The California Association of Realtors is suing Blue Shield of California over a notice of cancelled health insurance coverage for about 8,000 people, including Realtors and their family members.

The association has about 200,000 members, and about 10,000 members participate in health plans offered through the Realtor association, said Debra Ferrier, assistant general counsel for the Realtor group.

About 5,500 members use Blue Shield of California as their insurance provider, while a group of about 3,000 to 3,500 members use Kaiser and others choose other individual policies. “There are lots of places where Kaiser is not an alternative,” Ferrier said.

The latest contract with Blue Shield has been in effect for about seven years, and the association has offered Blue Shield coverage as an option for the past 15 years, Ferrier said.

David Seldin, a spokesman for Blue Shield, said that the company is canceling the contract because the association breached its contract. The association “failed to comply with the terms of the contract, specifically a very important provision requiring that they have 75 percent of their participating members taking Blue Shield insurance.”

He said that other coverage will certainly be available to the association’s members, and “anybody who loses healthcare coverage is eligible for guaranteed issue coverage,” which is mandated by law.

The Realtor association has had six months of notice about the cancellation, and “the amount of disruption should be fairly minimal,” he said.

While the association has estimated that about 8,000 people will lose Blue Shield coverage through the cancellation, Seldin said the company believes those numbers are between 6,000 and 7,000.

“From our standpoint it was a very cut-and-dry issue. We had a contract and they were not in compliance with (the contract). We took this action as soon as we became aware of the situation,” he said. Blue Shield has not yet had a chance to review the lawsuit, he said.

“Blue Shield has said we don’t meet participation requirements. We disagree,” Ferrier said.

According to a statement by association president Colleen Badagliacco, “We were … notified — by mail — that our insurance coverage was being canceled. Families are scrambling unsuccessfully to find replacement coverage by May 31. Many have operations scheduled, others are recovering from surgeries and require continued medical care or additional therapy. Some are dying and are in need of palliative care during their last days.”

The association is seeking a preliminary injunction to prevent the cancellation in coverage. Ferrier said the association received the cancellation notice in December and had been in negotiations with Blue Shield representatives. “We’ve been trying to renegotiate with Blue Shield for a variety of things,” Ferrier said. The association currently offers four programs through Blue Shield. The Blue Shield programs cover spouses and dependents of association members.

Blue Shield of California is a not-for-profit health care company that has about 3.2 million members and 4,300 employees, with 20 office locations.

The National Association of Realtors, which is affiliated with state and local Realtor groups across the country, has lobbied for several years for federal legislation that would allow trade associations to offer group healthcare insurance to their members on a national basis.

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