Hurricane Gustav insurance claims could reach $10 billion, not as high as was first predicted when the then-Category 3 storm was churning in the Gulf of Mexico. Fortunately fears that Gustav would be a repeat of Hurricane Katrina - which cost insurers $41 billion - were not realized.

Hurricane Gustav came ashore the Louisiana Gulf Coast on Monday. Forecasters had feared that Gustav could come ashore as a catastrophic Category 4 storm, but the storm weakened to a Category 2 storm by the time it reached land. Damage from the storm’s winds and storm surge spanned from the Gulf Coast of Mississippi to Texas. Even after it weakened to a tropical storm, heavy rains and possible tornadoes spawned by Gustav’s heavy were expected to cause additional damage. (more…)

An appeals court has upheld a bad faith insurance lawsuit verdict against the Allstate Insurance Co., leaving in place a $16 million verdict against the company.  Like the Missouri jury that originally found against Allstate, a three-judge appeals panel did not believe the insurance company’s assertion that its failure to settle the claims of two car accident victims in a timely manner was not intentional.

The Allstate lawsuit stemmed from a car accident that occurred in March of 2000, when a pickup truck driven by an intoxicated Wayne Davis Jr.  collided with the subcompact car carrying Edward Johnson and his wife, Virginia.  Both the Johnson’s survived, but their medical bills came to at least $320,000. (more…)

Americans who buy their own health insurance have very little protection if companies want to deny coverage or raise their premiums when they get sick. A new report published by the consumer advocacy group Families USA says states should do more to protect consumers from insurance companies that will stop at nothing to avoid paying claims.

About 14.5 million Americans bought their own insurance on the individual market in 2006.  The Families USA survey of insurance commissioners across the country showed that all but five states allow insurance companies to deny coverage to sick or older patients. All but 15 states have no limits on how much companies can raise premiums if individual policy holders. (more…)

A report just released this weekend by state Senator Jeffrey Klein (Democrat) reveals that some New York state HMOs restrict patient access to single source drugs or brand name medications for specific ailments that do not have lower cost generic versions.  The report includes a survey of the 15 HMOs with drug plans in New York state, including Aetna, Oxford Health Plans, Cigna, Health Insurance Plan of New York, Group Health Associates, and HealthNet of New York and was conducted to determine how and if companies restrict prescriptions to 20 of the most common single-source drugs.  The results point to HMOs setting these restrictions to increase their bottom lines and enhance profits.

The survey confirmed that a number of restrictions are placed on consumers, such as a “medical exception,” imposing quantity limits, and a “step therapy” rule.  A medical exception is when a patient and physician must obtain prior permission from the insurer so that a patient can receive coverage for a prescribed medication.  Medical exceptions are granted at the discretion of the insurance company.  Step therapy forces patients to try one or more other medications before seeking approval for a prescribed drug.  “It’s a dangerous situation,” Klein said.  “Clearly, when a doctor prescribes a specific medication for a patient and they know that drugs works for a patient, they shouldn’t be forced to use a generic drug or cheaper alternative that may not work,” he added. (more…)

State Farm Insurance has settled with more than a dozen policyholders who were suing the nation’s largest insurer over Hurricane Katrina damage claims.  The settlements were reached with plaintiffs who only last month learned that their lawyers had been barred from representing them because of ethics violations.

State Farm was one of the largest insurers on the Gulf Coast when Katrina made landfall there in 2005. Thousands of homes were reduced to rubble by wind and the massive storm surge created by the hurricane. Normal home owners policies do not cover damages from flooding, only wind. But in the case of Katrina claims, many home owners accused State Farm and other insurance companies of attributing damage to flooding, when in reality it was caused by wind, as a way to avoid paying the full value of claims. Some insurance companies initially made offers to settle claims for only pennies on the dollar, sparking thousands of lawsuits along the Gulf Coast. (more…)

Anthem Blue Cross is the latest insurer named in a lawsuit over illegally canceled policies.  The Los Angeles City Attorney is charging Anthem Blue Cross with deceptive practices and is seeking $1billion in restitution and penalties from the company.

Los Angeles City Attorney Rocky Delgadillo said Anthem, formerly Blue Cross of California, canceled policies and illegally denied claims when policy holders became ill.  In February, Delgadillo’s office filed a similar suit against Health Net Inc. for illegally canceling health insurance coverage for 1,600 customers. (more…)

Lawyers representing State Farm Insurance policyholders in Mississippi suing the insurer over Hurricane Katrina damage claims have been dismissed from the case.  Citing ethical concerns, U.S. District Judge L.T. Senter Jr. in Gulfport dismissed a group of attorneys affiliated with Richard “Dickie” Scruggs, the well-known lawyer who pleaded guilty last month to conspiring to bribe a judge.   Judge Senter has given plaintiffs involved in the State Farm lawsuits 45 days to retain new lawyers.

State Farm was one of the largest insurers on the Gulf Coast when Katrina made landfall there in 2005. Thousands of homes were reduced to rubble by wind and the massive storm surge created by the hurricane. Normal home owners policies do not cover damages from flooding, only wind. But in the case of Katrina claims, many home owners accused State Farm and other insurance companies of attributing damage to flooding, when in reality it was caused by wind, as a way to avoid paying the full value of claims. Some insurance companies initially made offers to settle claims for only pennies on the dollar, sparking thousands of lawsuits along the Gulf Coast. (more…)

Health Net Inc. has been ordered to pay $9 million to a California woman for illegally canceling her health insurance coverage after it learned she had been diagnosed with breast cancer.   The Health Net fine, levied by an arbitration judge, came one day after the Los Angeles city attorney’s office announced it would be suing Health Net for illegally canceling health insurance coverage for 1,600 other customers

Patsy Bates, 52, a hairdresser from Lakewood, California, had been left with more than $129,000 in unpaid medical bills when Health Net Inc. canceled her policy in 2004. Bates had been insured with another company but was persuaded to switch over to a Health Net policy after an agent suggested she could save money. She said she had undergone surgery to remove a tumor and had received her first two chemotherapy treatments when doctors stopped treating her because her bills were going unpaid. Bates was able  complete her cancer treatment through a state-funded program. (more…)

Critics of the health insurance industry say the gap between what a physician charges and what is reimbursed may be too big.  In response, New York State Attorney General Andrew Cuomo is suing UnitedHealthGroup—the nation’s largest health insurer—and Ingenix, its subsidiary.  Cuomo also launched an industry-wide investigation into health care reimbursements saying that some companies have been underpaying customers for a decade and that UnitedHealthGroup, in particular, manipulated data to cheat consumers.

The way insurers determine prevailing market rates for medical services has long been a subject of controversy; even the American Medical Association has a pending eight-year-old lawsuit.  The practice “is primarily unfair to consumers,” said Dr. Nancy H. Nielsen, president-elect of the medical association.  Cuomo said, “We believe there was an industry-wide scheme perpetuated by some of the nation’s largest health insurers to deceive and defraud consumers.”  Cuomo’s investigation comes when the industry is reporting huge profits while the rising cost of medical insurance has left about 47 million uninsured in the US.  “The larger issue is health plans make an awful lot of money,” said Sheryl R. Skolnick, a health care analyst for CRT Capital.  If insurers are found to have underpaid, they could end up having to make big restitutions to consumers.   (more…)

New York State Attorney General Andrew Cuomo said yesterday he is suing UnitedHealthGroup—the nation’s largest health insurer and its subsidiary Ingenix.  The New York attorney general also launched an industry-wide investigation into health care reimbursements.  Cuomo alleges that UnitedHealthGroup  manipulated data to cheat consumers, and he believes some insurance companies have been underpaying customers for a decade,  An investigation revealed two UnitedHealthGroup subsidiaries—United HealthCare Insurance Co. of New York Inc. and United Healthcare of New York Inc.—manipulated data to severely under-reimburse customers, to the tune of millions.  Cuomo has not yet filed charges, but said investigators found UnitedHealthGroup and its subsidiaries lied about data and manipulated numbers.

Cuomo said he would file a civil lawsuit to include three other subsidiaries of UnitedHealthGroup.  He  has subpoenaed 16 insurers, including Aetna, CIGNA, and Empire BlueCross BlueShield requesting they provide documents on how they computed reimbursements; copies of member complaints and appeals; and communications between members, Ingenix, and insurers. 

Cuomo’s office said they found Ingenix’s reimbursement database—owned by UnitedHealthGroup and used by most major insurers—used data resulting in smaller payouts. (more…)