Sunday, July 27, 2014
YOLO COUNTY NEWS
99 CENTS

Lawsuit targets ‘junk’ health insurance

TomEliasW

By
From page A12 | December 30, 2012 |

Dr. Norman Carter and his wife Kathleen are not alone, and a lawsuit they are fighting now in San Bernardino County Superior Court might help hundreds of other Californians who also believe they’ve been scammed by companies selling what lawyers often call “junk health insurance.”

Carter, 63, an independent orthodontist practicing in Chino since 1976, and his dental hygienist wife bought their $400-per-month individual policy from Mid-West National Life Insurance Co. of Tennessee in 2004, switching over from Blue Cross, which they believed was becoming too expensive. Besides their practices, both also taught at Loma Linda University.

Like many of the self-employed, all they wanted was comprehensive hospitalization coverage in case of a major illness. A high deductible was fine with them, so long as the lifetime cap on expenses was at least $1 million.

But, their lawsuit charges, what they bought into was a fraud. For their policy contained ambiguous language that set a limit of $18,000 for miscellaneous hospital expenses. When crunch time arrived for the Carters, their suit charges, Mid-West used that that language to classify almost anything done in a hospital as miscellaneous. The Carters contend they weren’t told this could happen when a Mid-West agent sold them the policy.

Their lawsuit contends that when Kathleen Carter, also 63, needed surgery and chemotherapy for primary peritoneal cancer in early 2011, Mid-West paid only about $30,000 out of almost $200,000 in bills, the couple today still owing Loma Linda more than $140,000.

The suit says Mid-West accomplished this mostly with that “miscellaneous” tag. Among doctor-prescribed items placed under this label were $49,660 in operating room charges, $28,300 for anesthesia used during an eight-hour surgery and $24,381 in prescription drugs.

The Carters’ lawyer, Claremont-based William Shernoff, calls this a combination of fraud, breach of contract and “breach of the covenant of good faith and fair dealing.” His action does not seek a specific amount of damages, instead asking a jury to penalize Mid-West and its parent company, Texas-based HealthMarkets Inc., enough to discourage them and other insurance companies from doing anything similar.

For sure, it takes a huge penalty to discourage the type of scam alleged here. As recently as 2008, HealthMarkets (owned mostly by the New York-based Blackstone Group and the Goldman Sachs investment bank) agreed to a $20 million settlement with insurance regulators in an action begun by the Massachusetts attorney general. Three years later, the firm was forced to pay another $350,000 in penalties.

HealthMarkets, Mid-West Life and two sister companies are also now being sued by the Los Angeles city attorney for “unlawful, unfair and fraudulent” insurance sales and advertising. Among other claims, the city’s lawsuit says HealthMarkets’ agents were deliberately trained to defraud customers by not explaining all the limits on their policies.

How widespread is this type of practice? The state Department of Insurance reports it received more than 100 complaints about Mid-West Life from policy holders who claimed their legitimate claims were denied or massively reduced. And that’s just from one company. Several others — the department wouldn’t name them — supposedly perform similarly.

HealthMarkets refused either to comment on the lawsuit or to say how many policies it writes in California, saying that information is private. But it reported collecting $73.6 million in premiums here last year. If the Carters’ premiums are close to typical, that would mean somewhere between 10,000 and 15,000 California individuals and families have such “coverage.”

“These companies used to do this even more than they do now,” said Shernoff, whose firm has won hundreds of millions of dollars in settlements from insurance firms. “But once they paid that $20 million fine and were also banned for a year from selling policies in Massachusetts, they improved a little.”

Shernoff said he has settled 10 cases similar to the Carters’ in the last five years and estimates there were hundreds of instances like the theirs in California during that time.

No one knows if this will all end when the state health insurance exchange created under the federal Affordable Health Care Act, better known as Obamacare, begins operating in 2014.

“We can’t speculate on that,” says insurance department spokesman Byron Tucker. “We don’t yet know what companies will sell insurance there and we don’t know how they’ll be regulated and which ones will be eligible.”

All of which means this remains a classic case of “caveat emptor” — let the buyer beware. If an insurance agent won’t answer every question asked, if a policy is written so ambiguously it might allow an insurer to weasel out of most reasonable and customary expenses, it’s probably best to look elsewhere for coverage.

— Reach syndicated columnist Tom Elias at tdelias@aol.com

Comments

comments

  • Recent Posts

  • Enter your email address to subscribe to this newspaper and receive notifications of new articles by email.

  • .

    News

    Zombies by rail: It’s not just a show, it’s a trip

    By Evan Arnold-Gordon | From Page: A1 | Gallery

     
    Fatal Covell Boulevard crash recalled in court

    By Lauren Keene | From Page: A1

    Humphrey Fellows will host Global Forum

    By Enterprise staff | From Page: A1 | Gallery

     
    Community gardens stretch food dollars, study finds

    By Special to The Enterprise | From Page: A1 | Gallery

    Wildfire spurs evacuation of 700 homes

    By The Associated Press | From Page: A2

     
    State can’t say if it’s meeting drought goal

    By The Associated Press | From Page: A2

     
    Rairdan joins race for Davis school board

    By Enterprise staff | From Page: A2

    Ukraine launches offensive to retake Donetsk

    By The Associated Press | From Page: A2

     
    Israel extends Gaza truce through Sunday

    By The Associated Press | From Page: A2

    New ordinance aims to prevent nut thefts from orchards

    By Anne Ternus-Bellamy | From Page: A4

     
    Biggest book sale to date opens Friday at Davis library

    By Enterprise staff | From Page: A4

    Luna family matriarch turns 100

    By Enterprise staff | From Page: A4 | Gallery

     
     
    Discussion of oil by rail EIR planned Sunday

    By Enterprise staff | From Page: A5

    Mace Innovation Center is focus of meeting

    By Enterprise staff | From Page: A5

     
    Freeway crash injures two drivers

    By Lauren Keene | From Page: A5

    Museum wants your old Davis High School yearbooks

    By Enterprise staff | From Page: A5

     
    Affordable housing forum planned in Davis

    By Special to The Enterprise | From Page: A5

     
    Protesters gather at Primate Center

    By Tanya Perez | From Page: A8

     
    State awards $40,000 for historic property survey

    By Lily Holmes | From Page: A8

    Free blood pressure screenings offered

    By Enterprise staff | From Page: A9

     
    Vanguard hosts economic development director

    By Enterprise staff | From Page: A9

    Get a sneak peek at documentary trailer

    By Enterprise staff | From Page: A9

     
    Davis Chamber Choir sings short summer program

    By Jeff Hudson | From Page: A9

    Tasting event benefits Yolo Land Trust

    By Lily Holmes | From Page: A9

     
    At the Pond: From Davis, it’s easy to get back to nature

    By Jean Jackman | From Page: A10 | Gallery

    Tickets on sale now for DHS Hall of Fame dinner

    By Enterprise staff | From Page: A11

     
    .

    Forum

    Feels like a million miles away

    By Creators Syndicate | From Page: A7

     
    Here’s what you need for a perfect wedding

    By Marion Franck | From Page: A7

     
    Check doctors’ vitals before they check yours

    By The Associated Press | From Page: A7

    Husband’s let himself go

    By Creators Syndicate | From Page: A14

     
    Questions on water rights

    By Letters to the Editor | From Page: A16, 1 Comment

    Campus turns on the tap

    By Our View | From Page: A16

     
    So, what’s in a week’s worth of waste?

    By Michelle Millet | From Page: A16

    Pat Oliphant cartoon

    By Debbie Davis | From Page: A16

     
    Golf tourney was a big success

    By Letters to the Editor | From Page: A16

    We can do more to help

    By Letters to the Editor | From Page: A17

     
    New playground is wonderful

    By Letters to the Editor | From Page: A17

    Just Us in Davis: Little Rock Nine hero to celebrate with Davis youths

    By Jann L. Murray-Garcia | From Page: A17 | Gallery

     
    .

    Sports

    Sutherland presents 1st clinic; golf column on its way

    By Bruce Gallaudet | From Page: B1 | Gallery

     
    New Korematsu teacher is an American Ninja Warrior

    By Bruce Gallaudet | From Page: B1 | Gallery

    Furyk opens 3-shot lead in Canadian Open

    By The Associated Press | From Page: B1

     
    Gray wins 6th straight, A’s 4 HRs beat Texas 5-1

    By The Associated Press | From Page: B1

    Kershaw throws 2-hitter as Dodgers beat Giants 5-0

    By The Associated Press | From Page: B1

     
    Nibali set to cruise to Tour victory

    By The Associated Press | From Page: B2

    Area sports briefs: River Cats take Game 1 of doubleheader

    By Special to The Enterprise | From Page: B4

     
    .

    Features

    .

    Arts

    .

    Business

    Companies will collaborate on crop insect control

    By Enterprise staff | From Page: A13

     
    Developer’s commitments: affordable and green

    By Special to The Enterprise | From Page: A13 | Gallery

    Lagerstrom represents Davis at Mary Kay seminar

    By Special to The Enterprise | From Page: A15

     
    UC Davis Health System earns ‘Most Wired’ award

    By Charles Casey | From Page: A15

    Bartholomew hires new associate

    By Enterprise staff | From Page: A15

     
    Yolo County real estate sales

    By Zoe Juanitas | From Page: A15

    Go back to school with Great Clips

    By Enterprise staff | From Page: A15

     
    .

    Obituaries

    Carlton Hope Meister

    By Special to The Enterprise | From Page: A4

     
    Jonathan Eric Hollander

    By Special to The Enterprise | From Page: A4

    .

    Comics

    Comics: Sunday, July 27, 2014

    By Creator | From Page: A6