Anthem Blue Cross Fined $550,000 for Two-Month Delay in Approving Therapy After an Independent Medical Review Found the Service Was Medically Necessary
The Department of Managed Health Care (DMHC) is a California state agency charged with regulating insurance companies offering health plans in the state. When insurers violate laws intended to protect consumers and ensure access to adequate healthcare, the DMHC’s Office of Enforcement has many tools at its disposal to punish violators and order corrective actions. Administrative penalties are common and can easily range in the tens of thousands of dollars, although such a fine might be only a drop in the bucket against a billion-dollar company like Blue Shield of California, Health Net, Aetna, or the many other insurers operating in California.
Last month one company – Anthem Blue Cross – was fined over half a million dollars for improperly denying care. One might hope such a steep penalty would grab the attention of even the most well-heeled insurer, but companies like Anthem routinely face comparable aggregated penalties month after month, and nothing much seems to change in their behavior when it comes to complying with laws regarding claims approvals and processing.
Sometimes litigation is the swiftest and surest way to get much-needed medical care and compensation for harm done by an unreasonable denial. Learn about this latest $550,000 penalty levied against Anthem Blue Cross, and contact Gianelli & Morris in Los Angeles for help protecting your right to benefits and holding insurance companies accountable by working with a team of experienced and successful California insurance bad faith lawyers.
DMHC Enforcement Action Against Anthem
In a Letter of Agreement dated April 22, 2025, and referencing Enforcement Matter Number 20-558, the DMHC Office of Enforcement concluded its investigation of Blue Cross of California Partnership Plan, Inc., aka Anthem Blue Cross, which is a subsidiary of Anthem, Inc., and a managed care plan that provides healthcare services to Medi-Cal beneficiaries in California.
The investigation concerned violations of California’s health insurance law, the Knox-Keene Act, and related regulations. The case concerned a policyholder who requires certain therapy services due to their medical condition. The policyholder requested services including in-home therapy evaluation and in-home service therapy, but Anthem denied the claim. The policyholder filed an appeal, and the insurer denied the appeal.
At this point, the policyholder requested an Independent Medical Review (IMR). As its name implies, an IMR is an impartial review by a third party of an insurance company claim denial. A policyholder whose claim is denied because the insurance company alleges the requested procedure is experimental, investigational, or not medically necessary, can request an IMR from the California Department of Insurance (CDI). The CDI then appoints an IMR organization to review the case, including ordering medical records and all relevant documents from the insurance company. The reviewing organization reviews the insurer’s denial against the backdrop of the specific circumstances of the policyholder and factors such as expert opinions, current standards of medical practice, research articles published in peer-reviewed journals, and the medical evidence relied upon by the insurer. If the reviewing organization determines the insurance company wrongfully denied coverage, they will be instructed to cover the claim.
In this case, the reviewing organization found the requested evaluation and therapy sessions to be medically necessary and overruled Anthem Blue Cross, which promptly informed the policyholder that it approved the evaluation but did not mention the therapy sessions. The therapy sessions weren’t authorized until two months later.
California Health and Safety Code (HSC 1374.34) requires a health plan to implement an IMR decision within five working days. Delays are subject to an administrative penalty of not less than $10,000 for each day the decision is not implemented. Here the DMHC determined that imposing the full amount of that penalty was warranted, which equated to a $550,000 fine for Anthem’s unreasonable two-month delay in covering the medically necessary service.
Healthcare Claim Denied? Contact Gianelli & Morris to Review Your Case
Insurance companies deny requests for services and procedures for numerous reasons, saying the treatment isn’t covered under the plan, an alternative treatment is better, or the requested service is experimental, investigational, or not medically necessary. Sometimes they are right, but often they are wrong, and in some cases, their decision hides an ulterior motive for cost-savings without truly evaluating the value of the service or the policyholder’s need.
If your claim was wrongfully denied in bad faith, you could be entitled not just to receive the requested care but also to be compensated for the harm the insurer’s wrongful denial inflicted on you. An additional award of punitive damages may be appropriate as well. Contact Gianelli & Morris to discuss your situation and find out how our California insurance bad faith attorneys can help.
