it addresses part of the need to reform our health care system. we're going to hear today@@@@@@ . . . . robin beaton. no one should have to go through what she's had to go through the last several years. in june of last year, she was

diagnosed with an aggressive form of breast cancer. and her doctor said she needed immediate surgery. the friday before the monday that she was to undergo a double mastectomy, she received a letter from her carrier, blue cross of texas, that rescinded her insurance policy. the letter stated that the company would not pay for the surgery. the letter further informed miss beaton that an investigation into her claim for benefits with the company had thoroughly reviewed her medical records, that she submitted when she applied for the coverage, and that they discovered that she had misinformed them on several pieces of information. one of them was that she didn't list her weight accurately. and the other, that she failed to disclose some medication that she had taken for a pre-existing heart condition. the record will show she was not taking that medication at the time she submitted her initial

application for coverage. robin's claim in june of 2008 was not for weight control. it was not for a heart condition. it was for cancer surgery. double mastectomy, for breast cancer. yet her policy was rescinded three days before that surgery was scheduled to take place. it was bad enough that she had to deal with the trauma of breast cancer, but to be denied coverage right before potentially life-saving surgery, quite frankly, is something that no human being should have to undergo. she had no insurance and no way to pay for her scheduled surgery. so obviously it was postponed. she called my office. my staff west to work. they had several conference calls with officials of blue cross/blue shield. in those conference calls, blue cross and blue shield was unyielding. they were adamant.

it went to the council, the general council of blue cross/blue shield. and that individual said there was no way they were going to reinstate her coverage. never take no for an answer. i called the president of blue cross/blue shield. i appealed to him personally. gave him the facts as i knew them, and he promised that he would personally investigate mrs. beaton's case. and he further promised that if the facts were as she said, and i said, that her coverage would be reinstated. good to his word, the president called me back within four hours and said that ms. beaton's coverage would be reinstated. however, precious time was lost. luckily for robin, she was finally able to get the surgery. not through blue cross/blue shield, though, as i understand it.

she's now undergoing chemotherapy because the cancer has spread to her lymph nodes. but she is still with us, thank god. and she's here today to tell us her personal story. robin's situation was what caused notice draft an amendment to represent the breast cancer bill last year to protect people like robin by prohibiting recisions of health insurance if nondisclosure of information is not related to the claim. not related to the claim, and inadvertent. there is no reason on god's green earth that somebody ought to have their health insurance revoked because of some inadvertent omission that's not related to the claim that's being submitted to the health insurance company. this bill, with my amendment, passed the house last year. but it died in the senate. it's been reintroduced and hopefully it will pass this year. i support the right of an applicant to request a

third-party independent review of an insurance -- an insurer's recision prior to pending or denying payments of claims. i understand that there's another side to this story. i understand that there are people that do try to scam insurance companies. i understand that there is a rule of reason. but again, if somebody inadvertently oh mitts something, or there's something that's not material to the claim, that claim, in my opinion, should be paid. end of story. as we head towards reforming health care, it is important that we promote honesty on behalf of the insured and the insurers. congress needs to be confident that there are consumer protections in place to protect people like robin beaton, as well as procedures for companies to protect themselves from insurance fraud. companies need to have open and clear rules on when they terminate policies. applicants need to be truthful when applying for coverage.

every american, and this is something that members on both sides of the aisle supports, needs to have access to affordable, quality health care. this is an important hearing towards that goal, mr. chairman. and i thank you for holding it. i also think that we should give special consideration to one of our panelists here on the dias. the gentlelady from chicago injured herself yesterday. and has a broken leg. and yet she is here today at this health care hearing. so we appreciate you being here. >> if the chairman would. and for natally with good health insurance. i'm happy about that, too. >> and again, thank you, mr. chairman, for holding this hearing. >> thank you, mr. burton. and thank you again in helping us obtain witnesses for this hearing. mr. dingle for an opening statement, please. >> thank you, mr. chairman. i commend you for holding this hearing on the rather vicious

practice of post-claims underwriting. and the detrimental effect that such practices have on hundreds of americans. and i want to thank the witnesses for appearing in what i hope will be an inform a tiff hearing today on which the committee may begin some actions to correct what appears to be a very serious abuse. i remember mr. barton, the way we worked together on this in your outrage last year when we were addressing similar questions. health care costs have risen sharply. in response to this insurance providers who have taken drastic measures to reduce costs and improve profit margins. unfortunately the health insurance industry has attempted to do so by giving in to unscrupulous industry practices, including the practice of post-claims underwriting. i want to be clear, i have no

sympathy for individuals who intentionally misrepresent their health status in the applications they submit for health insurance coverage. these actions are dishonest, and have a negative impact on the cost of health care for everyone else. and they are clearly wrongdoing. they should be punished. however, i have far less sympathy for health care providers, and insurance providers who have made it a customary practice to exploit current laws meant to protect individuals, or to take advantage of the most vulnerable americans in order to turn a profit. they do this by seeing to it that they avoid risk as opposed to practicing good insurance practices. as we've seen time and time again, insurance providers have made a living out of refusing to compete on quality, and chooses instead to compete by avoiding financial obligations at all costs.

in the current market, health insurance providers are allowed to pick and choose whom they will cover in the individual market. we have allowed this cherry picking or cream skimming to go on for years. but when we weren't looking, the industry decided to up the ante. in some cases, industry underwrote countless claims for individuals they cherry picked and then began to quietly punish those individuals when they got sick and used their insurance for its intended purpose, to cover major medical claims. in some cases, industry didn't just drop the individual policyholder, but retroactively re sippeded the contract as if the agreement had failed to exist. they refused to pay hospitals, doctors or nurses, but sought reimbursement for services rendered. to our witnesses, who are appearing this morning to share their personal experience with post-claims underwriting, we

will work to insure these practices come to a sharp end. to the ceos testifying this morning, i would like them to know this. we don't regulate for the fun of it. we regulate when the private sector refuses to honor its commitments to the american public. as we work to reform the nation's health care system, we will work to reform the current health insurance market. we will work to insure such reform will prohibit insurers from excludeing pre-existing conditions or engaging in any other unfair and discriminatory practice. we will also work to ensure these reforms include fair grievance and a fields mechanisms, very much lacking in the insurance world today, and will ensure information transparency and plan disclosure. these new reforms alone will not fix the problems. we will also have to work to ensure that there is strong

oversight on both federal and state levels. furthermore, the -- these insurance industry practices are precisely the reason why we need a public health insurance option included in our proposal to reform the health care system. a public plan that leads by example, and competes through quality and innovation, rather than unfair industry practices is what is needed to keep the private industry in the insurance business honest. thank you, mr. chairman. >> thank you, mr. dingell. mr. ging r, yerks? >> mr. chairman, thank you. generally insurance is a form of risk management that allows individuals to pay a monthly premium in exchange for a company taking on their financial risk in the event of a health care or catastrophic loss. health insurance, on the other

hand, is not typical insurance for a monthly premium individuals purchase health insurance to financially support them in the event of a catastrophic incident, such as a broken lig, as the lady from chicago just recently experienced. or surgery. patients also use their insurance for such things as doctor visits or monthly prescriptions. in some respects, health insurance has become the means by which patients see their providers and they receive treatment. primary responsibility for regulating the individual health insurance market rests with the state regulators. however, in the health insurance portability and accountability act of 1996, hipaa, congress made very clear that an individual insurance policyholder has a right to guaranteed renewability. an insurer must renew on continue an individual's existing coverage unless some specific exception is met.

those exceptions include a policyholder moving out of a network plan service area. if the policyholder intentionally, intentionally misrepresents material facts concerning their condition when contracting with the insurer. i believe it is unfair for an individual to be denied coverage for a claim when he or she has been upfront about their condition. the play by the rules of the contract. they paid their premiums on a regular timely basis. only to be denied coverage when a health care incident arises. as described by my colleague, mr. walden, whate would call post-claims underwriting. the impact it has on patients and their loved ones can be devastating. i have actually personally experienced that in my own family. and it literally took an act of congress to change that.

with these thoughts in mind, i look forward to the testimony of our witnesses today. i want to thank the entire panel, this first panel, particularly, as well as the second panel for coming in today and sharing your stories with us. and mr. chairman, i look forward to the hearing. and to the questions. and at this time i yield back. >> mr. green of texas for an opening statement, please. >> thank you, mr. chairman. and i think all of us appreciate you calling this hearing today, because like my ranking member from texas talked about, we deal with this all the time through our constituents. as a state legislator in texas we've had the same problem for many years. and i appreciate you bringing this out. and hopefully we'll address this in our health care reform. i want to thank our witnesses for being here today. most individuals in the country have health -- or insurance through their employer. medicare or medicaid. but millions of americans do not have insurance through their employers, or through the public market so they turn to

individual insurance market to purchase insurance policies. individuals who purchase insurance through an individl market must go through an application process and include any mental, physical or chronic conditions. insurance companies are supposed to review those applications and review the applicant's medical history before approving the individual for coverage. oftentimes medical history never occurs and the insurance companies will cover individuals, who have conditions they would not necessarily cover. these individuals believe their coverage and when it's current, when they submit a claim they often find themselves subject to that medical history investigation and dropped from their insurance and liable for all claims under the policy. in other instances individuals submit a claim for serious illness such as cancer and find themselves subject to a medical history investigation, and dropped from their policy because the insurance company claims the individual did not disclose a medical condition when filling out their initial application. both these instances leave the individual without health

insurance coverage and uninsurable because they have to report having their coverage rescinded. individuals who are undergoing medical treatment for conditions such as cancer are dropped from their coverage, often face life and death situations because the insurance company does not want to pay for their treatments. i can't imagine the pain and suffering of these individuals go through at the expense of an industry seeking healthy patients to make a profit. a few states, including texas, have taken actions to prevent companies from post-claims underwriting. we need to examine the individual market and ensure individuals never have to face their coverage for simply using their coverage. mr. chairman, again, i thank you for calling this hearing. i yield back my time. >> mr. burgess, three minutes for an opening statement, sir. >> let me say at the outset, i do believe in the individual markets. i believe it has a place in this country. and indeed, i was a client and a customer in the individual market for my family's coverage. for a period of time.

but i also believe that the barriers that we, the federal government, the congress puts in place on the individual market sometimes creates unnecessary difficulties for the people who sell on the individual market or the people who wish to be their customers. but no one can defend, and i certainly cannot defend the practice of denying coverage after the fact. and i cannot be comforted by the fact, or the statements that are made that this is in fact an infrequent occurrence, because as the cases in front of us at the witness table demonstrate this morning, there is no acceptable minimums to denying coverage after the fact when the coverage was dully paid for. and entered into in an honest fashion, and then only when the coverage was required, was it found to be not there. now, i don't think anyone on either side of the dias believes anyone would lie about something on a medical history.

maybe fudge weight a little bit. maybe the number of times we actually go to the gym or what we actually do there. but no one would willfully do that. the question before us today is do people intentionally lie to manipulate companies in order to give coverage when they know they have a preexisting condition and the legal jargon we apply to that is recision. and should insurance companies post-procedure be allowed to terminate individual contracts based upon the omissions of the disclosure of a preexisting condition, whether it was intent on behalf of the individual seeking coverage or noflt. i'm troubled by that inability to distinguish between those who act with fraud and those who honestly answer broad, vague or confusing questions on the contracts to obtain health coverage. those are not equivalent conditions. an omission without intent does not signify fraud, and no insurance company who hides filling out their requests for insurance shouldn't be protect. intent is crucial because those

who act fraudulently should not be protected by the law nor should it be our desire to do so. it is interesting to me that all of the insurance companies today that we're going to hear from on our panel today are for-profit companies. but miss beaton's insurer whose case appeared intractable until her member of congress got involved was blue cross/blue shield. i wonder, mr. chairman, why blue cross/blue shield is not in one of our panels today. clearly as a nonprofit company, they would not have a purely prove it-driven motive to engage this this type of behavior. those is perhaps particularly curious. i think there are a number of questions that we would like to pose to a company that does in fact function as a nonprofit. it's the responsibility of each insurance company, whether for-profit or not-for-profit to do the due diligence before the

contracts are entered into and not use recision as an excuse for lazy on incomplete underwriting. thank you, mr. chairman. i yield back the balance of my time. >> miss sutton, for opening statement, please. >> thank you, chairman stupak, for holding this important hearing. recision by insurance companies puts dollars ahead of lives of americans. i'm not exaggerating when i say that insurance company accountability is something that i have fought and advocated for at every stage of my professional life. during my time as a representative in the ohio general assembly, i worked on behalf of ohioans to ensure when benefits were promised, benefits were given. and now i'm here in congress. to continue that fight. recision of coverage is a problem that we in congress are seeking to eliminate, and it's our hope, you've heard from the comments here, that when we have finished reforming our health care system, coverage discrimination will be a thing of the past.

but today it's still a problem that exists and must be eliminated. when a health insurance policy recision occurs, it creates waves throughout the entire health care system. make no mistake, these decisions deprive people of needed care. they deprive hospitals and doctors of the reimbursement they have earned for their service. for some, a recision is a costly process that can result in a doctor or hospital having to seek payment from the individual. for others, it means a delay and access to a life-saving procedure or treatment. that's unacceptable. today we will hear from citizens, and i thank you all for coming to provide your testimony and your stories. about your lives that have been turned upside down by the insurance industry policy of recision. we'll hear from executives who will tell us that in the name of uncovering insurance fraud and corruption, they had no choice but to remove these beneficiaries from their rolls. but i think the testimony of the people who have lived through

this trauma will tell a different story. the number of uninsured in this country is now thought to be 47 million. it's a major flaw in our country that so many people go without their basic rights to have health care coverage, and millions more who have insurance still don't get the care they need when they need it. it's hard to understand how we allow those who are legitimately covered to join the ranks of the uninsured due to the stroke of a pen or the decision of an insurance company executive. unfortunately, mr. chairman, i have another hearing that is going on simultaneously with this one. so i'll be shuttling back and forth. but i want the panelists to know, that i will be listening carefully to the testimony, both for myself and the people of ohio that i am so honored to represent. and i thank you all again for coming. and i thank you, mr. chairman, for your attention to this matter. >> i thank you, police sutton.

members will be coming back and forth as there's a committee two floors up, telecommunications, also meeting. and in that donna christianson has submitted her opening statement. are you going to tell us how you broke your leg? >> well, i wish there was a dramatic story, mr. chairman. although it was in a fairly dramatic place. i did go to guantanamo bay yesterday and fell. and ended up breaking my foot in two places. i hope soon, with the help of the attending physicians, i'll have a boot or a cast or something. that was just yesterday. >> we wish you well. >> thank you. >> thanks for being here. >> i am grateful that i do have good health insurance to cover that. i appreciate today's hearing examining one of the truly egregious practices occurring in

the individual health insurance market. i want to extend a special welcome to miss peggy raddatz from my home state, from la grange. i thank you for being here and sharing your family's story with us. i know it isn't always easy to discuss personal matters. but you certainly are helping us to make better health care policies. and i thank the witnesses for helping us. when a consumer goes to buy a health insurance policy they try to identify the best policy to heat meet the health care needs of their family. at no time do they imagine that once they buy a policy, they might get sick and their insurance will simply rescind their policy and leave them without coverage, but with a high pile of bills. the practice of post-claims underwriting in the private market is wrong and we should prohibit it. let's face it uks it's already hard enough for an individual or small business owner to find health insurance. in my state of illinois, there

is no requirement that insurers take all-comers. i've heard from constituents over and over again who are unable to find a policy really at any price. those who do get through the insurance industry gauntlet know they're not home free. they know they may face high out-of-pocket costs, and doctor prescribed treatments, prior approval requirements, caps on services, and other devices that are designed to limit the insurance company payments. but few, no. when they need care, the insurance company has been collecting their -- that has been collecting their premiums may now go back and comb through their personal history in order to find an excuse not to pay, just when the policyholder needs the coverage the most. there are some who argue that recisions are used to stop fraud on the part of enrollees who misrepresent their health histories in order to obtain coverage.

one has to wonder why we would put up with a health care system when people have to hide their illnesses in order to get access to care. but we also know that this isn't about that. it's about a company -- most often about a company looking for an undisclosed headache ten years ago to deny coverage for a brain tumor today. it has less to do with the consumer and a lot to do with company profits. as we move forward with health care reform, we have to put an end to practices that discourage patients from seeking out care. insurance coverage should be a pathway, not a barrier to care. mr. chairman, i look forward to working with you to improve care coverage, refocus our attention on patients. and i really again thank our witnesses for being here today. >> thank you. >> thank you, mr. chairman. this is a very important hearing. i'd like to start by talking about the very concept that

we're here to discuss. because the term post-claims underwriting is an oxymoron. insurance companies are structured into different departments. they have an underwriting department and a claims department. and the underwriting department is supposed to do pre-issuance risk assessment to determine whether an individual policy is worth the company investing in that person. as a health care risk. the claims department is designed to respond to requests for coverage after a policy has been issued. so the very theory we're here to talk about today isn't even supposed to exist in a rational health care delivery system. and it wouldn't exist if we had a rational health care delivery system. but when you read news stories where the ceo of one private health insurance company is

sitting on stockptions valued at $1.6 billion, it shouldn't come as a shock to any of us that we're sitting here today hearing these horror stories of patients who have been caught up in an inefficient, unsustainable private health insurance delivery system. and ms. raddatz, i wish every claims examiner at every insurance company and every underwriter who gets engaged in post-claims underwriting determinations had to go through what you went through, and the other witnesses who are here today. because one of the most profound experiences i've had in my life was spending about a month at a pediatric oncology unit at the university of iowa hospitals and clinics when i was in the big brothers big sisters program and my little brother was diagnosed with acute large cell nonhodgkins lymphoma, and spent time every day watching young

patients with no hair, with i.v.s in their arms or in their chest going into a port, walking around and taking care of each other much better than our health care industry takes care of patients in their time of need. and it's a slander on the names of the health care professionals who do everything they can to keep patients like your brother, like my little brother, alive when we don't give them the support that they need after they have invested their hard-earned dollars by paying premiums to a health care insurance company who turns their back on the patient in their hour of need. and that's why i'm a strong supporter of the public health insurance option. and i'm proud that my colleagues on this committee, chris murphy and peter welsh, have joined me in introducing the choices bill to give health insurance patients a public health insurance option with no discrimination so we don't