Horror stories are a staple of those who believe that universal health insurance, with strict parameters set up by the federal government, is the answer not only for the tens of millions with no coverage, but even for those fortunate enough to have a policy, yet who too often find themselves left up the creek by outrageous carrier misconduct. Exhibit A is the case of Patsy Bates, whose health insurer dumped her during breast cancer treatments, and who paid the price last month.
(For the full Feb. 25 story, check out the "Good Morning, America" site by clicking here.)
Ms. Bates saw her health coverage cancelled by Health Net over some technicalities on her application while she was in the middle of breast cancer chemotherapy, dumping her with $129,000 in unpaid medical bills, and forcing her to at least temporarily postpone her life-saving treatment.
But Ms. Bates did not fade away quietly. She fought back in arbitration--the only legal avenue open to her under her policy--convincing arbitor Sam Cianchetti, a retired Los Angeles County Superior Court judge, that the carrier not only broke state laws, but acted in bad faith as well.
As a result, she was awarded $9 million--with the bulk, $8.4 million, for punitive damages.
That might be a relative slap on the wrist for a carrier that size, but more important, the decision, resulting bad publicity and the potential for further suits now that the cat was out of the bag prompted Health Net to end its habit of canceling the policies of sick policyholders, thereby saving lives and heartache down the road.
Better yet, the Los Angeles Times reported that other carriers might be following Health Net's example--the good one, by not bailing out on sick insureds. (Click here to read the Times story.)
Other legal challenges of the carrier's cancellation policy are pending, according to the LA Times--including a potential class-action.
Judge Cianchetti called Health Net's actions "egregious," because, according to GMA, the carrier was not only systematic, but downright enthusiastic about tossing sick customers overboard, offering bonuses for cancellations, and going so far as to set quotas in case certain staff members didn't have the stomach to act so callously.
Ms. Bates' lawyers argued that Health Net had saved more than $35 million by rescinding policyholders between 2002 and 2006, GMA reported.
The LA Times quoted California Insurance Commissioner Steve Poizner as hailing the decision. "Health insurers simply cannot hold out the promise of insurance for their consumers, and then snatch it away just when people need it most. That is illegal, immoral and will not be tolerated," he said in the article.
Why is it that so many people and politicians want to tell private carriers to take a hike, and give government a bigger role in health insurance?
I don't recall the last time Medicare dumped a cancer patient out on the street. Indeed, even with Medicaid--the insurer of last resort for the destitute--a dear friend of mine suffering from AIDS-related complications received the best of care, all paid for by the government program, before he finally succumbed.
So, how did Ms. Bates manage to survive long enough to beat her former carrier in arbitration? GMA reports that she completed her cancer treatment through a state-funded program in California.
State-funded? Interesting.
Comments (5)
It is these types of things which cause people to hate health insurance carriers and want government health care, which I am not sure would be good for the country. When people have to go these extremes to get the carrier to pay, it has to make us all wonder.
The people who always write that under no circumstances should we have a national health insurance plan because it would make things worse and be too expensive seem to forget this type of stuff goes on all the time.
It would not surprise me if this carrier raises the rates for all their insureds to pay for the fines. After all, they have to make up the loss, somehow.
This also points to last blog about the OFC, and how the states can do a much better job of handling the carriers and protecting consumers. I don't think the commisioner in this case did a good job for the insured. It appears like he did nothing until it hit the press, so he could get a quote in the paper and then work on getting re-elected.
This carrier tried to defraud the insureds, so why was this not reported by the anti-insurance fraud folks? Insurance fraud works both ways, and this carrier is just as guilty as the insureds who lie to the carriers.
Under the current system, each state would have to pass seperate laws to stop this from happening, and then levy seperate fines, penalties and so on.
These types of things require proactive steps, and it seems the NAIC is most always reactive.
Posted by Dave | February 29, 2008 1:50 PM
Posted on February 29, 2008 13:50
There are more regulations governing the handling of an auto loss than claims involving health insurers. As a 30-year veteran of property and casualty claims, I cannot understand why it is more important for regulators to insure that a claimant gets a contact on a loss involving their car, but we are on our own regarding health insurance claims practices.
Further, it's imperative that we can choose a repair facility, but are forced to go to medical practicioners regardless of personal needs or preference.
Posted by Catherine O'Brien | March 3, 2008 11:35 AM
Posted on March 3, 2008 11:35
Many know me as a strong defender of the insurance industry. I have been a property claims adjuster for in excess of 40 years. I sincerely believe that, for the most part, the industry is ethical (although MANY are poorly managed, and therein lies another story).
Unfortunately, I have become a consumer of the health insurance side of the industry. They are the antithesis of anything good I have ever learned about insurance.
I wonder about the PERSONAL ethics of those who make such disgraceful decisions (cancelling an insured in the midst of cancer treatments, e.g.) How can you live with yourself after making a decision like that?
The Enron gang is in jail for making questionable decisions. While the health insurance executives probably won't go to jail, let's hope that there really is justice in the future (whenever applied).
Posted by James P. Reilly | March 3, 2008 11:43 AM
Posted on March 3, 2008 11:43
Based on the info in the ABC News article, it looks like Health Net had no valid reason to deny coverage for cancer. The insured appears to have provided misleading or incomplete information on the application (as regards weight and a heart condition). I wonder if she worked through an agent to acquire her medical coverage?
I had a client in my office last week looking for life insurance for her husband. Her husband has a habit of chewing tobacco. She went to another agent first, who suggested that her husband stop chewing for a few weeks so that tobacco wouldn't show up in a saliva test.
Needless to say, my advice was the truth, the whole truth, and nothing but the truth. Putting misleading or incomplete information on an insurance application is the best way to have coverage rescinded.
But I think it's fair to say that insureds can trust carriers when carriers can trust insureds.
Posted by Brandon | March 3, 2008 11:45 AM
Posted on March 3, 2008 11:45
Sam, don't forget the role of rehabilitation in health insurers' responsibility to their policyholders. See the attached cautionary tale from today's Chicago Sun-Times:
http://www.suntimes.com/news/metro/822712,insure030308.article
Posted by Laura Toops | March 3, 2008 2:59 PM
Posted on March 3, 2008 14:59