The insurer pulled the rug out from under her: Lawsuit on insurer’s refusal to pay for breast cancer treatment

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

Patsy Bates, a 52-year-old mother of two, had previously been insured with another company but was persuaded to switch to a Health Net policy after an agent suggested she could save money.

She said she had undergone surgery to remove a tumor and had received her first two chemotherapy treatments when doctors stopped treating her because her bills were going unpaid.

Patsy, a hairdresser from Lakewood (Los Angeles County), had been left with more than $129,000 in unpaid medical bills when Health Net Inc. canceled her policy in 2004. The insurer contended that she had failed to disclose a heart condition and lied about her weight when she applied for the policy in July 2003.

But arbitration judge Sam Cianchetti ordered Health Net to pay her medical bills, plus $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," the judge wrote in his findings. "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."

Health insurers have come under fire from state regulators, attorneys and advocates for using mistakes or omissions in a member's application to justify canceling coverage after a policyholder becomes ill.

Friday's award marked the first punitive damages ordered by a judge in a case against an insurer for rescinding policies. Hundreds of cases in California have been settled quietly in confidential agreements.

"This punitive award will do more than anything to stop the shameful practice of post-claiming underwriting," said Bates' attorney, William Shernoff. "Other health insurers will obviously have to hear the message that the practice of canceling people's health insurance after they become sick will not be tolerated by the public."

Health Net officials released a statement Friday saying the insurer will rescind no policies in the future without a binding, third-party review process.

Health Net also said it would conduct a review of its practices and the way its brokers and agents are trained. The company said it is working with state regulators and will make additional announcements in the coming weeks.

Friday's award capped a difficult week for the insurer, which included being sued by the Los Angeles city attorney on claims of unlawful and deceptive business practices in connection with its rescission practices. City Attorney Rocky Delgadillo also said the company illegally ran an incentive program in which it paid bonuses to an administrator for meeting policy-cancellation targets.

"I don't have anger toward the company," said Patsy, whose cancer is in remission but who has some health problems. "I hope what they're saying is true, and that they're going to change their policies and take care of the people they insure."

Advice: Avoid insurers whom consumers frequently identify as refusing to pay for care when their beneficiaries get sick. Call your local Better Business Bureau and state Attorney General's office to find out their track record.

Browse for similar stories in our index at the very bottom of this page, or read a an Insurance Warrior story.

Thanks to the San Francisco Chronicle staff for today's source story.

A glorious blend of forces: Presbyterian Health Plan and Whipple

Gordon Hendrickson is a retired administrator for the YMCA and the Spina Bifida Association, and now lives in Albuquerque, New Mexico.

Five years ago, at age 66, routine blood tests found something wrong with his liver. After more tests, he received a diagnosis of pancreatic cancer. His doctors thought they had detected it early enough for surgery to save his life. But he would have to go elsewhere for the rarely-performed surgery, they advised, because doctors in Albuquerque had little experience with the rare, complicated, and risky Whipple procedure he needed.

Studies show that treatment by experienced surgeons and hospitals with much relevant experience greatly increases the odds of survival for patients with pancreatic cancer, and indeed, for many other conditions.

Gordon’s internist, Dr. Kristine Bordenave, found a major cancer center in Houston that could safely perform the Whipple – M.D. Anderson. But his insurer, Presbyterian Health Plan, insisted on selecting from local surgeons who had each performed an average of only a single Whipple.

Since Presbyterian Health Plan had refused to pay for care at M.D. Anderson, Gordon used a new credit card for the deposit, and later got socked with $80,000 of medical bills.

He fought Presbyterian for a year, filing two appeals. He took his case to a state review board, where he had to represent himself because he could not afford a lawyer. He ultimately won the case, forcing Presbyterian to pay the whole bill.

In June, his five-year checkup showed he has been cured of pancreatic cancer. A glorious blend of forces – smart doctoring, luck, and his own wisdom and grit – had come together to save his life.

Advice: You don’t have to accept an insurer’s No as the final answer.

Read the source story in Denise Grady’s July 29 article in the New York Times.

She sent the insurer her War Documents: The insurance warrior patient advocate

A 57-year-old massage therapist from Seattle with a master’s degree in French literature seems an unlikely consumer militant, but Laurie Todd was forced to become one when she was diagnosed with appendix cancer in 2005. After learning that the only available treatment was a lengthy surgery performed by just a handful of surgeons, she was further stunned to learn that her health insurer deemed it "out of network" and wouldn’t pay.

"They said, in essence, 'Go home and die.'" she recalled. "For me, it was like waving a red flag in front of a bull. The idea that there was this lifesaving treatment for me, but I’m going to die because my insurer wouldn’t pay for it, was totally ridiculous."

She spent weeks preparing her appeal. She pored over HMO Web sites, read dozens of lawsuits against health insurers and called every patient advocate agency she could find. Within days of receiving what she called her "War Documents," the insurer agreed to cover the surgery that saved her life.

After that, Laurie said, she began helping other people who were stymied by their insurance carriers. Then she wrote Fight Your Insurance Company and Win: Secrets of the Insurance Warrior (available at her web site). "I wish to God there was no need for such a book," she said. "But what I’m doing is empowering people to save their own lives."

Laurie’s Advice: "You have to amass evidence and proof. You have to do research. You have to be your own medical case manager. You have to do whatever it takes to get them to pay."

What if someone is too sick to launch the sort of battle she describes? "Find family or friends to do it. Either you give up, or you take charge."

Read a story about the difference insurance coverage can make, or read Dianne Williamson’s source story.

[I don’t get any money for recommending Laurie’s book, which I haven’t read yet.]