Ohio health insurance company drops lawsuit

COLUMBUS, Ohio - An Ohio health insurance company dropped its lawsuit Thursday against state and federal officials over confusion in rules for a program for patients with pre-existing medical conditions.

At issue is a high-risk insurance pool created by President Barack Obama's health care law targeting patients turned away by insurance companies because of such conditions as cancer or heart disease. The pool is meant to act as a temporary patch until 2014, when the federal law will require insurers to accept all applicants, regardless of medical history.

Medical Mutual of Ohio sued last year in federal court to force clarification over who has the final say in eligibility for enrollment into the program -- state or federal officials.

The company said it was getting conflicting opinions from government agencies that regulate it and needed the court to settle the issue.

Messages seeking comment were left for Medical Mutual, the Ohio Department of Insurance and U.S. Department of Health and Human Services.

The Obama administration began quietly winding down the program last month, announcing the plan would stop taking new applications.

Ohio was among the states that opted to run its own high-risk insurance pool, while the federal government runs the program for other states. Ohio selected Medical Mutual, a nonprofit insurance company, to administer the program.

The company filed its lawsuit Dec. 24 in Columbus federal court against Lt. Gov. Mary Taylor, the director of Ohio's Department of Insurance and Obama's Health and Human Services secretary, Kathleen Sebelius.

The complaint was prompted by a dispute over whether 14 people should receive health care coverage under Ohio's program, which currently serves about 3,500 residents.

Taylor, the state's most vocal critic of the federal health care law, was surprisingly on the side of keeping the residents in the program; the federal overseers of the overhaul initially said their coverage should be canceled.

Under the law, the program is open to people who have not been covered under a "creditable" insurance policy for at least six months. Applicants also must provide a certified medical record that proves a pre-existing condition.

In September, the federal Centers for Medicare and Medicaid directed Medical Mutual to cancel coverage for 14 individuals, according to the lawsuit. The federal agency found the enrollees' previous policies creditable, and thus not eligible for coverage.

Thirteen of the enrollees appealed the decision to the state's Department of Insurance, which found them eligible. But at the end of November, the federal agency again told Medical Mutual the individuals' coverage should be terminated. Still, the state's insurance department said it expected the company to comply with its ruling and reinstate the enrollees.

After several months of conflicting directives, the 13 people were reinstated into the program on Dec. 28 after the department of Health and Human Services agreed, according to Medical Mutual. The patients saw no lapse in coverage.