March 29, 2024 Breaking News, Latest News, and Videos

Lawsuit Targets Companies Selling What Lawyers Call ‘Junk’ Health Insurance:

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 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 Health 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.

in News
Related Posts

 (Video) Philz Coffee Set to Close Westside Location Next Month

March 27, 2024

March 27, 2024

The Franchise Recently Made Headlines for Changing Headquarters @smmirrornews Philz is closing its Santa Monica shop #coffeeaddict #coffee #coffeeshop #losangeles...

Fleurs et Sel Bakery Opens Storefront in West Adams, Welcomes Customers Three Days a Week

March 27, 2024

March 27, 2024

Indulge in Freshly Baked Cookies at the New West Adams Location Fleurs et Sel Bakery, known for its delectable cookies...

Easter Specials Guide: Brunch Spots, Desserts, and More in West Los Angeles

March 27, 2024

March 27, 2024

Discover the Best Easter Eats and Treats in LA for Your Holiday Celebration Easter is almost here, so here are...

Famous Literary Critic and Palisadian Passes Away at 92

March 27, 2024

March 27, 2024

A Memoriam Post Stated She Overturned Views on T. S. Eliot, Ezra Pound and Other Canonized Artists By Zach Armstrong...

Mixed-Use Development Set for Sloping Property along Chautauqua Boulevard

March 27, 2024

March 27, 2024

“Canyon Place” Is Set to Include Two Apartment Units and 1,415 Sq. Ft. of Office Space By Zach Armstrong A...

Over Five Miles of Venice Blvd. to Temporarily Close, Become Public Park in April

March 27, 2024

March 27, 2024

The Initiative, Which Started in 2010, Aims to Connect Communities and Promote Sustainable Transportation Options On Sunday, April 21 from...

(Video) Workers Strike at Luxury Hotel in Downtown Santa Monica

March 27, 2024

March 27, 2024

Meanwhile, Unite Here Local 11 Recently Announced a Contract Was Ratified at 34 Hotels @smmirrornews Workers are striking at Proper...

(Video) Director Adam Wingard Talks About His Influences While Making GODZILLA X KONG: THE NEW EMPIRE

March 27, 2024

March 27, 2024

Director Adam Wingard Talks About His Influences While Making GODZILLA X KONG: THE NEW EMPIRE at the Beyond Fest Screening...

Historic Union Contract Ratified by Thousands of Hotel Workers At 34 Hotels

March 26, 2024

March 26, 2024

UNITE HERE Local 11 Negotiates Agreement Ensuring Wage Increases  Hotel workers, who spearheaded the largest hotel strike in modern U.S....

Teen Kung Fu Coming to Pali Rec Center

March 26, 2024

March 26, 2024

This 8-week session, priced at $160, commences in April 2024 Palisades Recreation Center introduces Teen Kung Fu classes, fostering a...

After Securing $200K Grant, City Embarks on Action Plan for Older Adults, People with Disabilities and Caregivers

March 25, 2024

March 25, 2024

The City Will Engage Experts, Nonprofit Partners, Commissioners, and Stakeholders to Spearhead the Planning Process The city of Santa Monica...

City Commences Phase 2 of Beach Restoration Project

March 25, 2024

March 25, 2024

The Project Will Enlarge the Habitat for Significant Native Species, Including the Federally Threatened Western Snowy Plover Phase 2 of...

Caltrans Extends Closure on Topanga Canyon Boulevard Due to Mud and Rockslide

March 25, 2024

March 25, 2024

PCH Closure on March 26 Adds to Local Road Closures, Seek Alternative Routes The California Department of Transportation (Caltrans) has...

Animal Rights Groups Demand an End to Turtle Racing at Brennan’s Pub

March 25, 2024

March 25, 2024

The Organization Says Its Tried to Contact the Westside Bar for Months By Zach Armstrong Among its numerous entertainment events...

SMC Unveils Spring 2024 Issue of Acclaimed Literary Journal, Author Readings Coming in April

March 24, 2024

March 24, 2024

The Issue Presents a Mix of New, Returning, and Debut Writers, Reflecting Diversity and Enduring Relationships Santa Monica College announced...