Straight from the pages of John Grisham’s, "The Rainmaker," comes a story from California where a door-to-door insurance salesman called upon Patsy Bates and convinced her that he could get her a lower monthly premium if she switched to Health Net insurance. She wasn’t looking to change her current policy, but this sounded like a good deal to her.
Bates, a 52-year-old grandmother, was at work in her hair salon that she owns when the agent came by, and he filled out the application while she was styling a client’s hair. She said that she answered the questions as best she could at the time, but after she developed breast cancer and was undergoing chemotherapy, Health Net rescinded her policy, claiming that she did not disclose her true weight, nor list a preexisting heart condition on her application. They stated that they would never have issued her a policy in the first place had they known.
At the arbitration hearing in front of a private judge it was disclosed that Health Net was paying its employees bonuses for meeting cancellation quotas and saving the company money canceling policies on seriously ill people. Judge Sam Cianchetti, a retired Los Angeles County Superior Court judge, ruled that the company acted in bad faith and broke state laws in the process. He called their actions "egregious" and ordered them to pay Bates $9 million dollars, $8.4 million was in punitive damages, writing in his decision that, "It’s difficult to imagine a policy more reprehensible than tying bonuses to encourage the rescission of health insurance that keeps the public well and alive."
Thousands of people in California will now have a chance to get their coverage back and be reimbursed for outstanding medical bills as the state will reopen and reconsider policies dropped by the five major insurers over the last four years. An independent arbiter will review each case individually to determine if rescission was based on illness or if there was a valid reason to rescind the policy.
What Can I Do to Protect Myself?
There are some very important steps you can take if you feel that your company has terminated your policy when you need it most. Here are a few practical steps you can take to protect yourself and your rights in case you should find yourself in a similar situation.
1. Be Honest. The truth is always an absolute defense, so as you are filling out the paperwork on any policy make sure you disclose your true medical condition. If you already have insurance, preexisting conditions should not affect your change. Federal law sets national standards to protect citizens seeking a change in coverage if they have not lapsed for more than 63 days.
2. Document Everything. Keeping records of your policy, claim, denials, even telephone calls can make the difference in winning a case. Remember in "The Rainmaker" when she read to the court, “You must be stupid, stupid, stupid,” what an impact it had on everyone present?
3. Enlist Your Doctor’s Support. Medical experts who are treating you want the best for you, and they want to be paid. It is in their best interest to assist you in defending your claim against insurance companies.
4. Research, Follow-up, and Ask. Your insurance agent has a duty to make sure your coverage protects your interests. Likewise, company plans probably have policy administrators to help explain what is covered and how to appeal claims denial. Know your coverage and don’t be afraid to ask if you are in doubt.
5. Seek Outside Help. Every state has a Department of Insurance to monitor the industry for the public good. If the state is unable to resolve your issues, contact an attorney who is familiar with handling these types of cases. Together they may be able to help you get reinstated coverage and cover your past medical expenses.
When I read "The Rainmaker" for the first time, I thought how unscrupulous that insurance company was. To find out that this practice of rescinding policies due to illness is going on appalls me. Insurance is supposed to protect your family from huge medical debts, not add to your burden during stressful times. So if you or a loved one has been denied coverage, you may want to seek professional advice to determine whether or not you can eliminate at least the financial burden from your mind and get on with healing.