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CA senator sues Obamacare exchange for causing policy cancellations of 1M

By   /   March 5, 2014  /   No Comments

Part 92 of 96 in the series Obamacare

By Tori Richards │Watchdog.org

OBAMACARE IS TO BLAME: California Sen. Ted Gaines says a judge needs to stop the state exchange from canceling policies

A California senator has sued his state’s Obamacare exchange for causing the cancellation of more than a million policies and spending tax dollars in an “irrational, unreasonable and abusive” way, such as a lurid Richard Simmons video.

The lawsuit against Covered California and its director, Peter Lee, was filed late Tuesday by Sen. Ted Gaines, the Legislature’s most vocal critic of Obamacare. Gaines has sparred recently with Lee by demanding an accounting of $1.37 million spent to promote a campaign featuring a gyrating dance-off with Simmons.

“We saw a million people impacted who had insurance and then saw those plans canceled based on a decision of Covered California,” Gaines told Watchdog. “We want to stop that in its tracks to take a look as to whether this is the right path for insurance coverage in California and across the nation.”

Gaines said he has run into red tape trying to get a remedy in the Legislature and hopes the courts will have an effect. He filed the lawsuit as a private citizen and as the owner of a family insurance agency.

According to the lawsuit, insurance companies that wanted to participate in the exchange were required to sign the Qualified Health Plan Contract for 2014, which called for the cancellations of policies that did not meet its requirements. And even though President Obama declared that grandfathered plans could remain intact, Lee and Covered California continue to “exceed their authority by preventing health plans from renewing California’s grandfathered plans” and by barring plans from the exchange that don’t enact cancellations.

“Lee and Covered California will continue to enforce and administer state and federal law in a haphazard manner and in excess of their statutory jurisdiction, denying all Californians … the benefits and rights provided for under state and federal law,” the lawsuit says.

Gaines said he hopes the lawsuit could prevent millions of future cancellations that likely will occur leading up to the Jan. 1, 2016, requirement that businesses with more than 50 employees provide health insurance. Many employers meet this expense by having no-frills policies that would not meet today’s standards absent the grandfathering clause.

The senator has been Covered California’s biggest nemesis, as he has requested a state audit of the agency’s marketing expenses and complained about the cancellation issue to the Senate Health Committee. This comes on the heels of a Jan. 18 letter he fired off to Lee, inquiring about the cost of a recent eight-hour web stream featuring a gyrating Richard Simmons pleading with consumers to sign up for Obamacare.

Gaines learned the answer to his cost question through a Watchdog story that disclosed it was part of a $1.37 million marketing campaign “Tell a Friend, Get Covered.” The agency faces a $78 million deficit in 2016, when federal dollars will no longer fund state exchanges.

In the lawsuit, Gaines criticized that expenditure along with others, calling them “irrational, unreasonable and abusive.” He listed the additional expenses:

  • $10 million on a contract with public relations firm Weber Shandwick “with no discernible results or success;”
  • Spending $102.6 million of a $399.7 million budget on outreach that has “failed to obtain significant enrollment or a demographically … diverse enrollment and failing to sign up more Californians than were canceled;”
  •  Spending untold funds on a contract with Ogilvy Public Relations for media relations with “no discernible results or success” related to the Affordable Care Act
  • Spending untold funds on outreach and marketing efforts, which resulted in the enrollment of Californians who already had insurance instead of the uninsured population.

A remedy from the judge could include declaring the Qualified Health Plan Contract for 2014 unenforceable and ruling that Covered California violated a state law that says regulations must be “clear, necessary and legally valid.”

Covered California spokeswoman Anne Gonzales said the agency has not seen the lawsuit and therefore cannot comment. In a previous statement she said the agency is doing its best and faces hurdles as a new entity.

“We always anticipated a high level of media scrutiny, and we just hope that all the good work we’re doing doesn’t get lost in the noise,” Gonzales said. “Amidst all the debate, we are staying focused on the fact that despite all our challenges, hundreds of thousands of people are trying to sign up for coverage, which reaffirms our mission and boosts our potential financial sustainability for the future.”

But none of this matters to the average citizen victimized by cancellations and increasing costs, Gaines said.

“There are nightmare scenarios as far as people trying to retain their same doctors and hospitals for services,” he said. “We need to stop the cancellation process and figure out the right path for people who have health care.”

Contact Tori Richards at tori@watchdog.org and on twitter @newswriter2

Part of 96 in the series Obamacare
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  2. The mystery of Obamacare spending in Arkansas
  3. Obamacare raises questions for MD small business owners
  4. Kansas official on Obamacare: ‘Let someone else be the guinea pig’
  5. Obamacare insurance marketplace has plenty of kinks on first day
  6. OR’s Obamacare insurance marketplace hits technological snag
  7. Fail: Day 1 of the New Mexico Obamacare rollout
  8. Senator asks: Do you want this dysfunctional government taking over health care?
  9. Jobs, coverage at risk with Obamacare, MN union health official says
  10. Oregon’s Obamacare ads resemble middle school art
  11. VIDEO: Obamacare vs Affordable Care Act: Comedy triumphs in court of confusion
  12. Patience is key to navigating Illinois’ Obamacare marketplace
  13. Hawaii residents, lawmakers frustrated with health connector glitches
  14. Healthy young, key to Obamacare, aren’t buying it
  15. NM’s health exchange tries to lure ‘young invincibles’
  16. Obama drama: Senator blames governor for big rate hikes
  17. Progressive group navigates Oregon students through Obamacare
  18. Maddening: Trying to log onto federal health care site
  19. You know that one guy who successfully signed up for Obamacare? He didn’t
  20. What’s wrong? It’s been a week, and Obamacare website still not working
  21. HHS Secretary Sebelius back in FL after embarrassing Obamacare rollout
  22. Health centers enroll Floridians in Obamacare as application problems persist
  23. VIDEO: Stewart skewers Sebelius on Obamacare
  24. Obamacare effect? 9 companies exit Nebraska’s health insurance market
  25. Obamacare: Children of undocumented parents face an uncertain future
  26. Which way do we go? Obamacare navigator registration in TN in question
  27. NM health exchange tries to ease problems with Obamacare website
  28. CPA says hype over Obamacare small business tax credit is misleading
  29. Obamacare navigator under fire for arrest warrant
  30. Reports of Obamacare fraud emerge in Tennessee
  31. After two weeks, FL online Obamacare enrollees are hard to find
  32. Illinois state governor touts 100K Obamacare enrollees, all in Medicaid
  33. Kansas lawmaker calls for crackdown on Obamacare navigators
  34. WI health care exchange seeing few getting through
  35. Hawaii’s Obamacare exchange relaunches with more glitches
  36. We’ll know next month how many people in NM signed up for Obamacare — maybe
  37. Zero: Number of Nebraskans Obamacare navigators have signed up
  38. It took this Delaware woman 11 days to sign up for Obamacare – and she was the first
  39. How many people have signed up for health insurance in VA? Who knows?
  40. What else? NM federal health exchange ads stalled due to website problems
  41. Blue Cross hires temp workers to deal with Obamacare glitches
  42. If Obamacare is the next Medicare, will physicians leave en masse?
  43. Three problems that won’t be solved by fixing the Obamacare exchange glitches
  44. Plenty of Oregonians interested in Obamacare, but none can enroll online
  45. Criticize this: Obamacare premiums a near match to WI disclosures
  46. Report: Missourians will see sharp rise in premiums under Obamacare
  47. Kansas navigators say they’ve enrolled no one in Obamacare
  48. Obamacare too costly for rich Coloradans, Democrat congressman says
  49. Study: Kansas premiums to spike following Obamacare rollout
  50. Hang on to your candy: Creepy Uncle Sam is back
  51. Obamacare or bust: NM Watchdog turned back again
  52. Medical journals, experts refute claim that Medicaid cuts ER use
  53. Arkansas spends $4M on Obamacare ads, wants more
  54. LOL: In July video, HHS bragged about being ‘on schedule’ with Obamacare
  55. Illinois uses Day of the Dead to market Obamacare
  56. Sebelius denies GOP’s Terry ‘unreliable’ Obamacare info
  57. About 290,000 Washington residents lose health insurance plans
  58. Broken promise: Obamacare cancels almost 20,000 Kansas health care plans
  59. Top hospitals opt out of Obamacare
  60. Obamacare moves to intensive care
  61. Obamacare provision could lead to more Medicaid fraud
  62. Obamacare: Religious groups want to ‘move mountains’
  63. Obamacare hitting Wisconsin residents with double whammy
  64. Kansas AG: Obamacare threatens consumer privacy
  65. 1,500 in New Mexico have to move out of the high-risk insurance pool
  66. Cover Oregon website fiasco creates jobs, but costs millions
  67. For Florida’s Obamacare small business exchange, it’s crunch time
  68. Only 877 Wisconsinites have signed up for Obamacare, federal report says
  69. Just 172 in NM have completed Obamacare applications: ‘Woefully inadequate,’ says NMIX board member
  70. With only 346 Oklahomans signed up, leaders decry ‘Obamacare debacle’
  71. Defying Obamacare: ‘Send them the bill,’ NM insurance official says
  72. Kansas Obamacare enrollment dwarfed by nearly 20,000 cancellations
  73. Numbers don’t lie: In Illinois, Obamacare means Medicaid
  74. Wisconsin governor proposes insurance plan to address Obamacare rollout failure
  75. Tennesseans might know Tuesday if they can keep canceled health insurance
  76. People demand answers over Oregon’s Obamacare fail
  77. Calif. says ‘no’ to Obamacare freebies, makes own law
  78. HI health exchange violates federal law, League of Women Voters say
  79. Obamacare video winner: ‘Forget about the price tag’
  80. Harvard study finds ‘striking’ rejection of Obamacare by young Americans
  81. HI health exchange has signed up 574 people, for about $348,000 apiece
  82. Are the uninsured getting Obamacare coverage in Illinois?
  83. Secret Obamacare handbook the feds don’t want you to see is online
  84. Lost in translation: Once-supportive Hispanics turning backs on Obama, ACA
  85. HI Obamacare exchange not fiscally sustainable, lawmakers told
  86. Illinois’ latest Obamacare targets: gold diggers and momma’s boys
  87. Now Democrats are bashing California’s Obamacare exchange, too
  88. Obamacare: For $1.37M we get Richard Simmons in lurid web stream
  89. Obamacare: A welcome mat for IRS horrors
  90. California senator seeks audit of state Obamacare exchange
  91. Report: Hawaii ranks worst for Obamacare signups
  92. CA senator sues Obamacare exchange for causing policy cancellations of 1M
  93. Failure of Maryland Obamacare exchange could mean higher premiums in North Dakota
  94. Video: Watch Creepy Uncle Sam make it rain
  95. Five bright spots surrounding the Obamacare exchange failures
  96. Obamacare architect admitted in 2012 states without exchanges lose subsidies

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Tori Richards is a Pulitzer Prize-nominated reporter who has covered some of the biggest news in the world during her 25 years in the business. She has also won a dozen national and local writing awards for her coverage of the judicial system. Richards has worked for CBS News, Bloomberg, Reuters. Agence-France Presse, the NY Post, the NY Times and The Daily among others. Her work has also appeared on CNN.com, FoxNews.com and US News & World Report. Some of her biggest stories included the cases of OJ Simpson, Michael Jackson, the Aryan Brotherhood and the Night Stalker.

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