An arbitration judge in California has ruled that one of the state’s biggest for-profit medical insurers, Health Net Inc, has to pay breast cancer patient Patsy Bates, 9 milllion dollars for cancelling her policy when she was in the middle of receiving chemotherapy in 2004.
This is the largest amount ever for this kind of award. Judge Sam Cianchetti, who gave his ruling in a 21-page document, said the company had acted in bad faith and broken state laws, reported the Los Angeles Times.
“Health Net was primarily concerned with and considered its own financial interests and gave little, if any, consideration and concern for the interests of the insured,” wrote Cianchetti.
Patsy Bates, a 52 year old hairdresser, was left with 129,000 dollars in upaid medical bills when Healt Net cancelled her policy. Cianchetti ordered the company not only to pay her that amount, but also another 750,000 for emotional distress and a staggering sum of 8.4 million in punitive damages, according to an Associated Press news report.
Cianchetti wrote that Bates had 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.”
He wrote that the situation Bates must have had to endure as a result of the company’s actions must have been “hard to imagine”, and he called their decision “egregious”.
Bates was part way through chemotherapy following surgery to remove a tumour when doctors stopped her treatment because her bills were not being paid.
According to AP news, Bates said she was “devastated” and “didn’t know what was going to happen”. “It’s boggling that someone can do that to you,” she said.
Bates called Cianchetti “an angel”, he was a “real stand-up kind of judge” she told the press. She had to stop her chemotherapy for several months because she could not pay the bills. She eventually found a charity that helped her, said The Times.
Hay Gellert, Chief Executive of Health Net told The Times he “felt bad about what happened” to Bates and had called an immediate stop to policy cancellations, pending an external review. The sales force would be retrained, he said.
Internal company documents disclosed at the arbitration hearing showed that Health Net had given out bonuses to employees who met cancellation quotas.
Cianchetti called such practice “reprehensible” because it encouraged the “rescission of health insurance that keeps the public well and alive”.
According to The Times, other insurance companies are now thinking about changing their practices too. For example, Blue Cross, California’s largest for- profit insurer, and owned by WellPoint Inc, is in favour, a spokeswoman told The Times.
Bates told reporters she had been with another company, but a broker persuaded her to change to the Health Net policy because it would save her money, reported the Associated Press.
Speaking about the award, Bates’ attorney William Shernoff, told Reuters news agency:
“Let’s see if these other big health carriers will change their practices, then we will have done something.”
“Until this punitive damages award came down, nobody was doing anything,” he said.
Reuters reported that Shernoff has three similar class action cases against big health insurers pending in Californian courts.
According to Health Net, Bates’ insurance was pulled because she had not given her correct weight or revealed the fact she had a heart problem on her insurance application.
Bates told reporters it had been a busy day and that she was styling a client’s hair at the time the application was being filled in by the broker and she had answered the questions as best she could.
Sources: Los Angeles Times, Reuters, Associated Press.
Written by: Catharine Paddock, PhD