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Judge Sends $9 Million Message To Big Insurance

Posted by Jane Akre
Monday, February 25, 2008 12:02 PM EST
Category: Major Medical, Protecting Your Family
Tags: FDA and Prescription Drugs, Breast Cancer, Health Insurance, Defective Drugs

Judge rules $9 million against Health Net of California for cancelling a patient's insurance while she is in chemo.  


It is the first of its kind ruling against Big Insurance. 

Health Net says after a $9.4 million dollar judgment, it got the message and will stop canceling health policies.

The change in direction stems from the case of 52-year old hairdresser, Patsy Bates who was suffering from breast cancer, diagnosed in 2004. 

A salesman had signed Bates up for the policy, even though she already had coverage. She thought Health Net would cover her surgery and chemotherapy. But after two chemo treatments the insurer stopped paying.  

Bates had $129,000 in unpaid medical bills and since she couldn’t afford it, doctors stopped treating her.

"I was devastated. I didn't know what was going to happen," Bates told ABC News. "It's boggling that someone can do that to you."

Bates sued her insurer and Friday a California judge ordered Health Net to pay her the amount which includes $8 million in punitive damages.

In the landmark ruling, the outraged judge wrote: "She had valid health insurance … when the rug was pulled from underneath, and that occurred at a time when she is diagnosed with breast cancer, one of the leading causes of death for women."

Judge Sam Cianchetti called Woodland Hills-based Health Net’s actions “egregiousin a 21-page ruling. And he said they acted in bad faith, had no concern for the interests of the insured and broke state law.

Bates was represented by attorney William Shernoff. During arbitration he presented internal company documents that showed employees were rewarded for canceling patient’s policies.

He argued that Health Net saved more than $35 million between 2002 and 2006 by dropping policies. 

Health Net, California’s largest for-profit insurer made more than two billion in gross profit last year. Initially the company argued that Bates had failed to reveal a pre-existing heart condition and her true weight. Bates says the salesman filled out the form while she styled a client’s hair and she answered the best she could.

Bates had completed her breast cancer treatment through a state-funded program.  She still has about $130,000 in unpaid bills. Her cancer is in remission.

Health Net’s Chief Executive Jay Gellert made the policy change and told the Los Angeles Times that “I felt bad about what happened to her, I feel bad about the whole situation.”  

Other insurers such as WellPoint Inc says it too is considering changing its cancellation practices. #


Anonymous User
Posted by Maine Mike
Monday, February 25, 2008 3:13 PM EST

I can't wait to see how this ruling is going to be applied to all of the 9-11 survivors who got their health insurance cancelled by the insurance companies when the survivors are in the middle of treatment. If there was ever a case to be made for universal health insurance coverage (and I'm a Republican by the way)this judge's decision is it.

And as far as Bush and stopping 'lawsuit abuse', well, just imagine where this case would have gone had the so-called 'tort reforms' gone into play. Insurance companies would be rakng in premiums at the same time telling the policyholders, who paid their premiums, to go kiss off as far as any more coverage was concerned.

Anonymous User
Posted by David Dowding
Monday, February 25, 2008 3:27 PM EST

Why don't they apply the same logic to the insurance companies who refused to pay and cancelled coverage after Katrina.This is what Bush and the Republicans
consider globalization best business practices.
Screwing the less fortunate so those who do nothing can continue to enjoy the fruits of our labor. When will we learn that you cannot place profit above
performance? Greed is the mantra of this administration and the best part is they are so greedy they have killed the goose that laid the golden eggs. All Bush can do now is lay eggs. He's the best egg layer we've ever had in the Whitehouse.

Posted by Darren
Monday, February 25, 2008 4:13 PM EST

The only thing surprising about this case is that she won it, as the insurance companies get away with this far more often than they get punished for it. It's about time attorneys started putting pressure on the industry to treat their policyholders fairly. I think most folks who have to make a claim with insurance companies experience some sort of run around, cancellation on dubious grounds, or are folied by fine print. Imagine what kind of barriers are thrown up when a large claim is made against the policy (like "my house was destroyed by a hurricane and I need a new one" or "I have cancer and need intensive treatment").

Anonymous User
Posted by Vindicted?
Monday, February 25, 2008 6:16 PM EST

You have to love the quote: Health Net’s Chief Executive Jay Gellert made the policy change and told the Los Angeles Times that “I felt bad about what happened to her, I feel bad about the whole situation.”

I wonder if he feels bad more because he got caught or because he actually finds the policies abhorrent. Sadly it is probably the former reason and he will go back to lounging at his private golf club to lick is wounds...

Posted by jeffrey dach md
Sunday, March 02, 2008 8:30 AM EST

A simple solution to end this health insurance abuse is have the states regulate the health insurance industry just like a public utility is regulated.

This will rein in the obscene profits made by the insurance industry taking advantage of the vulnerability of sick Americans.

How does one deal with an eight hundred pound Gorilla that misbehaves and denies coverage for your medical bills?

Patsy Bates found out when a California court awarded her 9 million dollars for damages.

Her insurance carrier, Health Net cancelled coverage when she needed breast cancer treatment.

Her lawyer, William Shernoff, not only read the book, he wrote the book: "Fight Back and Win: How to Get HMOs and Health Insurance to Pay Up".

Bravo for LA City Attorney Delgadillo and New York City Attorney General Andrew Cuomo for going after the health insurance industry for fraudulent practices such as cancellation for pre-existing conditions and underpayment for out-of-network doctor bills.

To read more:


Making Your Health Insurance Company Pay Up by Jeffrey Dach MD

Jeffrey Dach MD

Comments for this article are closed.

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