Today in the Los Angeles Times, I read about the health insurance company Blue Shield of California which has been sued by a policyholder alleging bad faith for refusing to pay medical bills totalling $450,000 arising out of a serious car accident. According the the article, the insureds applied for health insurance, paid premiums and received an individual policy through Blue Shield of California in December, 2000. After receiving the policy and believing they had health insurance coverage, unfortunately the husband suffered serious injuries in a car accident in March, 2001. Blue Shield paid more than $100,000 in medical expense claims relating to this car accident and then decided to re-examine the family’s application for health insurance. After re-examining the application, Blue Shield contended that the family mis-stated the husband’s weight and other medical conditions and claimed that it would never have issued the health insurance policy had it known of the husband’s true weight. As a result of alleged mis-statements, Blue Shield of California denied remaining claims and rescinded the family’s health insurance policy. Blue Shield rescinded the family’s health insurance policy leaving more than $346,000 in outstanding medical bills and an unpaid debt owing to Blue Shield to reimburse the approximately $104,000 in claims already paid. The family sued Blue Shield alleging that it rescinded the policy for reasons unrelated to the answers on the policy application, instead rescinding when the insureds became unprofitable after the husband’s serious auto accident.
In Arizona, an insurer has an obligation to deal with you fairly and in good faith. If you believe you have been victimized by the conduct of an insurance company, you can submit a complaint to the Arizona Department of Insurance who will investigate to determine if it believes any laws have been violated. You may also consider meeting with a private lawyer to assist in determining what private remedies may be available if an insurance company treats you unfairly. Have you had similar experiences with your health insurance carrier? Have you had positive dealings with your insurance carrier? I’d like to hear about your experiences.
If the facts of this case are as indicated in the LA Times article, do you believe Blue Shield acted fairly and in good faith toward its insureds by taking away insurance only after expensive claims had been submitted? Do you believe that Blue Shield of California truly believed that it would not have issued the health insurance policy if the husband’s true weight were recorded on the policy application or do you believe the company attempted to rescind the policy simply because the family’s claims expenses were so high? What limitations or restrictions, if any, should be placed on a health insurance company such as Blue Shield when it evaluates whether to rescind a health insurance policy? Did the company do anything inappropriate in the method it processed claims for benefits related to this automobile accident? What other information would affect your answers to these questions? Let me know your thoughts.