San Diego-based American Specialty Health (ASH) has filed suit against Chubb Corp., claiming the insurer is guilty of false advertising and failure to cover ASH’s legal expenses incurred in the successful defense against legal actions previously brought by the California Chiropractic Association (CCA).
ASH subsidiaries obtained an insurance policy from Chubb that, according to its own online advertisements, reportedly included “broad coverage for managed care activities” and “defense expense coverage.”
The lawsuits were filed on behalf of American Specialty Health’s subsidiaries, American Specialty Health Plans of California Inc. and American Specialty Health Networks Inc.
In the lawsuit, ASH subsidiaries charge that, in addition to repudiating the advertising materials featured on its own Web site, Chubb did not pay for ASH’s defense in the litigation, failed to properly investigate ASH’s claims, misrepresented the coverage purchased by ASH, and failed to act in good faith in the claim-handling process.
ASH subsidiaries purchased a Managed Care Organization Errors and Omission Liability Policy from Chubb Corp. In its lawsuit, CCA charged ASH with unfair business practices, claiming that ASH refused to fairly compensate chiropractors for medical services, terminated chiropractors without cause, and reduced reimbursement rates to providers. As of December 2004, the Superior Court of San Diego dismissed 15 of the 18 charges.
“American Specialty Health is asking the court to compel Chubb Corporation to honor the commitment they made when they sold ASH their insurance policy,” said George DeVries, chairman, president, and chief executive officer of ASH. “As a policyholder, we look forward to presenting evidence that Chubb failed to meet its obligations to ASH.”
In this legal action, ASH reportedly seeks compensatory damages and interest, immediate payment of defense costs, a prohibition against false advertising, court costs, and punitive damages.
Editor’s note: Insurance Journal attempted to contact Chubb on Friday to hear its side of the story, but no response had been given to date.
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