Canceled Insured Awarded $9M Against Calif. Health Insurer

A woman who had her medical insurance coverage canceled as she was undergoing treatment for breast cancer has been awarded more than $9 million (euro6.06 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.

Last Friday, arbitration judge Sam Cianchetti ordered Health Net to repay that amount while providing $8.4 million (euro5.66 million) in punitive damages and $750,000 (euro505,100) 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.”

Bates, a mother of two, said she screamed when she heard about the damage award.

“I am elated,” she said.

Bates’ attorney William Shernoff said he wanted other insurers to take notice of the award.

“We are going to put a stop to this practice,” he said.

Health Net said it was implementing a freeze on policy cancelations that would last until the company sets up a third-party review panel to scrutinize cases.

“Obviously we regret the way that this has turned out, but we are intent on fixing the processes to maintain the public trust,” spokesman David Olson said.

The award came a day after the Los Angeles city attorney sued Health Net, claiming it illegally canceled the coverage of about 1,600 patients. City Attorney Rocky Delgadillo also said the company illegally ran an incentive program in which it paid bonuses to an administrator for meeting targets of policy cancelations.

Health Net acknowledged that such a program existed in 2002 and 2003 but was subsequently scrapped.

“It’s hard to imagine a policy more reprehensible than tying bonuses to encourage the recision of health insurance that helps keep the public well and alive,” Cianchetti wrote in the Bates decision.

Bates had been insured with another company but was persuaded to switch over 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.

“I was devastated. I didn’t know what was going to happen,” Bates said. “It’s boggling that someone can do that to you.”

Bates went on to complete her cancer treatment through a state-funded program.

Health Net also said it would review its practices and the way its brokers and agents are trained.

Latest Comments

• February 28, 2008 at 5:11 am

  Non-Hypocrite says:

  If this jackpot winner had kept her previous policy, there would have been no such problem. According to the reports I have read, she flat out lied, deliberately or carelessly... read more
• February 27, 2008 at 5:24 am

  Former Ins Exec says:

  I support socialized medicine but I don't see a candidate before us that could build in the safety-nets required to prevent fraud. Medicare is as antiquated at the tax code b... read more
• February 27, 2008 at 4:31 am

  Mary B. says:

  This is probably the only time I have ever agreed with a jury verdict in this matter. Insurance policies for autos, buildings and "injury" claims are one thing but to "f" with... read more