Kentucky

When I think of insurance companies and tort reform, I am reminded that the selling of insurance is a public trust and their regulation a public responsibility.  Individual insurance policies are more than an arms-length transaction but rather a special fiduciary relationship.

Thus, the following story out of Los Angeles casts a dark shadow on many of the arguments made by the tort reformers' claims about frivolous lawsuits, premiums out of control, yadayadayada.....

The title of this story tells it all: Health Insurer Fined $9 Million for Dropping Breast Cancer Patient in Middle of Chemo Treatment.

LOS ANGELES ? A woman who had her medical coverage canceled as she was undergoing treatment for breast cancer has been awarded more than $9 million in a case against one of California's largest health insurers.

Patsy Bates, 52, a hairdresser from Lakewood, had been left with more than $129,000 in unpaid medical bills when Health Net Inc. canceled her policy in 2004.

On Friday, arbitration judge Sam Cianchetti ordered Health Net to repay that amount while providing $8.4 million in punitive damages and $750,000 for emotional distress.

"It's hard to imagine a situation more trying than the one Bates has had to endure," Cianchetti wrote in the decision. "The rug was pulled out from underneath, and that occurred at a time when she is diagnosed with breast cancer, one of the leading causes of death for women."

More is expected of an insurance company in the selling, settling, and securing of insurance than profits.  Selling insurance is a privilege and it is supposedly regulated. 

The individual policyholders, their attorneys, and claimants should have more arrows in their quiver than the Unfair Claims Settlement Practices Act, common law bad faith, Consumer Protection Act, and simply old fashioned fraud to fight these abuses.  The citizens should be protected by an active and consumer-oriented Department of Insurance and Attorney General closely following practices such as this.

Courts which permit insurance adjusters to show up at a claimant's house days after an accident while the claimant is still in a daze (and oft-times under prescription medication) to settle cases is a travesty, but our appellate decisions have sanctioned this activity as one of simple contract between two parties who are obvious un-equals.

In an earlier post some time ago on this practice, I noted an -

* * * earlier decision authored by Justice Roach in Margaret Coomer v. Charlie Phelps and Progressive Northern Ins. Co., in which the Kentucky Supreme Court affirmed summary judgment dismissing a claim in which the injured party signed a settlement and release when the insurance adjuster showed up at her doorstep the next day after the accident offering to settle the claim.  The SC rejected claims of fraud, mistake, and bad faith, as well as the capacity of the claimant who was on pain meds.