Battling Blinding Disease and Insurance Company

Shannon Dagher faced possible loss of coverage after diagnosis.

June 18, 2007 — -- On June 18th, Good Morning America aired a report about health insurance companies rescinding individual policies because patients had failed to disclose pre-existing medical conditions. The report incorrectly included a graphic stating that Shannon Dagher had been denied insurance coverage. Although Blue Cross of California held her claims payments while she was the subject of an investigation, it never rescinded her policy and insists that it never denied Ms. Dagher applicable care, coverage or reimbursement. Blue Cross says Ms. Dagher was investigated for possible failure to adequately disclose several pre-existing conditions -- not just headaches. Ultimately, the company says she was found to have made adequate disclosures and was sent a letter dated March 27, 2007 informing her that the investigation had ended. Ms. Dagher told GMA that she never received that letter; Blue Cross insists that it resolved the pre-existing condition review weeks before receiving Good Morning America's first phone call.

This week "Good Morning America" takes a hard look at the health insurance industry, and gets answers about its sometimes questionable policies. Rescission, for instance, is a controversial practice in which insurance companies retroactively cancel policies, often after a claim is made. Below is the story of a young woman who faced such a crisis when her sight was at risk.

Shannon Dagher, a 22-year-old college student, said she was at the eye doctor for a checkup last November, one month after her new insurance policy kicked in, when she received terrible news.

"I was diagnosed with a very rare disorder, called pseudotumor cerebri. It basically looks and acts like a brain tumor," Dagher said.

Dagher's doctors said she needed surgery or she may go blind.

"I'm petrified of the thought of going blind," Dagher said. "I've never been sick before in my life and now in the past six months I've started to lose my peripheral vision and I'll never get that back."

But instead of authorizing the surgery, her insurer, Blue Cross of California, stopped processing her bills.

The company instead launched a "rescission investigation" into Dagher. It threatened to cancel her coverage if she had failed to disclose accurate information about her health on her original application.

Her Blue Cross application asks about headaches (which can be a sign of pseudotumor cerebri) as well as more serious conditions like epilepsy, paralysis and stroke all in one question. Dagher didn't have any of those serious conditions, so she checked no.

"I never lied to Blue Cross on my application," she said. "At the time I got insurance I had no idea something was wrong with me."

According to the insurance industry's own estimate, thousands of similar rescission investigations into policy holders occur every year, and most of them lose all their coverage as a result.

Legislatures around the country are paying attention to this little known practice. Connecticut has just passed a law that will make it harder for health insurers to rescind policies.

"These incidents are hardly isolated and random -- they are part of a pattern, a prevalent practice in this industry that very simply has to be stopped," Connecticut Attorney General Richard Blumenthal said.

Getting an insurance company to talk about rescission is not easy, as "Good Morning America's" Chris Cuomo found out.

Cuomo talked on the phone to Shannon Troughton, a spokesperson for Wellpoint Inc. Blue Cross of California is a subsidiary of Wellpoint.

"It's a very important tool for us to address any identified issues of abuse or misrepresentation," Troughton said. "Anyone who causes fraud in the system increases the cost of health care for all of our members."

"GMA" called eight other insurers. None would talk on camera and referred our producers to their trade group, America's Health Insurers Plans.

"Health insurers pay large claims and pay millions of dollars in claims every day," Susan Pisano, a spokesperson for America's Health Insurance Plans, said.

"A policy is rescinded only if someone could have known that the condition existed…They were asked about it on the application and they didn't provide the information," Pisano said.

"GMA" went back to Blue Cross for some clarification on Dagher's case. Shortly after we asked about Dagher's policy, she learned that her investigation was complete, and her policy would not be canceled.

Then Blue Cross denied Dagher's policy had ever even been considered for rescission. Blue Cross said in a statement to "Good Morning America": "Although she may have received a letter from us indicating a review was being conducted in the past, her policy was not rescinded…for you to report that this member's issues are in any way linked to rescission would be erroneous and misleading."

But Blue Cross had sent Dagher multiple letters telling her that the "rescission review process" was under way.

And while Blue Cross said it sent Dagher the letter telling her the review was complete, she said she never got anything in the mail.

"I think that the companies that we represent understand full well the impact of the process of rescission and of a rescission," Pisano said. "It must be terribly disruptive, especially at a time when somebody is sick."

Dagher recently dropped out of college because of her medical condition.

"To be accused of fraud when I have no defenses, when I'm sick, and when I'm relying on the coverage that was promised to me and is due to me, it really shakes my faith in humanity and the good of people," she said.

Dagher, who has a basic policy with a high deductible, didn't file suit. Blue Cross of California just recently authorized the surgery that may save her vision.

A California attorney is currently settling a class action against Blue Cross of California. The settlement will require the insurer to prove there was intentional misrepresentation before they can cancel a policy. The insurer is denying any wrongdoing but has agreed to revise and clarify the application filled out by potential clients.