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What happens if you didn't tell with complete honesty the Insurance Company about a pre existing condition or disease that you knew, should have KNOWN about or disclosed?
Covered CA Application - Agent Certification
That is, what if there is wrong, false, misleading or incomplete information on your application?
The Insurance company can cancel or rescind the policy, give back the premium - force the agent/broker to give back the commission or service fees, even if the condition has NOTHING to do with the claim that arises.
This in fact happened to us back in the early 80's, the start of the AIDS epidemic. We had someone who was in a bar fight in Haiti, got stabbed and was given multiple blood transfusions. His policy was cancelled, when he turned in a claim for some kind of stomach hospitalization.
Answers to FAQ's Top
6A. Health History Questionnaire – ALL QUESTIONS MUST BE ANSWERED OR THE APPLICATION WILL BE RETURNED. Give COMPLETE details of any "Yes" answers in Section 6C on the following page.
Has any person listed on this application, in the last 10 years, had any signs or symptoms, seen a health care provider, had treatment recommended including prescription medications, received treatment, or been hospitalized for any of the following conditions as stated in questions 1 through 14? (Blue Cross Individual Application.)
I have provided a complete history of material information that will be considered in the acceptance or denial of this application. I understand that if I intentionally provided incomplete or false material information Blue Cross may revoke my coverage. This means Blue Cross will cancel membership as if it never existed. Also, after approval for membership, if material information is discovered by Blue Cross that was not provided to the Plan prior to the effective date of the policy, Blue Cross may deny coverage.
I understand and agree that I alone am responsible for the accuracy and completeness of this application.
I have personally read and completed this application. If I am accepted, this application will become part of the contract between Blue Cross and me. (Blue Cross Individual Application)
How does the Insurance Company know, if the application wasn't filled out correctly? Do they investigate?
Your Insurance Agent/Broker MUST sign this form, that he informed you of the importance of completing the application properly. The agent can get in a lot of trouble for improperly advising you on how to complete the application.
Review and select one of the following:
10119.3. (a) Notwithstanding any other provision of law, an agent or broker who assists an applicant in submitting an application to a health insurer has the duty to assist the applicant in providing answers to health questions accurately and completely.
Definition: 1. information in mind: general awareness or possession of information, facts, ideas, truths, or principles -- Her knowledge and interests are extensive. 2. specific information: clear awareness or explicit information, e.g. of a situation or fact ---I believe they have knowledge of the circumstances.
To render life policy void for falsity of warranty that answers in application therefore are true to best of applicant's knowledge and belief, they must be substantially untrue, not merely in fact, but to best of applicant's knowledge and belief.St.1917, p. 964, 6 (West's Ann. Insurance Code, 10380); West's Ann.Civ.Code, ? 1572.
Combs v. Burbank Mut. Life & Benefit Ass'n 140 Cal.App. 139, 35 P.2d 132 (Cal.App. 2 Dist. 1934)
Applicant's failure to disclose diagnosis of leukemia and thereby correct misstatements in application for life insurance policy breached continuing duty of good faith and provided basis for rescission under statute requiring each party to contract of insurance to communicate to the other, in good faith, all facts within knowledge which are or are believed to be material to contract, as to which no warranty is made, and which cannot be ascertained by other party, even if insurer could have discovered disease by complete blood count (CBC) during application process.CA Ins.Code 332 .Lunardi v. Great-West Life Assurance Co. 37 Cal.App.4th 807, 44 Cal.Rptr.2d 56 (Cal.App. 6 Dist.,1995)
Blue Cross has 24 months to initiate retroactive action due to false or omitted health history information on the application. Claims submitted during that period are audited to ensure that preexisting conditions not listed on the application were not diagnosed, evaluated, or treated prior to enrollment. If a preexisting condition that should have been disclosed is discovered, the contract may be retroactively canceled, or it may be re-underwritten and placed into coverage that would have been offered based upon complete original information.Source - Blue Cross Confidential Agent's Manual
Employers and employees who commit fraud or misrepresentation to circumvent the law or rules governing PacAdvantage will be disqualified, possibly retroactive to the initial enrollment date. In cases of fraud, individuals may be financially responsible for their own medical care, even care provided while improperly enrolled through PacAdvantage. Page 6 Pac Advantage Employer Manual 7/04Top