Opening statements began Wednesday in a trial to determine if a man’s health insurance was wrongly dropped three months after a major car accident left him with massive bills.The civil case against Blue Shield of California marks the first time a California jury will weigh in on the practice of rescission and could define the way courts handle similar lawsuits pending across the state.Steve Hailey’s case in Orange County Superior Court is expected to last until early June and will examine whether Blue Shield inappropriately dropped his coverage after the car wreck left him with bills exceeding $400,000.Hailey, confined to a wheelchair and carrying a catheter drainage bag, appeared in court for the first half of the day. In the afternoon, jurors listened to detailed testimony from Hailey’s doctor about the process of rebuilding his urethra after the accident.Blue Shield lawyer John LeBlanc said Hailey and his wife, who filled out his insurance application, had their coverage dropped because they “concealed and misrepresented critical information” on the application, including prior health problems such as years of treatment for hypertension and chest pains.Hailey’s lawyer Michael Nutter said in opening statements the Blue Shield application was “confusing and ambiguous” and led to any omissions.Both sides agreed on a timeline of events: The Haileys were approved for an insurance policy Dec. 15, 2000; Hailey was in the car wreck in March 2001; Blue Shield canceled the policy in June 2001.LeBlanc added that a February 2001 trip to the emergency room led Blue Shield to investigate Hailey’s insurance application. Nutter said Hailey should have been informed when the investigation was opened.Hailey’s case helped prompt state regulators to target questionable health insurance rescissions. More than $13 million in fines for rescissions have been collected from Anthem Blue Cross, Health Net Inc., PacifiCare, Kaiser Permanente and Blue Shield.Rescission is an industry term for the practice of canceling insurance policies after costly claims are made, typically based on failures to report previous medical conditions on applications.Consumer advocates contend that insurers seek out such errors and deny coverage when costs associated with paying a policy exceed the income from the premium.Rescission is legal in California, if insurers do appropriate medical underwriting before issuing a policy and resolve all reasonable questions about coverage, said Lynne Randolph, a spokeswoman for the state Department of Managed Health Care. The exception is when policyholders willfully mislead insurers on their applications.The Hailey lawsuit was dismissed in 2005, but in 2007 the state court of appeals ruled that it should go to trial.There are a number of lawsuits on state dockets alleging health insurers dropped coverage after policyholders made pricey claims.One of them is a $1 billion lawsuit brought against Blue Shield by the Los Angeles city attorney’s office. It contends the company dropped hundreds of policyholders illegally and used deceptive advertising. City attorney spokesman Nick Velasquez said the case is ongoing, and the next procedural hearing is set for June 17. P.s. EasyToInsureME offers clients the easiest way to buy individual health insurance. Free services include instant online health insurance quotes, custom proposals for each client, free phone consultation, and 10-minute application by phone. Our services are free because we are paid by the health insurance company not by our clients.

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