In The Media
For Immediate Release:
California Court of Appeal Weighs In On Allegations of Fraud Against HealthMarkets
April 15, 2010 – The California Court of Appeal for the Second Appellate District, Division 5, has overruled a decision of the Los Angeles Superior Court dismissing an action alleging fraud in the sale of health insurance against the HealthMarkets company Mid-West National Life Insurance Company of Tennessee and the association through which the policy was marketed, the Alliance for Affordable Services. The Court’s decision returns the case, Woffinden v. Mid-West Nat’l Life to the trial court for a jury trial.
In the decision, the Court addressed several legal defenses routinely asserted by HealthMarkets in fraud actions. First, the Court determined that a 2004 class action settlement involving HealthMarkets (then known as UICI), its subsidiaries and affiliated associations, does not bar claims against the companies by individuals. The Court found that the 2004 class action settlement agreement specifically excluded claims by individuals that misrepresentations about the nature of health insurance were made to induce them to purchase.
The Court also evaluated HealthMarkets’ “buyer-beware” arguments that the Woffindens should have read their policy more carefully when they received it and returned it for a refund if it wasn’t what they were looking for. These arguments are routinely made in HealthMarkets fraud cases, and, in a few cases, have been successful. In the Woffinden case, the Court found that a jury could decide that a reading of the Mid-West health insurance policy would not adequately inform consumers of the dramatic limitations of the policy. The Court found that the company’s representation of “significant pre-negotiated discounts with most of the major healthcare providers” made it reasonable for the Woffindens to believe that their medical costs would be covered by the policy.
The Court rejected all of the other routine arguments made by HealthMarkets/Mid-West and the Mega Life and Health Insurance Company in fraud cases against them. It held that, contrary to Mid-West’s assertion, its representations to the Woffindens “created a duty to disclose material facts that were omitted and materially qualified the disclosures that had been made.” It held that the misrepresentations of the Mid-West agent were not “statements of opinion” as Mid-West claimed. They were statements of fact about the nature and scope of insurance coverage. Finally, the Court held that the Woffindens’ legal claims about misrepresentations made by the agent at his sales meeting with the couple were not barred by a legal doctrine known as the parol evidence rule.
The Court’s written opinion was ordered not to be published in the official reports. This means that it cannot be cited as precedent for other cases. (Although individuals and organizations may ask the Court to publish the opinion, and within a limited time, the Court may agree to do so.) However, the opinion represents the thinking of a generally conservative panel of the Court of Appeal, and provides a strong indication that the appellate courts will carefully scrutinize the decision of a judge to dismiss such a case before a jury has a chance to decide it.
The legal team for the Woffindens included Stuart Law Firm’s Antony Stuart and Glenn Anaiscourt. Briefing in the Court of Appeal was principally the work of Jeffrey Ehrlich of Ehrlich Law Firm. Read the Court’s decision here. Read the story of Charlotte and Howard Woffinden here.
Tony Stuart’s statement concerning the decision:
“Howard Woffinden is gratified that the HealthMarkets marketing scheme will finally be evaluated by a jury. Although the holdings of the case cannot serve as precedent in other health insurance fraud cases, the Court’s firm rejection of all of HealthMarkets’ usual defenses speaks volumes. Also, its determination that the 2004 class action settlement cannot bar such cases when brought by individuals should prevent HealthMarkets from asserting that meritless claim again. All in all, the decision reflects strong support for the rights of insurance consumers.”
HealthInsurance Fraud
Mike Casey, Insurance Pitch Misses the Mark: One Company Tops the List of Complaints Alleging Insurance Misrepresentation, Kansas City Star, Dec. 10, 2006, available at KansasCity.com.
PBS NOW with David Brancaccio
- David Brancaccio, host of the PBS television showNOW, interviewed Tony Stuart in early May 2006 regarding the HealthInsurance Marketplace Modernization and Affordability Act, proposed legislation in the Senate that would have made it much easier for a disreputable company to intentionally sell you a fraudulent health insurance policy --and get away with it. Watch the show. Read a transcript of the broadcast. Additional informationabout the show and issues facing health insurance consumers todayis available on the NOW Web site.Facing strong opposition from the AARP, the American Cancer Society, the American Diabetes Society, state insurance commissioners and attorneys general, and numerous consumer groups, the bill failed to survive a Senate vote for cloture on May 11, 2006.
Health Insurance Fraud Perpetrated by HealthMarkets (formerly the publicly traded company UICI)
- Nannette Miranda, Widow Stuck With Half-Million In Health Care Bills: Assembly Looks At More Regulation, ABC Channel 7 (Los Angeles), Mar. 7, 2006, available at http://abclocal.go.com.
- Debora Vrana, Associations' Policies Under Scrutiny; Millions Buy Health Insurance Through Trade and Other Groups. But Alliances and Claims of Misrepresentations Raise Concerns, Los Angeles Times, July 5, 2005, at C.1, available at http://www.insurancenewsnet.com.
- Chad Terhune, States Probe Health-Policy Sales Promoted Through Associations, Wall Street Journal, Feb. 25, 2003, and Chad Terhune, Nonprofit Groups That Tout Insurance Have Hidden Links, Wall Street Journal, Nov. 21, 2002.
- America's Health Care: Is There a Crisis?, CNN Larry King Live Transcript, broadcast aired July 13, 2007, available at http://transcripts.cnn.com.
- Ellen Shapiro et al., Coverage Denied, People Magazine, July 23, 2007, at 64.
Health Insurance Regulation
- Debora Vrana, Stronger Rules Sought on Association Health Plans, Los Angeles Times, Aug. 17, 2005, available at www.consumerwatchdog.org.
Read about current Stuart Law Firm cases involving fraud in the marketing of health insurance
Invasion of Privacy
- "Reality-based television suffered a setback because of a case Los Angeles sole practitioner Antony Stuart took to the California Supreme Court. His client, Ruth Shulman, was videotaped for the now-canceled syndicated TV program On Scene: Emergency Response as she was being rescued from a car accident. The court ruled that Shulman could proceed with her lawsuit against Group W under a theory of invasion of privacy because the company broadcast footage from her private conversations with the medical team at the scene and inside the helicopter. Shulman v. Group W Productions, (1998) 18 C4th 200, mod 1998 WL 436054.The case halts the trend of ever-expanding First Amendment rights of the media.'The significance of Shulman is that it upholds the right of privacy in a public place,' says Stuart, who worked on the case with cocounsel Michael L. Goldberg of Virginia. 'It's an important principle in today's world, where technology has made it so easy to eavesdrop or photograph private moments.'"
-- California Lawyer, December 1998
- Also see Philip Carrizosa, Unwilling TV Subject Can Sue Over Privacy, Los Angeles Daily Journal, June 2, 1998, at 1.
Negligent Health Care Provision
- Gerald Faris, El Segundo, Paralyzed Man Settle Suit for $3.5 Million, Los Angeles Times, May 12, 1990
- Local Man Settles Out-of-Court, $3.4 Million Injury Suit, Inglewood News, May 17, 1990
- El Segundo Settles with Quadriplegic, Daily Breeze, May 12, 1990
Read about Orejel v. City of El Segundo involving negligence in the provision of health care.
