Thursday, April 17, 2014
FAIRFIELD-SUISUN, CALIFORNIA
99 CENTS

Lawsuit targets ‘junk’ health insurance

elias column sig

By
From page A11 | January 02, 2013 | Leave Comment

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

Huge jump in Solano median home price

By Brad Stanhope | From Page: A1 | Gallery

 
Supervisor candidates square off at forum

By Barry Eberling | From Page: A1 | Gallery

 
Carli takes oath, now Vacaville’s 14th police chief

By Susan Winlow | From Page: A1 | Gallery

Solano DA hosts workshop to fight human trafficking

By Ian Thompson | From Page: A3 | Gallery

 
Suisun water rates won’t rise this year

By Ian Thompson | From Page: A3

Kaiser area head Villalobos to leave for SoCal

By Barry Eberling | From Page: A3

 
Donate a car, help build a house

By Amy Maginnis-Honey | From Page: A3

 
Fairfield town hall on crime delayed

By Ryan McCarthy | From Page: A4, 1 Comment

Railway museum offers wine-tasting rides

By Adrienne Harris | From Page: A4

 
Travis trustee takes back blast at radio duo

By Ryan McCarthy | From Page: A4

 
Drugs topic of cardiac class

By Adrienne Harris | From Page: A4

Fairfield police log: April 15, 2014

By Susan Hiland | From Page: A12

 
Suisun City police log: April 15, 2014

By Susan Hiland | From Page: A12

Fairfield police log: April 14, 2014

By Susan Hiland | From Page: A12

 
Suisun Police log: April 14, 2014

By Susan Hiland | From Page: A12

Weather for April 17, 2014

By Daily Republic | From Page: B12

 
.

US / World

Armed robber was never told to report to prison

By The Associated Press | From Page: A1

 
Lost sea lion in California found mile from water

By The Associated Press | From Page: A4

Body of California man who jumped into river found

By The Associated Press | From Page: A4

 
California delays decision on protecting gray wolf

By The Associated Press | From Page: A5

Court rules for environmentalists in water fight

By The Associated Press | From Page: A5

 
Governor calls special session on rainy day fund

By The Associated Press | From Page: A5

Seabird from Atlantic spotted on Alcatraz

By The Associated Press | From Page: A5

 
Ex-Bell city leader gets 12 years in prison

By The Associated Press | From Page: A5

Ferry sinks off South Korea; 6 dead, 290 missing

By The Associated Press | From Page: A10

 
NATO ups military presence amid Russian threat

By The Associated Press | From Page: A10

Denver police eye 911 response time after killing

By The Associated Press | From Page: A10

 
Man charged with marathon hoax is held on bail

By The Associated Press | From Page: A10

Geneva talks on Ukraine face steep hurdles

By The Associated Press | From Page: A10

 
Pro-Russian insurgents seize armored vehicles

By The Associated Press | From Page: A10

.

Opinion

 
Parenting demands responsibility

By Ruben Navarrette | From Page: A11

Let’s stop Fairfield’s future thugs

By Kelvin Wade | From Page: A11, 2 Comments

 
Obamacare news you probably missed

By Martin Schram | From Page: A11

Editorial Cartoons for April 17, 2014

By Kim Durbin | From Page: A11

 
In support of Pam Bertani

By Letter to the Editor | From Page: A11

.

Living

Today in History for April 17, 2014

By The Associated Press | From Page: A2

 
Community Calendar: April 17, 2014

By Susan Hiland | From Page: A2

A lesson in household budgeting

By Chris Erskine | From Page: A2

 
Horoscopes for April 17, 2014

By Holiday Mathis | From Page: A9

 
.

Entertainment

TVGrid

By Daily Republic Syndicated Content | From Page: B4

 
Alicia Silverstone out with book ‘Kind Mama’

By The Associated Press | From Page: A7

Jenny McCarthy announces engagement on ‘The View’

By The Associated Press | From Page: A7

 
Ailing Malcolm Young taking break from AC/DC

By The Associated Press | From Page: A7

Disney Channel’s ‘Jessie’ breaks romantic ground

By The Associated Press | From Page: A7

 
Daniel Radcliffe on why New York audiences rock

By The Associated Press | From Page: A7

.

Sports

 
Crawford’s 41 points leads Warriors over Nuggets

By The Associated Press | From Page: B1 | Gallery

Vacaville’s Peralta to wrestle at San Francisco State

By Daily Republic staff | From Page: B1

 
Angels beat A’s 5-4 on Iannetta’s HR in 12th

By The Associated Press | From Page: B1 | Gallery

MEL, SCAC tangle in hoops all-star games

By Paul Farmer | From Page: B1

 
Sharks take goalie questions into rematch vs Kings

By The Associated Press | From Page: B1

Backup QB Matt Flynn returns to Packers

By The Associated Press | From Page: B2

 
Atlanta lands MLS expansion team for 2017

By The Associated Press | From Page: B2

Bucks owner Herb Kohl reaches deal to sell team

By The Associated Press | From Page: B2

 
Sidney Rice agrees to terms with Seahawks

By The Associated Press | From Page: B2

Goodwin helps Suns to 104-99 win over Kings in finale

By The Associated Press | From Page: B2 | Gallery

 
IndyCar driver Saavedra fined $10K

By The Associated Press | From Page: B2

Sandoval’s single lifts Giants past Dodgers, 2-1

By The Associated Press | From Page: B2 | Gallery

 
Officer: Sharper’s DNA found on 1 Arizona victim

By The Associated Press | From Page: B2

Jets sign former Titans RB Chris Johnson

By The Associated Press | From Page: B2

 
Spieth ready for more after Masters success

By The Associated Press | From Page: B2

 
.

Business

Yellen: Fed stimulus still needed for job market

By The Associated Press | From Page: B4

 
Some exempted from minimum wage, increased or not

By The Associated Press | From Page: B4

Fed survey: Growth picks up across most of US

By The Associated Press | From Page: B5

 
Bank of America posts loss, hurt by legal charges

By The Associated Press | From Page: B5

IBM posts lower 1Q earnings amid hardware slump

By The Associated Press | From Page: B5

 
Google’s 1Q earnings disappoint as ad prices slip

By The Associated Press | From Page: B5

.

Obituaries

.

Comics

For Better or Worse

By Daily Republic Syndicated Content | From Page: A8

 
Zits

By Daily Republic Syndicated Content | From Page: A8

Blondie

By Daily Republic Syndicated Content | From Page: A8

 
Get Fuzzy

By Daily Republic Syndicated Content | From Page: A8

Baldo

By Daily Republic Syndicated Content | From Page: A8

 
Dilbert

By Daily Republic Syndicated Content | From Page: A8

Frank and Ernest

By Daily Republic Syndicated Content | From Page: A8

 
Garfield

By Daily Republic Syndicated Content | From Page: A8

Rose is Rose

By Daily Republic Syndicated Content | From Page: A8

 
B.C.

By Daily Republic Syndicated Content | From Page: A8

Baby Blues

By Daily Republic Syndicated Content | From Page: A8

 
Pickles

By Daily Republic Syndicated Content | From Page: A8

Sally Forth

By Daily Republic Syndicated Content | From Page: A8

 
Peanuts

By Daily Republic Syndicated Content | From Page: A8

Wizard of Id

By Daily Republic Syndicated Content | From Page: A8

 
Beetle Bailey

By Daily Republic Syndicated Content | From Page: A8

Cryptoquote

By Daily Republic Syndicated Content | From Page: A9

 
Bridge

By Daily Republic Syndicated Content | From Page: A9

Crossword

By Daily Republic Syndicated Content | From Page: A9

 
Sudoku

By Daily Republic Syndicated Content | From Page: A9

Word Sleuth

By Daily Republic Syndicated Content | From Page: A9