Insurance Lawyer Blog

In a blow to insurance companies across the country, a unanimous Montana jury at the US District Court in Billings recently awarded 90 year old Arlene Hull a $34.3 million judgment against Ability Insurance Company of Omaha, Nebraska. It is one of the largest jury awards in Montana’s history, and amounted to $250,000 for breach of contract, $2 million for violating Montana’s Unfair Trade Practices law, and $32 million in punitive damages, according to the Billings Gazette.

In a story that is all too common to those of us who work in insurance law, Mrs. Hull and her husband purchased long-term care insurance in 1997 from a company then called Mutual Protective Insurance. Mr. Hull died in 1998, but Mrs. Hull continued to pay premiums. The company changed names and shifted ownership over the following years. In 2007, Mrs. Hull was diagnosed with Alzheimer’s disease and it became more difficult for her to care for herself. A year later, she moved into St. John’s Lutheran Home in Billings, when she began receiving benefits from her long-term care insurance policy. Ability Insurance bought the company holding Mrs. Hull’s policy in 2007 and decided to review her policy in January 2010. Ability decided to cut off Mrs. Hull’s benefits, and when her daughter appealed the decision, it was denied. Ability told them that then 88 year old Arlene Hull, diagnosed with Alzheimer’s for three years, did not need “continual supervision due to severe cognitive impairment” and that she was only “moderately” not “severely” impaired. In September 2010, Mrs. Hull and her daughter brought this lawsuit against Ability in the US District Court. The insurance company then reversed course and reinstated her benefits in October 2011, but the company refused to pay for the period she was without benefits.

Unfortunately, Montana law caps punitive damages at $10 million, so Mrs. Hull’s $32 million in damages from the judgment will not likely stand in an appeal. Regardless, this is a significant victory for insurance victims like Mrs. Hull. Her attorney said, “Long-term-care policy holders are responsible people who don’t want to be a burden to others and should not be wrongfully denied benefits under these policies.” Insurance companies need to understand that they cannot get away with these kinds of shady business practices, harming their hardworking customers by denying them deserved benefits to save the company money.
Cheating the vulnerable elderly happens all over the country, as our San Francisco bad faith insurance attorney (http://www.brodfirm.com/lawyer-attorney-1844610.html) discussed in a previous post about Dr. William Hall’s similar case in southern California. Without this recourse in law, seniors would be trapped by these greedy, unscrupulous insurance companies—duped out of their money and then left to suffer during the last years of their life, denied the care they paid for. If a loved member of your family is facing this kind of abuse over health insurance or long-term care insurance, please contact an San Francisco insurance attorney in your area as soon as possible.

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As San Francisco insurance attorneys we were glad to see the latest news that Blue Shield of California and Blue Shield of California Life and Health Insurance Company, a major insurer, finally settled a multi-year lawsuit. It is encouraging to see even a small correction of a gross injustice done to the hardworking insurance consumers of California.

After three years of investigation, the lawsuit was filed in 2008 by then City Attorney Rocky Delgadillo on behalf of the city of Los Angeles, alleging that the insurance provider wrongly dropped policy holders after they became ill, duping consumers into buying insurance that would be rescinded, and other shady business practices. The city of Los Angeles was seeking $1 billion in damages and restitution. Blue Shield was accused of rescinding hundreds of policies of patients after they were hospitalized or required major medical procedures. The consumers had previously applied and were approved for insurance, only to be told once they needed health care benefits that they had made a mistake on their misleading or confusing application form, discovered from a retroactive investigation by the insurance company. Often these consumers had been paying for health insurance for years, only to find out at the critical moment that they paid for nothing. Thousands of cases were investigated. Since 2002, Blue Shield denied benefits to 850 people and delayed benefits to countless more.

A federal ban on these types of rescissions for unintentional mistakes on insurance applications went into effect in September 2010 because of the new healthcare legislation. Now Blue Shield has settled for $2 million, to be split between the city and Los Angeles County, and the company will also pay the legal costs of the lawsuit, but without admitting any fault in the matter.

Part of the settlement requires Blue Shield to submit a new and amended health insurance application form that complies with federal and California requirements in being intelligible to consumers. Blue Shield is limited on an application to asking for relevant, as in “reasonable and necessary”, medical information to calculate the risk of insurance benefits being requested. The settlement also bans Blue Shield from rescinding coverage unless it can prove that the policyholder committed fraud or misrepresented relevant health information on their insurance application. It also bans Blue Shield from giving insurance investigators commissions based on their number of rescissions.

The insurer’s spokesperson stated that Blue Shield settled the suit simply to avoid the costs and distractions of ongoing litigation. Blue Shield also claims it is committed to taking aggressive and proactive steps to provide better access to health care.

Even with this settlement, however, the individual policyholders who were wrongfully denied benefits did not gain any monetary restitution. The settlement may be good news overall, especially as a wake-up call to insurance companies that they must comply with federal legislation and behave in a fair and above-board manner with their customers. But for the many families struggling to cover medical expenses, it is perhaps cold comfort. This is why it is vital to speak to a California insurance lawyer if your insurance company is trying to give you the run around or to rescind your policy or benefits. In something that is so important to you and your family and the future, local families need an experienced San Francisco insurance attorney in your corner working specifically on your case.

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