their premiums? 

Mr. SASSI. Well, as I outlined in my testimony, we have a very 

thorough process where we review. We reach out to the members 

to see if there is any additional information the member could provide. We share the information that we have. It goes to a committee that is established with the doctor that makes the decision 

and multiple appeal processes, including binding third party appeal 

and a third party review. 

Mr. YARMUTH. That is all wonderful. What I am saying is if you 

decide to rescind their policy, they have been paying for 20 months 

and then you rescind their policy, what happens to the premiums 

they have been paying? 

Mr. SASSI. The premiums would be refunded less any claims that 

were paid. 

Mr. YARMUTH. OK. Is that the same policy you would have, Mr. 

Collins? 

Mr. COLLINS. We refund 100 percent of the premiums on the policy. 

Mr. YARMUTH. OK. That is all I had, Mr. Chairman. Thank you. 

Mr. STUPAK. Thank you, Mr. Yarmuth. Thanks again for joining 

us. Thanks. 

Well, let me ask this question just on competition. You say there 

is so much competition between you, between the insurance companies. Isn’t it true that the insurance companies are not subject to 

antitrust laws? 

Mr. COLLINS. I am not prepared to answer that question, sir. 


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Mr. STUPAK. Maybe Mr. Sassi? 

Mr. SASSI. I am not an attorney. 

Mr. STUPAK. So when the Energy and Commerce Committee does 

the markup of H.R. 3200, the national health care bill, when I offer 

my amendment to take away the antitrust exemption for insurance 

companies, you have no objection to that? 

Mr. COLLINS. Sir, my testimony was I am not prepared to testify 

on that. And I am really not an expert in antitrust matters in any 

way, shape, or form. 

Mr. STUPAK. It is only the insurance industry and Major League 

Baseball that are not subject to antitrust laws. Therefore, you can 

set the profits wherever you want. And we would have no recourse. 

Competition. The average health insurance premium for Indiana employers and employees went from $6,628 in 2000 to over $12,153 

in 2007. In that group, 116 percent were individuals and 75 percent for employers. Doesn’t that account for the huge profits you 

had? 

Mr. SASSI. I think that probably accounts for an increase in 

health care costs. 

Mr. STUPAK. Well, accounting for the increase in health care 

costs has been why would your profits according to SEC go from 

2.4 billion to 12.9 billion? 

And if you take WellPoint, Mr. Sassi, your profits increased from 

226 million in 2000 to 3.45 billion? To me, that is a 1,380 percent 

increase. So it can’t be health care costs. It has got to be the record 

premiums you are charging people. 

Mr. SASSI. Well, as I have previously testified, looking back at 

the starting points, WellPoint was a much different company. And 

we have grown dramatically through acquisitions of other companies. 

Mr. STUPAK. Sure. 

Mr. SASSI. So I don’t think it is an apples to apples comparison. 

Mr. STUPAK. Sure, but you said that the reason why premiums 

went up is because health care costs so much nowadays, costs so 

much to deliver health care. Then if that is the case, you would be 

paying out more money, and your profits would be less. You 

wouldn’t be having a 1,380 percent increase. 

Mr. SASSI. Chairman, the point that I was trying to make is that 

7 years ago, we were a company of a million members. And now 

we are a company that insures over 35 million members—— 

Mr. STUPAK. Sure. 

Mr. SASSI [continuing]. With a combination of many companies. 

Mr. STUPAK. Sure. But you said the reason why you had to 

charge, you went from $6,600 to $12,000, was because health care 

costs went up. But, of course, corresponding is the fact that your 

profits also went up 1,380 percent when the cost of health care basically went up 116 percent. There is quite a disparity there, no 

matter how many people you cover. If you cover more people, you 

would have more costs. 

Let me ask you this question. The American Insurance Plans 

wrote us a letter. Are you both a member of AHIP, America’s 

Health Insurance Plan? 

Mr. COLLINS. Yes. 

Mr. SASSI. Yes. 


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Mr. STUPAK. I want to ask a question about no longer doing rescissions without intentional fraud. You know, I know today you 

sort of danced around it. After I asked a question in Washington, 

the AHIP wrote a letter, said, ‘‘Well, the companies focused their 

responses on specific legal standard referenced in the question. 

They will not rescind an individual’s coverage on the basis of a preexisting medical condition which the policyholder was unaware of 

at the time he or she applied for coverage.’’ 

So will you commit today that you will not rescind an individual’s coverage on the basis of a preexisting medical condition which 

the policyholder was unaware of? Will you commit to that today, 

Mr. Sassi? 

Mr. SASSI. Yes. I previously testified to that this morning. 

Mr. STUPAK. You, too, Mr. Collins? 

Mr. COLLINS. Yes, sir. That is the knowing standard I was testifying to earlier. 

Mr. STUPAK. OK. Then it goes on to say, ‘‘And are you committing that you will only rescind the policy to the policyholder as materially misrepresenting their knowledge, health status or history?’’; so a material misrepresentation. Is that correct? You do 

that? 

Mr. COLLINS. Yes, sir, material misrepresentation or omission on 

the application. 

Mr. STUPAK. Is that your standard, too? 

Mr. SASSI. Yes, that is our standard. 

Mr. STUPAK. OK. So we are making some progress. Let me ask 

you this. Mr. Sassi, Mr. Hill asked you a number of questions 

about victims of rescission here in Indiana. 

And our Committee also asked you questions and asked for your 

cooperation so we could contact them. In fact, last week we sent 

you a letter listing four cases here in Indiana. And they were case 

number 59–717–60, number 65–86, number 67–20, and number 

65–83. And we asked you to send these people a letter and ask 

them to contact the Committee. And you refused, saying that you 

could not do that. 

Why did you refuse to contact these policyholders? 

Mr. SASSI. It is our understanding that the request being asked 

of us would have violated HIPAA. 

Mr. STUPAK. How would it violate HIPAA when the insurance 

company is contacting their policyholder? 

Mr. SASSI. Again, I am not an attorney. And I believe that our 

attorneys were working closely with the Committee staff to determine if and how we could comply with your request. 

Mr. STUPAK. Well, we checked with CRS and everyone else that 

under privacy laws, your company, WellPoint, clearly falls within 

the definition of a covered entity. And you are permitted to use or 

disclose an individual’s protected health information to the individual. It was up to the individual to contact us. 

So would you contact those folks and have them contact our 

Committee? 

Mr. SASSI. I will take that under advisement and speak with our 

legal team. 

Mr. STUPAK. OK. Maybe we will have to use our—let me ask you 

this, then. The Reilling case, Ms. Reilling who was here, why did 


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you cancel her out? Do you still offer these one-group policies, these 

one-person group policies? 

Mr. SASSI. Chairman, Ms. Reilling’s case, here today was the 

first that I had heard of that case. While she was testifying, we did 

do some research. And Ms. Reilling was covered under an employee 

policy issued by Kentucky Retail Federation. 

Mr. STUPAK. Correct. 

Mr. SASSI. So it was an employer plan. And apparently the eligibility rules of that employer plan indicate that groups must have 

two members. And so it is my understanding that the association, 

Kentucky Retail Federation, does not insure groups of one. 

Mr. STUPAK. Are you saying Kentucky Retail Federation told you 

to cancel Ms. Reilling’s? 

Mr. SASSI. They are the policyholder. 

Mr. STUPAK. Really? So for the last 15 years when you allowed 

Ms. Reilling to have this policy, did Kentucky Retail Federation 

pay that premium? 

Mr. SASSI. Chairman, again, this is the first I am hearing about 

this. We would be happy to investigate the situation—— 

Mr. STUPAK. Mr. Sassi. 

Mr. SASSI [continuing]. And provide something for the record. 

Mr. STUPAK. You are under oath. 

Mr. SASSI. Yes. 

Mr. STUPAK. You are not here telling us that Kentucky Retail 

Federation was responsible for providing Ms. Reilling a policy. You 

were. You didn’t go through Kentucky Retail Federation to provide 

a policy or even to contact Ms. Reilling on her policy. 

Everything, every document you have had, everything you have 

seen—and if you did your due diligence, everything is between your 

insurance company and Ms. Reilling or your insurance company 

and Ms. Reilling’s agent. There is no Kentucky Federation. 

Mr. SASSI. Chairman, again, based on my limited understanding 

of the situation, my understanding is that Ms. Reilling was covered 

under a policy issued—— 

Mr. STUPAK. Do you still write single-person group policies? 

Mr. SASSI. I believe other associations. Associations do have that 

option. 

Mr. STUPAK. So you still write single-person policy coverage? 

Mr. SASSI. I can’t definitively say. Again, I would be happy to research the matter and provide a response for the record. 

Mr. STUPAK. Well, you did for her for 15 years. So why was she 

canceled? Was it because she was sick in the last year? 

Mr. SASSI. Chairman, unfortunately, you have exhausted my 

knowledge of the situation. Again, I would be happy to research it 

and provide a response for the record. 

Mr. STUPAK. OK. You said federal privacy laws prevented you 

from contacting your own policyholders to contact our Committee 

if they so choose. Under Ms. Reilling’s case, federal law, HIPAA, 

prevents you from canceling a contract that is in effect. You can’t 

go back and cancel it under HIPAA law. 

So why did you cancel it? It seems like you rely on federal law 

when it is in your best interest, but when it is not in your interest, 

you don’t follow federal law. 


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Mr. SASSI. Again, my understanding is that Ms. Reilling was covered under an employer contract. 

Mr. STUPAK. For 15 years. 

Mr. SASSI. It has eligibility requirements. And, again, I would be 

happy to research it. I don’t know if—— 

Mr. STUPAK. So, Professor, under HIPAA, could they cancel Ms. 

Reilling’s policy? 

Ms. KINNEY. I would be reluctant to answer without all of the 

facts, but the purpose of HIPAA is to enable people to maintain 

their policy. 

Mr. STUPAK. And then HIPAA says you can’t cancel unless you 

have—— 

Ms. KINNEY. Unless you have the statutory standard that is included in your excellent supplemental report and basically intentional misrepresentation or failure to pay the premium. 

Mr. STUPAK. Right. And she was able to. In fact, they even sent 

Ms. Reilling a renewal. They sent her a renewal, and then they 

sent her a rescission, all in the same month. But HIPAA prohibits 

insurance companies from rescinding or otherwise discontinuing individual insurance coverage unless there’s been a fraud or intentional misrepresentation of a material fact by the applicant. 

Ms. KINNEY. The problem with HIPAA is that I think it doesn’t 

go far enough. It does not address rescissions. A rescission is when 

you have the contract that existed in the first place. 

Mr. STUPAK. Sure. 

Ms. KINNEY. It is like an annulment versus a divorce. 

Mr. STUPAK. She wasn’t rescinded. She was just failed to renew. 

And HIPAA goes on to state that ‘‘A health insurance issuer that 

provides individual health insurance coverage to an individual 

shall’’—it is mandatory—— 

Ms. KINNEY. Right, but HIPAA—— 

Mr. STUPAK [continuing]. ‘‘Renew or continue in force such coverage at the option of the individual,’’ Ms. Reilling. 

Ms. KINNEY. Right. 

Mr. STUPAK. So under HIPAA, the failure to renew here since 

they did it for 15 years straight puts you in violation of law. 

Ms. KINNEY. It would be my view that they are in violation of 

the law having seen what is before us before. 

Mr. STUPAK. Let me ask you this, Professor, if I may. In your 

chart, page 3—— 

Ms. KINNEY. Yes. 

Mr. STUPAK [continuing]. It is interesting when I was looking at 

it. It looks like basically from a child until age 60, the premiums 

for women are always higher until you hit 60. Then finally the men 

have a higher premium. Now, I understand there are child-bearing 

years in there, but is there any reason for that or is that just coincidence? 

Ms. KINNEY. I would really have to give that to underwriting and 

actuarial science, which always is a mysterious process. And I 

think that these are determined based on the experiences that the 

insurance industry generally has with people in this age, sex, and 

so forth. 

Mr. STUPAK. You agree with me, though, these four plans laid 

out until age 60, women pay higher premiums than men? 


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Ms. KINNEY. Right. I saw that, too. I mean, I was putting this 

together basically Thursday, Friday. And I was kind of struck by 

that observation, too. 

Mr. STUPAK. Well, let me go back to Mr. Collins and Mr. Sassi 

since our first panel was all women. I am not trying to come to conclusions here, but do you charge women more? Do they have greater health risks than men as a general rule, Mr. Collins? 

Mr. COLLINS. In Golden Rule’s actuarial duties, the individual 

policies that we sell, if you stacked up the policyholders through 

age 65, men would pay slightly more than women over the course 

of a lifetime if you took 1 policyholder for each age and laid them 

out. 

Mr. STUPAK. Right. But of the 60, women pay higher according 

to the professor’s chart. Is there a reason for that? 

Mr. COLLINS. Well, that is the Indiana high-risk pool that you 

are looking at. I don’t think it—— 

Ms. CUTTER. Yes. 

Mr. STUPAK. Yes, you are right. 

Ms. CUTTER. Mr. Chairman, if I may? 

Mr. STUPAK. Sure. 

Ms. CUTTER. That is from the Indiana Comprehensive Health Insurance Association. Those actuarial bases are established by a national firm called Millimen. 

Mr. STUPAK. Right. 

Ms. CUTTER. And they use data from multiple areas to determine 

what the prices should be for individual contracts in Indiana based 

on geography, age, gender, that sort of thing. 

Mr. STUPAK. Surely. Didn’t it strike you as funny as the Insurance Commissioner that up to age 60, women pay more than men? 

Ms. CUTTER. Women generally pay more for health insurance 

during those child-bearing years from about 20 up until about 50. 

And then it starts to more even out, as you have noticed, that by 

age 60, then, the men are tending to catch up. 

The other thing that—— 

Mr. STUPAK. Well, I guess I would agree with that up to maybe 

19 to 40–45, but even as a child, it seems like it is the boys who 

are jumping off roofs. It is not young girls. Why would they pay 

more or why between 50 and 60, they would pay more? 

Ms. CUTTER. I would have to look at the actuarial data that 

Millimen has collected in order to generate those pricings. But 

most of the time, women tend to be more careful about their health 

than men tend to be until they get into those upper ages, when, 

unfortunately, our bodies just don’t work as well as they had 20 or 

30 years previously. And I think that is the point at which men’s 

health starts to catch up in terms of cost with women’s health. 

We would be glad to get that information from Millimen, Mr. 

Chairman, if you would like to have that. 

Mr. STUPAK. Let me ask you this question, if I may. I want to 

make sure I understood this right. So if I write an insurance policy 

in Indiana, an individual policy, after 2 years, I can’t rescind it, no 

matter what? 

Ms. CUTTER. That is correct. The incontestability clause only addresses the first 2 years of a policy. I believe Mr. Sassi made a 

comment earlier in his testimony where you asked him if somebody 


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had paid a premium for 10 years and, all of a sudden, you found 

out there was something wrong with the policy, you couldn’t cancel 

it. His answer to that was no. 

Mr. STUPAK. OK. So there is no rescission after 2 years. Have 

you investigated rescission practices here in Indiana? 

Ms. CUTTER. We have. We have had 14 of those investigated for 

the year 2008. 

Mr. STUPAK. So 14. And what were those reasons for rescinding 

those 14? 

Ms. CUTTER. There are multiple reasons. Generally speaking, as 

I said earlier, they were for a claim that was related to a critical 

condition that had not been revealed on the application by the applicant. 

Mr. STUPAK. So intentionally not renewed or unintentionally? It 

made no difference? 

Ms. CUTTER. There were about three or four of those cases where 

we concluded similar circumstances to Ms. Raddatz’s testimony, 

where there was information that the doctor had indicated in medical records that the patient was completely unaware of. And, 

therefore, in those circumstances, rescission was withdrawn or 

other terms are transforming with that at the 10–4 coverage with 

the weight for a particular provision. 

Mr. STUPAK. Let me ask you this. In your testimony, you said, 

‘‘Our policy analysts also review the language contained in any applications used for individual health policies to make certain that 

there are no all-inclusive or have you ever or questions using medical terminology too complex for the average consumer to understand. No insurer may use an application without our stamped approval on that form.’’ Is that correct? 

Ms. CUTTER. Yes, sir, it is. 

Mr. STUPAK. The binder right there, the red book right there, 

would you take a look at it in tab number 18? That is actually tab 

number 18 is actually AMBIEN’s individual application kit. And if 

you go to page—I believe it is page—let me find it here—page 8, 

start with question, it looks like, 16 there on that form. It says, ‘‘In 

the last 5 years, have you had an illness, physical injury persisting 

or new physical and/or health problems not mentioned elsewhere in 

this application that you have not been evaluated for that you plan 

to have evaluated by a licensed health practitioner?’’ 

It sounds like this sort of question is sort of an all-inclusive, 

‘‘Have you ever?’’ type question. 

Ms. CUTTER. Well, it is limited to a time element of 5 years looking back. 

Mr. STUPAK. OK. So it is everything you had in 5 years. 

Ms. CUTTER. Exactly. We don’t like questions that say, ‘‘Have you 

ever?’’ just as you had stated. 

Mr. STUPAK. OK. So you don’t like that question, but they do 

have that in there, right? 

Ms. CUTTER. Well, giving a time limit that we will allow them 

to say, ‘‘In the last 5 years, has anything else happened to you that 

hasn’t been previously asked?’’ 

Mr. STUPAK. So if you ever had a common cold, you should put 

that down, too, in the last 5 years? I am not trying to be flippant, 

but—— 


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Ms. CUTTER. No. I totally understand. 

Mr. STUPAK. OK. Well, then, another question—and here is 

where I am on page 16 because you have got to help me out with 

this one. 

Ms. CUTTER. On page 16? 

Mr. STUPAK. I am sorry. Question 16 on page 8. 

Ms. CUTTER. All right. 

Mr. STUPAK. ‘‘Within 5 years, have you ever been diagnosed with 

or treated for any of the following?’’ and ‘‘Kelosi’s enditis, Oucher’s 

disease, pneumocystic carinii pneumonia, and sploridia’’? What are 

those? 

Ms. CUTTER. Those are diseases that if you had had a diagnosis 

for, you were going to know that disease. 

Mr. STUPAK. Sure. Can you tell me what they are? I mean, I 

might have it and no one ever told me. 

Ms. CUTTER. I can tell you what several of them are. I can’t tell 

you what every single one of them is. 

Mr. STUPAK. Well, what is Kelosi’s enditis? 

Ms. CUTTER. You would ask the one that I don’t know. 

Mr. STUPAK. Well, you don’t even know what the common name 

of it is? Is it like tendinitis? I don’t know. 

Ms. CUTTER. No. I think—— 

Mr. STUPAK. Do we know what—— 

Ms. CUTTER. I think it is much more serious than—— 

Mr. STUPAK. OK. How about Oucher’s disease? What is that? 

Ms. CUTTER. I don’t know that one either. Hemophilia I know, 

muscular dystrophy, multiple sclerosis. 

Mr. STUPAK. Oh, yes. Yes. I think we all know those. 

Ms. CUTTER. Right, right. 

Mr. STUPAK. But there are about six terms there I have no idea. 

But isn’t your job to weed these out to make sure it is a common 

understanding so we don’t make a misrepresentation on the application forms, we don’t get behind? 

Ms. CUTTER. Absolutely it is our job and my—— 

Mr. STUPAK. Can you go back and look at this application and 

see if there is something we should do to improve upon it? 

Ms. CUTTER. My point would be that those specific conditions 

that are listed are so unusual that you are not going to have one 

of those without a doctor having made a diagnosis about that particular condition because they are relatively serious conditions. 

Mr. STUPAK. Sure. So you are saying because one of those words 

is on there, someone might have said that to me, I should know 

it, right? And I should know what the illness is? 

Ms. CUTTER. I would say if you have been given a diagnosis by 

a physician for one of those conditions, you would be well-aware of 

that condition. 

Mr. STUPAK. I see. OK. Do you support on rescission the Connecticut approach, which basically prohibits post-claims, underwriting? Companies must do their underwriting up front. Do you 

support that idea? 

Ms. CUTTER. I would certainly entertain that idea. Our concern 

would be what kind of time line that would involve because I have 

to tell you very honestly that most physicians’ offices—and not that 


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I blame them for this—insurance papers are the last thing that 

they will deal with in a physician office. 

Mr. STUPAK. Well, do you think it is fair you would be accepting, 

insurance companies accept, your premiums while they don’t know 

if they are going to accept it or not? Shouldn’t they have all of the 

information up front? 

Ms. CUTTER. I think that there probably is a deeper level of information that could be collected up front. I would agree absolutely 

with that. 

Mr. STUPAK. How about the fact that in Connecticut, the State 

insurance commissioner reviews all rescissions and makes a decision within 15 days? State Insurance Commission and the party 

have to make a decision within 15 days. Do you think that is fair? 

Ms. CUTTER. We would be actually open to that sort of consideration. 

Mr. STUPAK. OK. Is there an appeal process in Indiana? If I get 

rescinded, who do I appeal to? 

Ms. CUTTER. The Department of Insurance. And we investigate 

the rescission circumstances and have the ability to work with the 

insurers to either overturn that rescission or make other arrangements for the policyholder to have coverage. 

Mr. STUPAK. Mr. Sassi, you said that WellPoint has an appeal 

process, right? 

Mr. SASSI. Yes. 

Mr. STUPAK. How come Ms. Reilling wasn’t given an appeal process when you canceled her insurance? 

Mr. SASSI. We do have an appeal process. Again, I am unfamiliar 

with the details in Ms. Reilling’s case. Everyone covered under insurance has an appeal process and particularly for rescissions in 

the individual market. As I detailed in my testimony—— 

Mr. STUPAK. Right. 

Mr. SASSI [continuing]. We have multiple levels of appeal process. 

Mr. STUPAK. That is why I am confused. You canceled Ms. 

Reilling without any appeal process. The letter just says: You are 

out of luck. We will offer you something else, but we are not going 

to offer you that. 

Mr. SASSI. Again, my understanding is Ms. Reilling was not covered under an individual insurance policy. She was covered under 

an employer group policy. 

Mr. STUPAK. So if you are covered underneath a group policy, you 

don’t get an appeal process? 

Mr. SASSI. No. We do. All of our policyholders do have an appeal 

process, grievance and appeal. 

Mr. STUPAK. Then she should have an appeal process, right? 

Mr. SASSI. Absolutely. 

Mr. STUPAK. Well, take a look at the binder there, number 23 

right there. I don’t see anywhere it says she has an appeal process. 

It says, ‘‘Thank you for considering us. We have been around for 

over 60 years. We have helped people in the community get coverage. We are writing to your application. We deny you. We will 

offer you something else.’’ 

Mr. SASSI. Well, I think—— 


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Mr. STUPAK. ‘‘And if you have life insurance, you are denied 

also.’’ But I don’t see anywhere it says any kind of appeal process 

or anything. 

Mr. SASSI. Well, I think this letter does not pertain to her losing 

eligibility in her group insurance policy. She would have an appeal 

process with her group policy. It looks like—and, again, this is the 

first time I am looking at this—that this is the declamation for individual insurance. 

Mr. STUPAK. So you are saying that she would have gotten a letter that describes an appeal process when you denied her her coverage? Somewhere it would have said she would have gotten an appeal, ‘‘You have a right to an appeal’’? 

Mr. SASSI. Well, if she was covered under the association 

plan,—— 

Mr. STUPAK. Right. 

Mr. SASSI [continuing]. As I understand—— 

Mr. STUPAK. Right. 

Mr. SASSI [continuing]. The employer, I believe, was responsible 

for providing the appeal rights. 

Mr. STUPAK. The Kentucky Federation of Business had to provide her her appeal rights. Why wouldn’t you? You are the insurance company. 

Mr. SASSI. Well, it is an employer plan. And appeal rights are 

covered in all of our member—— 

Mr. STUPAK. She is her own employer. She was an employer. So 

how would she tell herself to appeal? 

Mr. SASSI. Again, she was a member of a larger group. 

Mr. STUPAK. Kentucky Retail Federation and Better Business. So 

the federation had to tell her her appeal rights? How would they 

know your appeal rights? Wouldn’t you know your appeal rights? 

Wouldn’t your company know? You are expecting—— 

Mr. SASSI. All members have access to appeal rights. It is in the 

member certificates that we issue to members. 

Mr. STUPAK. Let me ask you this, then. I mentioned section 162. 

That is the section in the pertinent part of the health care bill we 

are marking up in committee. When I say ‘‘marking up,’’ we are 

amending it and altering it and maybe change it as it goes to the 

full floor of the U.S. House of Representatives for a vote. 

Basically what the bill says is a health insurance insurer may rescind health insurance coverage only upon clear and convincing evidence of fraud. So would you agree with that, Mr. Sassi, that they 

can only rescind based on clear and convincing evidence of fraud? 

Mr. SASSI. Well, when looking at the House bill—— 

Mr. STUPAK. Right. 

Mr. SASSI [continuing]. That is before you today, looking at rescission in the context of eliminating medical underwriting, having 

a guarantee issue in the individual market, coupled with effective 

and enforceable personal coverage requirement, we do agree with 

the rescission statements that are in the bill. 

On a stand-alone basis, that is taking pieces out of context, but 

we do agree with the premise. Coupled with elimination of that 

preliminary thing in an enforceable personal coverage requirement, 

yes, we would agree with what is in the bill. 

Mr. STUPAK. Mr. Collins, do you agree with what is in the bill? 


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Mr. COLLINS. Well, sir, we would certainly agree in the context 

of health care reform agenda that the House is pursuing that includes enforceable mandate, subsidies for low-income people. It is 

important that the pool of people who are outside of coverage be 

as small as possible and that we get as many people covered as we 

can in order to make this work effectively because affordability is 

the primary barrier to access. 

Mr. STUPAK. Right, but I am not asking about affordability. I am 

asking about health insurance insurers may rescind health insurance coverage only upon clear and convincing evidence of fraud. 

Would you agree with that? 

Mr. COLLINS. Well, sir, I would agree with the overall context of 

health care reform, that that is a workable standard, yes, sir. 

Mr. STUPAK. OK. Well, then the legislation has another provision 

that requires insurance companies to provide ‘‘the individual with 

notice of such proposed rescission and an opportunity for review by 

an independent external third party.’’ Do you agree with that? 

Mr. COLLINS. Well, sir, there is a host of—most states have some 

sort of external third party review requirements in place today for 

claim review, for claims that are denied, and—— 

Mr. STUPAK. Well, this is for rescission. So would you agree that 

there should be—— 

Mr. COLLINS. Well, I am drawing an analogy, sir. 

Mr. STUPAK. OK. 

Mr. COLLINS. I think that those processes work fairly well for us. 

Mr. STUPAK. So you have no problem with that, then? 

Mr. COLLINS. Certainly in the context of reform, it would be a 

valuable service to the public, sir. 

Mr. STUPAK. Mr. Sassi, do you agree it should be an independent 

third party review? 

Mr. SASSI. In 2008, WellPoint already implemented an independent third party review. So we have no issue with this. 

Mr. STUPAK. Why didn’t Ms. Reilling get an independent third 

party review, then, if you had it in there as a company policy since 

2008? She was denied here in this month, June. 

Mr. SASSI. Again, Ms. Reilling was not covered under an individual insurance policy. 

Mr. STUPAK. So only individuals have third party review. If I am 

a part of a group, don’t I get third party review? 

Mr. SASSI. Currently. That was a change we made to our rescission practices in the individual market. 

Mr. STUPAK. So if you are a group, you are out of luck? 

Mr. SASSI. You have other appeal rights. 

Mr. STUPAK. OK. I have to go through my employer to find out 

what they are or does your company tell us what they are? 

Mr. SASSI. We issue certificates of coverage that detail the benefits in each of our plans. And each of those certificates of coverage 

has appeal rights. 

Mr. STUPAK. Professor, it sounds like we are playing semantics 

here. Are we in a way? 

Ms. KINNEY. Well, I mean, different classifications do have meanings, but it does seem that the witness earlier that Ms. Reilling 

had appeal rights. They ought to have been fairly clearly expressed 

to her and accessible. 


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Mr. STUPAK. One of the things I have asked the Committee to 

do is have an amendment ready that not only do you have only rescission based on an intentional fraud and proven by clear and convincing evidence but also have an independent third party review 

but give it 30 days. Is that reasonable? Connecticut has 15 days. 

I guess I am trying to stop this post writing after 30 days and 

also have an independent review done within 30 days because if 

you are waiting for your bone marrow transplant, you don’t have 

a lot of time. 

Ms. KINNEY. Well, you might have an expedited process for that 

kind of a review. For example, with Medicare appeals processes, 

they have an expedited process for appealing coverage decisions 

that are life-threatening ostensibly. 

But here I think that the insurance industry should be able to 

investigate a policy, but they need to do it in my judgment in a 

shorter period of time and not be permitted for 2 years to engage 

in what is basically post-claim underwriting. 

Now, I think what gets to us and however you address it but 

what seems offensive to many is the ability to go back and review 

a chart and review statements looking for some kind of factor that 

would give rise to a conclusion that there had been a known misrepresentation. 

I think that that is the practice that we really need to go after 

and to clarify what is knowing. And also I thought maybe coming 

over this morning that you might put in some kind of requirement 

that a decision based on a review of medical record—if the insurance company has the medical record, they have it for 3 months, 

then they need to look at the medical record in that period of time 

and make a decision about whether that complies with the policy 

up front before even any claims were submitted. 

Mr. STUPAK. Yes. It seemed like before they take your premium, 

they should give you some determination based upon the records, 

correct? 

Ms. KINNEY. Right. I suppose that the rationale would be that 

if you then—you know, once you take a premium, you do have insurance and that that speeds up the process of getting insurance. 

And you might have a situation where you have a delay in coverage if you have too many requirements up front. 

But, as I understand it, another aspect of the insurance industry, 

you can issue riders and temporary insurance to cover that time. 

It seems to me a problem that does have a solution. 

Mr. STUPAK. Is it fair to say that at your Center for Law and 

Health or Health and Law, if you have a health insurance policy 

and you are terminated, is it fair to say it is very, very difficult to 

get insurance coverage? 

Ms. KINNEY. I think that the testimony and the information that 

has been garnered in these hearings suggest that is the case. And 

certainly in our research we did years ago, which it is probably a 

little dated, but once you have been canceled, it is hard to get insurance. 

Mr. STUPAK. All right. Let me just take a look at one more thing 

here. Mr. Sassi, you said that the first time you heard about Ms. 

Reilling’s case was today. Will you commit that you will have the 


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company take a look at that and make sure that Ms. Reilling’s 

rights were protected before you terminated that policy? 

Mr. SASSI. Yes, sir. 

Mr. STUPAK. OK. Well, I want to thank you all for coming. That 

is going to conclude our questioning today. I want to thank all of 

the witnesses for coming today and your testimony. 

The Committee rules provide that members have 10 days to submit additional questions for the record. I will ask unanimous consent that contents of the document binder will be entered into the 

record provided the Committee staff may redact any information 

that has business propriety or relates to privacy concerns or is law 

enforcement-sensitive. Without objection, the documents will be entered into the record. 

[The information appears at the conclusion of the hearing.] 

Mr. STUPAK. That concludes the hearing of the Subcommittee. 

Thank you all for coming. Thank you for participating. And thank 

you for being good hosts here in Indiana. 

[Whereupon, at 1:00 p.m., the foregoing matter was concluded.] 

[Material submitted for inclusion in the record follows:] 


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