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Insurance Coverage Disputes & Bad Faith Claims

2/25/2008
Christopher M. Davis
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Health Insurer Ordered to Pay $9 Million for Illegally Terminating Benefits
A woman who had her medical coverage canceled as she was undergoing treatment for breast cancer has been awarded more than $9 million in a case against one of California's largest health insurers.  Patsy Bates, 52, a hairdresser from Lakewood, had been left with more than $129,000 in unpaid medical bills when Health Net Inc. canceled her policy in 2004.  On Friday, arbitration judge Sam Cianchetti ordered Health Net to repay that amount while providing $8.4 million in punitive damages and $750,000 for emotional distress.
The next day, the Los Angeles city attorney sued Health Net, claiming it illegally canceled the coverage of about 1,600 other patients. City Attorney Rocky Delgadillo also said the company illegally ran an incentive program in which it paid bonuses to an administrator for meeting targets of policy cancelations.  Health Net acknowledged that such a program existed in 2002 and 2003 but was subsequently scrapped.

Bates was fortunate because she was allowed to complete her cancer treatment through a state-funded program.  But what about others who were victims to health insurance company’s illegal efforts to terminate medical benefits when they are needed most?  I’m sure there are many others that didn’t have the means or strength to file suit against the insurance company and pursue costly and time-consuming litigation.  What Health Net did was a travesty and the award appears justified.
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