I’ve written earlier about misleading or incorrect statements about health insurance policy rescissions (see Fact-Checking the President on Health Insurance). The misreporting on this issue continues.

In a March 18 story, Murray Waas of Reuters tells an interesting tale concerning a health insurance policy rescission in South Carolina that produced a multimillion dollar judgment against the insurer, Insurer Targeted HIV Patients to Drop Coverage, quoting extensively from judges’ opinions. Regardless of the merits of the particular case (most of the court documents are sealed), the article is factually inaccurate on at least one major point.

Wass writes:

But an investigation last summer by the House Energy and Commerce Committee as well as earlier ones by state regulators in California, New York and Connecticut, found that thousands of vulnerable and seriously ill policyholders have had their coverage canceled by many of the nation’s largest insurance companies without any legal basis.[emphasis added by me]

I have not read the documents from Connecticut, New York, or California, but I have read the written materials from the House Energy and Commerce Committee hearings. The hearings found no such thing — there was no evidence of widespread illegal behavior.

In general, the evidence indicates that the vast majority of health insurance policy rescissions are legal, including at least half of the dozen or so worst cases of rescission “abuse” highlighted by the Committee.

In a market with hundreds of thousands of transactions, many people fail to disclose or misstate facts about their health or health history when applying for insurance. In most states, that failure is grounds for the insurer to rescind the contract and refund the premiums if the correct information would have caused it to deny coverage, charge a higher premium, or otherwise change the terms of the coverage offered. The insurer does not have to prove fraud or intent to deceive. This legal framework helps produce lower premiums for people who disclose accurately (as I explained in Fact-Checking op-ed).

If reporters or other people don’t like the law, they should say so and advocate a change in the law. But they should get their facts straight and stop spreading false and/or exaggerated claims about illegal behavior.