Kantor & Kantor recently helped a client who had been denied health insurance coverage for his life saving cancer treatment.
Our client was a participating member of the U.S. Jesco International, Inc. Health and Welfare Plan (Plan). During the relevant time, the Plan was funded via the purchase of a group health insurance policy from Blue Cross Blue Shield of Texas (BCBS). At all times our client lived in California, was a California employee, and received his medical care in California. Our client participated in the Anthem Blue Cross of California PPO Network, and his claim was administered by Anthem.
Premiums for health benefits under the Plan were paid 50% by our client and 50% by his employer Jesco. Our client’s premiums were paid by weekly deductions from his paychecks.
In July of 2013, our client was diagnosed with a rare form of cancer, large cell lymphoma. He began immediate intensive chemotherapy. The cancer and the treatment of the cancer left our client totally disabled. Our client was deemed totally disabled as of July 11, 2013 and awarded California State Disability Insurance benefits by the State of California’s Employment Development Department. He has been re-approved by the State for total disability benefits through July 2014.
In January 2014, our client underwent a stem-cell transplant at the UCLA Ronald Reagan Medical Center. The procedure was pre-approved by the transplant coordinator assigned by Anthem. In the end, our client made claims for health benefits totaling more than $350,000.
In March 2014, BCBS notified our client that while his procedures had been pre-authorized by Anthem, his claims for the transplant treatments were being denied. BCBS stated that the group health insurance policy had been terminated retroactive to January 1, 2014 due to a lack of payment of premiums owed by Jesco. Our client had no reason to know that Jesco had not paid all premiums necessary to keep the coverage in force.
California and Texas have laws regulating insurance which provide for mandatory continued group health insurance coverage for disabled insureds in the event of the termination of their health insurance policy. California Insurance Code § 10128 et al mandates up to a year of continued health insurance coverage for treatment of the disabling condition. http://codes.lp.findlaw.com/cacode/INS/1/d2/2/1/1.5/s10128 Texas Insurance Code § 1252 et al also provides a reasonable extension of benefits for expenses incurred in treating the condition causing the disability. http://codes.lp.findlaw.com/txstatutes/IN/8/B/1252/C/1252.203 The extension must provide coverage for the lesser of 90 days or the duration of the disability. Both laws are saved from ERISA preemption. 29 U.S.C. § 1144(b)(2)(A). http://codes.lp.findlaw.com/uscode/29/18/I/B/5/1144 The medical claims at issue were for treatment received during the extension period mandated by both insurance laws.
Our client hired us to fight for his rights. On March 25, 2014, Kantor & Kantor appealed the denial of his medical insurance benefit claims. We explained to BCBS the factual circumstances for the termination of our client’s coverage and explained that he was entitled to mandatory continued coverage of treatment for is disabling cancer by virtue of insurance law.
In response, BCBS stated: “As this is a group policy, and the [sic] chose not to pay their premiums, we cannot extend coverage to the member.” There was no discussion of any issues raised in the appeal letter or any reference to any insurance code provision.
On April 29, 2012, Kantor & Kantor appealed again. We noted the lack of a full and fair review and lack of meaningful communication by BCBS. We directed BCBS to both the California and Texas laws regulating insurance. We provided proof our client was totally disabled, copies of the text of Cal Ins. Code § 10128.2 and Texas Ins. Code § 1252.102, and the Ninth Circuit’s decision in Miller v. Northwestern National Life Ins. Co., 915 F.2d 1391 (9th Cir. 1990) – which held laws such as those at issue are saved from ERISA preemption. http://www.ecases.us/case/ca9/549021/raymond-miller-v-northwestern-national-life-insura
BCBS upheld the denial of benefits based on the following rationale: “The member’s health care benefit plan, US Jesco International LTD coverage termed [sic] effective 01/01/2014. During the time the group coverage was in effect, the group had Mr. Kimsey listed as actively employed, not a disabled employee.” BCBS did not address the applicability of the California or Texas insurance laws providing for mandatory coverage or the Ninth Circuit authority indicating the laws were saved from ERISA preemption. BCBS confirmed that Mr. Kimsey’s appeals had been exhausted.
Kantor & Kantor immediately filed a lawsuit against BCBS in Federal Court asserting breach of the ERISA contract and seeking equitable relief. BCBS hired a large multi-national law firm to represent its interests, Foley & Lardner LLP. Foley answered the complaint for BCBS by stating that BCBS’s real name is Health Care Service Corporation (HCSC), a mutual legal reserve company doing business as Blue Cross and Blue Shield of Texas. In HCSC’s answer to the lawsuit it claimed 23 affirmative defenses: failure to state a claim, lack of standing; barred by statute of limitations; laches; estoppel/ratification/waiver; negligence/failure to exercise reasonable care; no coverage; no coverage/exclusions & limitations; benefit plan provisions bar claims; no proximate cause; excuse, failure of condition precedent, concurrent, or subsequent; failure to mitigate damages; failure to perform and material breach; full performance; set-off/recoupment; contributory fault; consent; unclean hands; impossibility of performance; failure to provide sufficient notice/proof of loss; failure to exhaust administrative remedies; limitation of remedies under ERISA; and reservation of affirmative defenses.
Within days of HCSC’s assertion of these defenses Kantor & Kantor had evaluated them and written a letter explaining why none of the defenses were properly pled. Kantor & Kantor drafted a motion to strike all the defenses and sent it to the attorneys at Foley. Confronted with the law, HCSC agreed to file a new answer that did not have these affirmative defenses. Where HCSC had previously blamed our client for its failures, HCSC now blamed Jesco.
Kantor & Kantor then began pressing HCSC on the merits of its decision to deny our client’s health insurance claims. Kantor & Kantor made it clear to HCSC why it was going to lose in court. At the first opportunity, Kantor & Kantor presented the facts and law to the judge overseeing the case.
The court was persuaded by Kantor & Kantor’s advocacy, telling HCSC’s attorneys in open court “You might want to really sort of think about whether or not you want to come back here after you have a chance to look at the law and see what the law is in California. Because I don’t care what the standard of review is here, I think you guys are on pretty slim ground….considering what the facts are in this case and what the law is in California and Texas.” A copy of the transcript for the hearing can be found here.
Ten days later Kantor & Kantor received a letter from BlueCross BlueShield of Texas. The letter stated “having further reviewed the matter and the materials available to it, BCBSTX overturns the denial based upon the application of the terms of the plan and Texas law….”