Calif. Sen. Sues Obamacare Exchange After 1 Million Policies Cancelled

Image: Calif. Sen. Sues Obamacare Exchange After 1 Million Policies Cancelled State Sen. Ted Gaines

Thursday, 06 Mar 2014 10:38 AM

By Melanie Batley

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A California state senator is suing the state's Obamacare exchange for causing the cancellation of one million policies and spending tax dollars in an "irrational, unreasonable, and abusive" way.

Republican state Sen. Ted Gaines filed a lawsuit Tuesday against Covered California and its director, Peter Lee. He has been a vocal critic of Obamacare, most recently demanding Lee justify the expenditure of $1.37 million on ad campaign featuring a risquĂ© video with Richard Simmons promoting the new healthcare marketplace. 

"We saw a million people impacted who had insurance and then saw those plans cancelled 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 filed the lawsuit after failing to gain traction on the issue through the Legislature. He filed the case as a private citizen and as the owner of a family insurance agency, Watchdog reports.

The lawsuit contends Covered California has exceeded its authority by requiring insurance companies that wanted to participate in the exchange to sign a contract that would cancel policies that did not meet the new healthcare law's requirements.

Late last year, Covered California rejected the Obama administration's "fix" stipulating that grandfathered plans could remain intact. 

Gaines said he hopes the lawsuit will prevent future cancellations that are expected in the next few years once Obamacare's business mandate goes into effect.

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

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