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…)

A New Orleans home owner whose home was destroyed during Hurricane Katrina has won an appeal against the home owner’s insurance company that denied his claim.   By ruling against Lafayette Insurance Company, the Louisiana 4th Circuit Court of Appeals has given fresh hope to the thousands of Katrina victims who say their insurance companies acted in bad faith when they denied claims.

Lafayette had appealed an earlier  state court decision that said the insurance company had to pay for damage to an apartment building owned by an Orleans Parish man that was caused by flooding brought on by levy failure following Hurricane Katrina.  In addition to being a source of income, the building also served as the man’s home.  Lafayette paid the policyholder about $2,700 for wind damage, but he estimates his home sustained a total of $223,488 in damage that should be covered.  Lafayette maintained that because that damage was caused by flooding, it did not have to cover the loss.

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Washington Mutual, the country’s largest savings and loan, is being targeted by the New York State Attorney General’s office for allegedly inflating the appraisals of houses for which it wrote mortgages. Fraudulent appraisals have left thousands of homeowners in that state with mortgages they can’t afford, and such schemes have been blamed for the turmoil in the current housing market. Yesterday, Andrew Cuomo, the New York Attorney General, said he was expanding a probe of mortgage fraud to focus on companies that packaged home loans and that were later resold to investors.

Washington Mutual and other lenders often write mortgages and then sell them as a group to investors. Last week, Cuomo accused Washington Mutual of pressuring an appraisal company to overvalue thousands of homes. Those mortgages were then sold to investors, who Cuomo says were misled about the value of the properties.

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