We're continuing our discussion of an insurance bad faith case that recently moved a step closer to trial. The plaintiff suffered from anorexia and entered an outpatient treatment program. Her physicians discharged her shortly after she checked in, because they believed she needed more intensive treatment.
The plaintiff entered a residential program, only to have her health insurance company deny her claim. They told her that their doctors had spoken to the facility's staff and gone over the reviewing physician's notes. The woman claims this was not a proper investigation and the insurer denied the claim in bad faith.
She didn't stop there. The plaintiff then asked the insurance department in her state to conduct an independent medical review. That review showed her insurance did cover the residential program. The insurer paid in the end.
She filed the breach of contract and bad faith lawsuit in March 2009. In her claim, she said the insurer's bad faith was evidenced by the cursory review and lack of follow-up, and she added that the insurance company physicians had no experience with eating disorders.
The plaintiff and the insurance company both moved for summary judgment. (Summary judgment is appropriate if the court finds no material issues of fact that need to be determined by a jury or a court. The motion is made prior to trial.)
The insurance company claimed that there was no bad faith, because it had based the coverage decision on its experts' opinions. There was no "genuine dispute," their motion explained.
The judge disagreed. In his opinion, he explained that the genuine dispute doctrine is only appropriate if a defendant relies on the advice of independent experts. His understanding, he continued, was that there was a question as to whether one of the doctors was an insurance company employee or an independent expert.
That, he said, is a fact issue that should be decided by a jury after all the evidence is heard.
The judge also allowed the plaintiff to move forward with her claim for punitive damages and attorney fees. He explained that she could very well be entitled to both if she prevails on her bad faith claim.
Source: Westlaw News & Insight, "Coverage denial for anorexia treatment could be bad faith," 04/01/11