Practice Areas

Health Insurance Fraud

Certain unscrupulous companies are willing to take advantage of people by selling health insurance as major medical or comprehensive coverage when, in fact, the policies offer very little coverage at all.

Companies are required to accurately and honestly represent the products that they sell. When a company's misrepresentations cause harm, the company can be held responsible for the damage it causes.

Examples of Health Insurance Fraud Cases

Dana and Doug Christensen, Playa Del Rey, California

Dana and Doug Christensen purchased a health insurance policy from the Mega Life and Health Insurance Company in January 2001. Doug, who was 47 years old, was a bone cancer survivor. The couple specifically questioned their Mega insurance agent regarding whether the policy would protect Doug if his cancer recurred. The Mega agent assured them it would.

When Doug’s cancer did recur, though, the couple learned that most of their hospital expenses were not covered. The couple was left with over $450,000 in uncovered expenses before Doug passed away. In Doug’s last months he begged his wife to divorce him so she would not be stuck with his medical bills, but Dana steadfastly refused.

After Doug’s funeral, Dana was left alone with nearly a half million dollars in unpaid medical bills. The only person who could help her in this situation was a lawyer.

Dana contacted Antony Stuart and asked him to represent her. To the vast majority of attorneys, Dana’s case would have appeared to be about insurance bad faith, but Mr. Stuart was careful. He recognized that the real issue was fraud.

The Stuart Law Firm fought aggressively for Dana’s rights against Mega and its allies, who employed corporate defense attorneys from four other firms, and who resisted at every turn. For Dana Christensen, Stuart Law Firm obtained a public settlement with Mega and its co-defendants in the amount of $1.71 million.

Cheryl Brooks, Franklin, Tennessee

When they met with him to discuss health insurance, Don and Cheryl Brooks carefully explained to Mid-West insurance agent Tom Amstadt that Cheryl had a family history of breast cancer. Amstadt said, "This is the policy you need. It is the best one on the market for catastrophic illness." He put his hand on a presentation book that he had brought with him to the meeting and asked the couple to trust him.

Later, Cheryl was diagnosed with breast cancer. She began to receive "explanation of benefit" forms indicating that Mid-West was covering just a small portion of the bills for her treatment. Cheryl called the company to ask what was happening. Mid-West’s representative informed Cheryl that chemotherapy was very limited under the policy. Cheryl said there must be some mistake. She explained that she had cancer, and that she had bought the policy for just this sort of situation. The representative became testy with Cheryl, then hung up. Cheryl then called Tom Amstadt in tears. Amstadt said he would check into the matter and get back to her. He never did.

Cheryl later called the company to ask how much had been paid toward her treatment. The representative she spoke with said Cheryl should not worry, because she had up to $100,000 in lifetime benefits. Cheryl thought she was correcting the representative when she said, "You mean $1 million, right?" Amstadt had said the policy provided up to $1 million in lifetime benefits. No, the representative said, she had a $100,000 limit on chemotherapy. Already facing $150,000 in uncovered bills, Cheryl realized that if she were to develop cancer in her right breast, Mid-West would not pay for any of the care she would need. So to avoid incurring yet more medical bills that Mid-West would not cover, she had her healthy breast removed too. Cheryl is represented by Stuart Law Firm in a legal action against HealthMarkets/Mid-West and the Alliance for Affordable Services in Fort Worth, Texas.

Howard and Charlotte Woffinden, Los Angeles, California

In February 2004, Howard and Charlotte Woffinden needed to replace their existing Blue Cross group health insurance. Howard found a Web page providing information about a health insurance plan available through the Alliance for Affordable Services and requested additional information. Stephen Casey, an Alliance representative, called and arranged to visit the Woffindens at their home.

At the meeting, Casey said the Alliance was a network of small businesspeople who organized themselves to seek out, select, negotiate, and procure health insurance and other services on favorable terms, on behalf of themselves and Alliance members. He said the Alliance had selected Mid-West as the insurance company of choice for its members.

Howard and Charlotte said they wanted catastrophic coverage. Howard explained that since the Woffindens had no experience with medical problems, and wanted to know from Casey what was good coverage. Casey responded that the policy he offered was equal to or superior to the Woffindens's existing Blue Cross coverage. He said that with the Alliance, members enjoyed substantial discounts based upon prices that were pre-negotiated with medical providers. Casey said that because of the pre-negotiated pricing and discounts, the coverage he recommended would be more than adequate to meet the Woffindens' needs. Charlotte mentioned that she had received care at Cedars-Sinai Medical Center. Casey responded, "Oh, good, we have huge discounts with Cedars."

Casey never explained that under the Alliance policy, the deductible was not annual, but "per incident," so the Woffindens could be responsible for paying multiple $5,000 deductibles per year. He did not explain that the policy contained no stop-loss provision. He did not disclose that after an initial hospitalization, the policy might provide no coverage for subsequent hospitalizations for the same illness within a 180-day period.

After the Woffindens purchased the policy, Charlotte was diagnosed with cancer. When the Woffindens went to the hospital for their first consultation, an admissions representative bluntly advised them that their health insurance policy was "not worth anything."

The Woffindens were forced to struggle to obtain medical care and treatment for Charlotte's cancer using personal savings. Of $781,927.02 in bills, Mid-West paid just $76,097.15 - under ten percent. Charlotte ultimately succumbed to her cancer, leaving her family with a large debt. Howard is represented by Stuart Law Firm in an action against Mid-West and the Alliance for Affordable Services.

Darlene and Dave Henderson, Penn Valley, California

In April 2000, Darlene and Dave Henderson met with a salesman for the National Association for the Self-Employed who showed them the MEGA plan, which appeared to them to be a group PPO similar to others they had seen. David Henderson required surgery for a life-threatening aneurysm and a subsequent colostomy at a total cost of over $190,000. They learned the policy was not a group policy, and that its maximum benefits were very low in relation to typical medical expenses. MEGA paid just 14% of Dave’s medical expenses. Dave complained to the salesman, who said not to tell anyone. “I could lose my license,” the salesman said. The Hendersons’ case against MEGA and the National Association for the Self-Employed is scheduled for trial in Nevada Superior Court in May 2006. They are represented by Stuart Law Firm.

Linda and Jerry Hopkins, Hawthorne, California

After Jerry and Linda Hopkins purchased their MEGA policy in October 2004, Linda was diagnosed with stage-three ovarian cancer. She underwent surgery at a local medical center, where her bills totaled $250,000. Of this amount, MEGA agreed to cover $20,000. At the medical center, Jerry Hopkins was told there were four others in the cancer ward with the same insurance—and the same problem. Later, when Linda’s cancer returned, the medical center told Jerry it would be unable to provide the treatment she needed because her coverage was so poor. The Hopkins have retained Stuart Law Firm and are asserting a claim for fraud against Mega and the NASE.