Wednesday, October 22, 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

Crime key topic again at Fairfield candidates night

By Ryan McCarthy | From Page: A1, 35 Comments | Gallery

 
Logue wins US Chamber of Commerce support

By Ryan McCarthy | From Page: A1

 
Dixon corn maze breaks own world record

By Jess Sullivan | From Page: A2, 1 Comment | Gallery

Car washes raising money to fight breast cancer

By Susan Hiland | From Page: A3

 
Fairfield Police Department promotes 2, honors 1

By Ryan McCarthy | From Page: A3 | Gallery

 
Families Helping Families preps for holidays

By Amy Maginnis-Honey | From Page: A3

Charity Tree Auction application deadline nears

By Amy Maginnis-Honey | From Page: A3

 
Tots can trick-or-treat at Solano Town Center

By Amy Maginnis-Honey | From Page: A3

 
2 new challenges part of 2014 Solano Turkey Trot

By Amy Maginnis-Honey | From Page: A4 | Gallery

 
PAL center seeks volunteers

By Jess Sullivan | From Page: A4, 1 Comment

 
Suisun council splits on housing element changes

By Ian Thompson | From Page: A5

$1.4M land sale by Fairfield gets OK

By Ryan McCarthy | From Page: A6

 
Solano names new First 5 director

By Ian Thompson | From Page: A6

Action, thriller movies headed to box office

By Amy Maginnis-Honey | From Page: A7

 
Fairfield police log: Oct. 20, 2014

By Susan Hiland | From Page: A12

Fairfield police log: Oct. 19, 2014

By Susan Hiland | From Page: A12

 
Fairfield police log: Oct. 18, 2014

By Susan Hiland | From Page: A12

Suisun City police log: Oct. 20, 2014

By Susan Hiland | From Page: A12

 
Suisun City police log: Oct. 19, 2014

By Susan Hiland | From Page: A12

Suisun City police log: Oct. 18, 2014

By Susan Hiland | From Page: A12

 
.

US / World

Assad pursues withering campaign against rebels

By The Associated Press | From Page: A1 | Gallery

 
FBI: Denver girls may have tried to join jihadis

By The Associated Press | From Page: A1

IS fighters seize weapons cache meant for Kurds

By The Associated Press | From Page: A1

 
7 arrested in Oakland raid on Black Muslim Temple

By The Associated Press | From Page: A6

Stinky seaweed piling up at upscale Laguna Beach

By The Associated Press | From Page: A6

 
California man goes missing during road trip

By The Associated Press | From Page: A8

2nd guilty plea in California tainted beef case

By The Associated Press | From Page: A8

 
Golden Gate Bridge officials float sidewalk toll

By The Associated Press | From Page: A8

5 Jonestown victims buried in California

By The Associated Press | From Page: A8 | Gallery

 
New rules adopted in hopes of spurring home loans

By The Associated Press | From Page: B8

Former Washington Post editor Ben Bradlee dies

By The Associated Press | From Page: A9

 
Pakistani Nobel laureate honored in Philadelphia

By The Associated Press | From Page: A9

Cadaver dog searches in suspected serial killings

By The Associated Press | From Page: A10

 
Schools scoured in search for ambush suspect

By The Associated Press | From Page: A10

AP-GfK Poll: Most expect GOP victory in November

By The Associated Press | From Page: A10 | Gallery

 
Freed Vietnamese dissident travels to US: official

By The Associated Press | From Page: A13

North Korea frees US man; 2 more still detained

By The Associated Press | From Page: A13

 
Brown meets with health care experts about Ebola

By The Associated Press | From Page: A14

US expands Ebola checks; Rwanda to check Americans

By The Associated Press | From Page: A14

 
WHO: Ebola vaccine trials in W. Africa in January

By The Associated Press | From Page: A14

.

Opinion

Expect voter participation to drop

By Dan Walters | From Page: A11

 

PUC chief: Likely 1st test for new Brown term

By Thomas Elias | From Page: A11

Editorial Cartoons: Wednesday, Oct. 22, 2014

By Daily Republic Syndicated Content | From Page: A11

 
Spering kept youth league going

By Letter to the Editor | From Page: A11, 11 Comments

Day, Blankenchip good for respective cities

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

 
‘Misleading’ mailer sent to residents

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

.

Living

Today in History: Oct. 22, 2014

By The Associated Press | From Page: A2

 
Community Calendar: Oct. 22, 2014

By Susan Hiland | From Page: A2

Horoscopes: Oct. 22, 2014

By Holiday Mathis | From Page: B6

 
Is it OK for a business to use its contacts to raise money for a charity?

By Kathy Mitchell and Marcy Sugar | From Page: B6

Hummus and chocolate together? Deliciously so!

By The Associated Press | From Page: B7 | Gallery

 
Easy slow cooker chili that lives up to the hype

By The Associated Press | From Page: B7 | Gallery

Roasted beets can brighten up any holiday table

By The Associated Press | From Page: B7 | Gallery

 
.

Entertainment

TVGrid

By Daily Republic Syndicated Content | From Page: A5

 
Argentina demands ‘Top Gear’ apology from BBC

By The Associated Press | From Page: A7

‘S.H.I.E.L.D’ fans push for Coulson/May romance

By The Associated Press | From Page: A7 | Gallery

 
From Kors to DVF, fashion mourns de la Renta

By The Associated Press | From Page: A7 | Gallery

.

Sports

Local report: Vikings earn 3-0 SCAC volleyball win over Wolves

By Daily Republic staff | From Page: B1

 
SJS releases season’s first wins list

By Paul Farmer | From Page: B1 | Gallery

Bumgarner, Giants stop Royals 7-1 in Series opener

By The Associated Press | From Page: B1 | Gallery

 
Bruins hold off Sharks to win 5-3

By The Associated Press | From Page: B1 | Gallery

Logano: No worries about retaliation from Patrick

By The Associated Press | From Page: B2

 
Cowboys release Michael Sam from practice squad

By The Associated Press | From Page: B2

Fighters suing Mayweather over Vegas cable TV bout

By The Associated Press | From Page: B2

 
49ers lose center Daniel Kilgore, needs surgery

By The Associated Press | From Page: B2 | Gallery

Raiders plagued by 3rd-down defensive woes

By The Associated Press | From Page: B2

 
For a young Mexican golf star, seeing helps him believe

By The Associated Press | From Page: B2

Shaw shoulders blame for Stanford’s slide

By The Associated Press | From Page: B2

 
Newman dodges penalty for Talladega inspection

By The Associated Press | From Page: B2

WS Game 2 starters Ventura, Peavy study in contrasts

By The Associated Press | From Page: B3 | Gallery

 
Hats off! Royals get old-timey with tip o’ the hat

By The Associated Press | From Page: B3

KC, San Fran mayors announce World Series wager

By The Associated Press | From Page: B3

 
Ezeli returns as Warriors beat Clippers 125-107

By The Associated Press | From Page: B3

Buster’s back: Posey tries to add 3rd Series ring

By The Associated Press | From Page: B3 | Gallery

 
AP sources: Rice’s appeal hearing set for Nov. 5-6

By The Associated Press | From Page: B3

Kings GM: NHL should educate after Voynov’s arrest

By The Associated Press | From Page: B3

 
Broncos are still No. 1 in AP Pro32 rankings

By The Associated Press | From Page: B9 | Gallery

‘Blade Runner’ Pistorius gets 5 years in prison

By The Associated Press | From Page: A12 | Gallery

 
.

Business

New efforts to ban tobacco farm child labor

By The Associated Press | From Page: B8 | Gallery

 
Total CEO killed in Moscow runway crash

By The Associated Press | From Page: B8

China economy grows at slowest pace in 5 years

By The Associated Press | From Page: B8

 
Google’s streaming music service adds mood to mix

By The Associated Press | From Page: B8

5 problems McDonald’s is facing in the US

By The Associated Press | From Page: B8 | Gallery

 
.

Obituaries

Rufina Ferrer Levengood

By Nancy Green | From Page: A4

 
.

Comics

Garfield

By Daily Republic Syndicated Content | From Page: B5

 
B.C.

By Daily Republic Syndicated Content | From Page: B5

Wizard of Id

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

 
Baby Blues

By Daily Republic Syndicated Content | From Page: B5

Rose is Rose

By Daily Republic Syndicated Content | From Page: B5

 
Zits

By Daily Republic Syndicated Content | From Page: B5

Baldo

By Daily Republic Syndicated Content | From Page: B5

 
Peanuts

By Daily Republic Syndicated Content | From Page: B5

Blondie

By Daily Republic Syndicated Content | From Page: B5

 
Pickles

By Daily Republic Syndicated Content | From Page: B5

Beetle Bailey

By Daily Republic Syndicated Content | From Page: B5

 
Dilbert

By Daily Republic Syndicated Content | From Page: B5

Frank and Ernest

By Daily Republic Syndicated Content | From Page: B5

 
Sally Forth

By Daily Republic Syndicated Content | From Page: B5

Cryptoquote

By Daily Republic Syndicated Content | From Page: B6

 
Crossword

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

Word Sleuth

By Daily Republic Syndicated Content | From Page: B6