Byung Kim and Yong Kim v. Time Insurance Co., No. 4:07-cv-4201 (S.D. Tex. December 22, 2008).
I do not usually comment on health insurance cases, but with the new administration's focus on reforming health care, this case shows why finding a way to avoid the challenges presented by the pre-existing-condition exclusion would save the courts a lot of hair-splitting as well as cover beneficiaries for necessary medical care. Hair-splitting cases require some factual recitation, so hang on.
A pre-existing condition is defined in the Time policy as a sickness or injury and related complications (1) for which medical advice, diagnosis, care or treatment was sought or received, or (2) that produced symptoms that would cause an ordinarily prudent person to seek medical care, either within 12 months before the policy effective date. The court had to decide whether Yong Kim's gastric pain, evident for months before the policy began, was caused by liver disease (a mix of cirrhosis, Hepatitis B, and resulting cancer) or diverticulitis. If the pain and other symptoms were caused by liver disease, then Time did not have to pay for a liver transplant that all the physicians thought was necessary.
The plaintiff and her husband had not been insured for 10 years. Their son prodded them, and they finally relented, purchasing a policy that took effect on July 17, 2007. Mrs. Kim had not seen a doctor for anything for the previous 5 years, although for about 10 years she had suffered from constipation which she treated with over-the-counter remedies. On July 20, 2007, her daughter took Mrs. Kim to a hospital for shortness of breath and sever intermittent abdominal pain that had first appeared around the beginning of July (wellbefore inception of the policy). A CT scan led to a diagnosis of cirrhosis, colonic diverticulosis, and other conditions. After transfer to another hospital, she was diagnosed with liver cancer, for which she needed a liver transplant. She was also diagnosed with diverticulitis.
The insurance company's medical director reviewed the records and determined that Yong Kim's liver condition was a pre-existing condition not covered by the policy. Asked to reconsider, Time had the records reviewed by another medical director, who reached the same conclusion. The Kims rounded up a battery of their doctors who determined that the the pain was actually caused by the diverticulitis because her liver disease usually does not cause the kind of acute pain she reported. Moreover, the liver disease was not a factor in causing diverticulitis. The insurer consulted with other medical experts who concluded that liver disease caused the symptoms. The insurer paid $390,616.91 for treatment of diverticulitis but continued to deny coverage for treatment of the liver disease, including the transplant. Litigation ensued.
The court determined, "It is impossible to reconcile the competing expert opinions regarding the cause of Plaintiff Yong Kim's pre-coverage symptoms." The court noted that none of the insurer's doctors reviewing the case had treated the patient, and Time had provided no evidence regarding their qualifications in diagnosing either liver disease or diverticulosis. The court dutifully scrutinized and discussed prior case law (the details of which I will spare you), which indicated that any symptoms that would prompt a reasonably prudent person to seek medical advice or treatment before the policy effective date are enough to trigger the pre-existing-condition exclusion.
Here, however, the court could find no reasonable basis for ruling out diverticulitis as the cause the pre-coverage symptoms. Hence, "viewing the record in the light most favorable to Plaintiffs, a reasonably jury could find that Time incorrectly chose liver cancer, not diverticulitis, as Yong Kim's pre-existing condition." Time's motion for summary judgment denied.
However, the court dismissed bad faith claims against Time. A jury might find that Time had made a mistake, but the facts do not allow a finding that Time had deliberately ignored evidence or otherwise conducted a bad-faith investigation. The fault, Dear Brutus, is not in ourselves or our insurers but in our cumbersome health care insurance system. An equitable way to get coverage for pre-existing conditions that does not invite beneficiaries to game the system by putting off the expense of insurance until after symptoms appear should help simplify health care coverage and unburden the courts.
Comments