Wednesday, July 23, 2014
FAIRFIELD-SUISUN, CALIFORNIA
99 CENTS

Lawsuit targets ‘junk’ health insurance

elias column sig

By
From page A11 | January 02, 2013 |

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 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 Carter’s 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 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 seek elsewhere for coverage.

Thomas Elias is a California author. Reach him at tdelias@aol.com.

LEAVE A COMMENT

Discussion | No comments

The Daily Republic does not necessarily condone the comments here, nor does it review every post. Read our full policy

.

Solano News

Fairfield labor pact wins City Council OK

By Ryan McCarthy | From Page: A1, 11 Comments | Gallery

 
 
 
Solano leaders feel left out of Delta decision-making

By Barry Eberling | From Page: A3

Polk first to file for Fairfield council

By Ryan McCarthy | From Page: A4, 2 Comments

 
 
Carpenters training center set to expand in Fairfield

By Barry Eberling | From Page: A5, 6 Comments | Gallery

Governor signs 2 bills by Frazier into law

By Ryan McCarthy | From Page: A5

 
Dally seeks to retain seat on Vacaville school board

By Amy Maginnis-Honey | From Page: A5

2 Vacaville homes hit by gunfire

By Barry Eberling | From Page: A6, 2 Comments

 
Library friends set spring book sale

By Ryan McCarthy | From Page: A6

 
Video chair exercise class returns to senior center

By Amy Maginnis-Honey | From Page: A6

 
Man, woman, comic and dance contest primed for box office

By Amy Maginnis-Honey | From Page: A7

Rockville Trails hike on August calendar

By Barry Eberling | From Page: A8 | Gallery

 
 
Mayor’s Commission on Crime hears from community

By Amy Maginnis-Honey | From Page: A12, 12 Comments | Gallery

.

US / World

Dueling rulings: Courts split on health law clash

By The Associated Press | From Page: A1

 
Assailants sought in fatal train platform beating

By The Associated Press | From Page: A9

Senate, House on collision course on border money

By The Associated Press | From Page: B9

 
ACLU may fight for California migrant shelter

By The Associated Press | From Page: B9, 1 Comment

IRS employee charged with identity theft

By The Associated Press | From Page: A9

 
Gaza blockade key to any Israel-Hamas truce deal

By The Associated Press | From Page: B10

 
Mexican-born professor eyed for state high court

By The Associated Press | From Page: A10 | Gallery

Airlines ban flights to Israel after rocket strike

By The Associated Press | From Page: B10

 
Board puts soda tax before San Francisco voters

By The Associated Press | From Page: A10

George Harrison memorial tree killed by beetles

By The Associated Press | From Page: A10, 2 Comments

 
AP source: Thieves got into 1K StubHub accounts

By The Associated Press | From Page: A12

Obama nominee McDonald pledges to ‘transform’ VA

By The Associated Press | From Page: A12

 
Body of missing S. Korean shipping tycoon found

By The Associated Press | From Page: A12

Crews make gains on massive Washington wildfire

By The Associated Press | From Page: A12

 
11 parents of Nigeria’s abducted girls die

By The Associated Press | From Page: A12

Lax security at crash site hampers investigations

By The Associated Press | From Page: A13

 
Plane crash bodies removed from war zone

By The Associated Press | From Page: A13

.

Opinion

 
 
Walmart donation benefits Meals on Wheels

By Letter to the Editor | From Page: A11, 2 Comments

Batson’s column on Mideast peace is wrong

By Letter to the Editor | From Page: A11, 5 Comments

 
Fix our problems first

By Letter to the Editor | From Page: A11, 7 Comments

.

Living

Today in History for July 23, 2014

By The Associated Press | From Page: A2

 
Community Calendar: July 23, 2014

By Susan Hiland | From Page: A2

How to argue appropriately with your mate

By Barton Goldsmith | From Page: A2

 
10 Things: 10 fresh ways to use fresh blueberries

By J.M. Hirsch | From Page: B6

Horoscopes for July 23, 2014

By Holiday Mathis | From Page: B6

 
Bulking up the classic BLT without adding fat

By Sara Moulton | From Page: B6

I’m tired of my parents judging me because of who I date

By Kathy Mitchell and Marcy Sugar | From Page: B6

 
A summer sausage roll with a triple dose of fennel

By The Associated Press | From Page: B6

.

Entertainment

‘Downton Abbey’ back on Jan. 4 for season 5

By The Associated Press | From Page: A7

 
‘X-Men’ VR experience coming to Comic-Con

By The Associated Press | From Page: A7

TVGrid

By Daily Republic Syndicated Content | From Page: B8

 
.

Sports

49ers start fresh after forgettable offseason

By The Associated Press | From Page: B1

 
Giants beat Phillies 9-6 in 14 innings

By The Associated Press | From Page: B1 | Gallery

 
A’s agree to 10-year lease to stay in Oakland

By The Associated Press | From Page: B1

Raiders enter camp with ‘chip’ on shoulders

By The Associated Press | From Page: B1

 
AP source: Cavs to sign Andrew Wiggins to contract

By The Associated Press | From Page: B3

Paterno son, other former assistant sue Penn State

By The Associated Press | From Page: B3

 
Pyrenees please Nibali, Rogers in Tour Stage 16

By The Associated Press | From Page: B3 | Gallery

Warriors announce Brandon Rush’s signing

By The Associated Press | From Page: B3

 
CEO: Rivers to quit Clippers if Sterling stays

By The Associated Press | From Page: B3

Racehorse owned by Britain’s queen fails dope test

By The Associated Press | From Page: B3

 
Mudcats score early, get 7-3 win over South Bay Storm

By Daily Republic staff | From Page: B3

Seahawks start atop AP Pro32 rankings

By The Associated Press | From Page: B3

 
Selig still waiting on Tommy John report

By The Associated Press | From Page: B3

.

Business

Ackman goes after Herbalife’s nutrition clubs

By The Associated Press | From Page: B8, 1 Comment

 
China meat scandal hits Starbucks, Burger King

By The Associated Press | From Page: B8

Solid earnings drive more gains in US stocks

By The Associated Press | From Page: B8

 
Microsoft 4Q earnings hurt by Nokia acquisition

By The Associated Press | From Page: B8

Apple post biggest earnings gain in nearly 2 years

By The Associated Press | From Page: B8

 
One in every 25 New Yorkers is a millionaire, study says

By Los Angeles Times | From Page: B8

California firm issues nationwide fruit recall

By The Associated Press | From Page: A10

 
.

Obituaries

John Klefstad

By Nancy Green | From Page: A4

 
.

Comics

Blondie

By Daily Republic Syndicated Content | From Page: B5

 
Frank and Ernest

By Daily Republic Syndicated Content | From Page: B5

Garfield

By Daily Republic Syndicated Content | From Page: B5

 
Rose is Rose

By Daily Republic Syndicated Content | From Page: B5

Sally Forth

By Daily Republic Syndicated Content | From Page: B5

 
Beetle Bailey

By Daily Republic Syndicated Content | From Page: B5

B.C.

By Daily Republic Syndicated Content | From Page: B5

 
Baldo

By Daily Republic Syndicated Content | From Page: B5

Wizard of Id

By Daily Republic Syndicated Content | From Page: B5

 
Baby Blues

By Daily Republic Syndicated Content | From Page: B5

Peanuts

By Daily Republic Syndicated Content | From Page: B5

 
Zits

By Daily Republic Syndicated Content | From Page: B5

Pickles

By Daily Republic Syndicated Content | From Page: B5

 
For Better or Worse

By Daily Republic Syndicated Content | From Page: B5

Get Fuzzy

By Daily Republic Syndicated Content | From Page: B5

 
Dilbert

By Daily Republic Syndicated Content | From Page: B5

Word Sleuth

By Daily Republic Syndicated Content | From Page: B6

 
Cryptoquote

By Daily Republic Syndicated Content | From Page: B6

Bridge

By Daily Republic Syndicated Content | From Page: B6

 
Sudoku

By Daily Republic Syndicated Content | From Page: B6