Court allows bad faith claim to move forward

A federal judge recently denied a motion for summary judgment in a case brought by a health insurance policyholder. The woman claimed her insurer acted in bad faith when it denied payment for a residential program to treat her anorexia. The case was not in Florida; the ultimate outcome, though, could influence bad faith claims across the country.

The woman has suffered from anorexia in the past. She’d been stable for seven years in 2008 when a miscarriage triggered a relapse. She entered a part-time outpatient treatment program that August, only to have her physicians discharge her after two weeks. They believed she needed more intensive care.

She found a residential treatment program and made arrangements to check in early in January 2009. That program was not covered by her policy, according to her mental health insurer, and the claim was denied. She managed to pay for two months of treatment on her own before she ran out of money, according to court documents.

The insurer explained that it had made the denial decision after its doctors spoke with the treatment center staff and examined the reviewing physician’s notes. The insurance company admitted that no employee looked at the plaintiff’s past medical records or treatment history, nor did anyone contact her treating physician.

This is the basis of her claim. The plaintiff says the insurance company failed to conduct a proper investigation. The insurance company says otherwise.

The plaintiff appealed – but not to the insurer.

Continued in our next post.

Source: Westlaw News & Insight, “Coverage denial for anorexia treatment could be bad faith,” 04/01/11

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