Washington state to bar insurer from writing new coverage

Washington state to bar insurer from writing new coverage

(Updated -- see note at bottom of this post.)

Washington State Insurance Commissioner Mike Kreidler has issued an order barring Ability Insurance Company, of Omaha, Neb., from writing new policies in Washington for the next six months.

The order, issued Wednesday, takes effect in 10 days.

The order stems from the company’s failure to honor long-term care coverage that lapsed after a senior citizen with dementia failed to make her payments. In such situations, state law allows a consumer to reinstate coverage within five months of the policy’s lapse.

“Situations like this are exactly why we have this law,” said Kreidler. “It protects people who, through no fault of their own, have lost the ability to keep up with their financial records.”

The suspension does not affect the company’s duties under current policies. The company can also continue to renew existing policies.

In this case, the company on March 20, 2009 sent the woman a notice of non-payment, warning that her policy would lapse unless paid within the next 35 days.

When her daughter called the company about a claim on Aug. 4, 2009 – well within the five-month period – the company failed to tell her that the policy had lapsed. The daughter didn’t learn of the lapsed policy until she checked her mother’s mail in September. This was still well within the five-month period.

Nonetheless, the company refused to reinstate the coverage. It contended that the five-month window started the day the premium was due, not at the end of the 35-day period mentioned in its March 20 letter.

Also Wednesday, Kreidler issued a cease-and-desist order telling the company to stop violating state law in such cases. He is also imposing a $10,000 fine on the company.

The company has the right to demand a hearing.

Update on May 4, 2011: Ability has requested a hearing, which automatically stays the suspension pending the outcome of the hearing.

Second update: On June 6, 2012, Kreidler's order was upheld, meaning that the company's authority to write new business was suspended for six months. The company was also fined $10,000.
Threshold Motion Successful

Threshold Motion Successful

Rajic v. Atkins, [2011] CanLII O.N.S.C. 1024 (S.C.J.)

In this Bill 59 action, the defendant brought a motion to have the action dismissed on the basis that the plaintiff failed to meet threshold after the jury retired to consider its verdict.

Justice Wilson granted the motion and dismissed the action. She found that the plaintiff was an unreliable historian and that there were comments in numerous medical reports about exaggeration, psychogenic pain and illness behavior. She found that the plaintiff’s self report could not be used as a basis for diagnosis because of the many inconsistencies in statements that he made. Since the plaintiff’s experts relied to a great extent on the truthfulness of what the plaintiff reported to them, she did not attach significant weight to their opinions.

The defendant had obtained surveillance of the plaintiff showing him engaged in various activities such as walking without a limp, carrying a 10lb bag of potatoes, clearing snow off his car, working under the hood of his car for 45 minutes, mowing the lawn, raking and bending down to pull weeds. Justice Wilson did not accept the explanation that he was having “one of his good days” when he was filmed by the investigator. Justice Wilson held that his sworn evidence at trial concerning his pain and limitations were inconsistent with the level of function demonstrated on the surveillance tapes.

Credibility is extremely important in a threshold motion and tools such as surveillance can be invaluable, as was seen in this case.

How to file an appeal when a health insurer denies your claim

Picture this: Your 24-year-old daughter is seriously injured in a snowboarding accident. She suffered head injuries. She's heavily sedated. Your doctor wants to do urgent surgery to stem internal bleeding. It will be costly. But your health insurer refuses to authorize the surgery.

What do you do?

In the past, your options were to pay for the procedure yourself, get another opinion that will be less costly or do nothing. All are bad choices and time is critical.

We've posted a new "appeals kit" designed to help when insurers deny requests to authorize a particular service -- or to pay a claim afterward. The site can help you challenge decisions and appeal denials. We're one of the first states to compile this information into a one-stop, consumer-focused site.

In the case above, you'd have several choices:
  • File an urgent appeal with your health insurer.
  • If the insurer still says no, you can appeal to an independent third-party group made up of health care professionals. They can overrule your insurance company and make it pay. (Over the last three years, nearly 1 in 4 appeals that were sent to an independent review organization by a health plan ruled in favor of Washington consumers.)
  • You can sue.
  • Or you can file a complaint with our office
All this can be complicated, depending on your type of coverage, type of appeal, and the timeline. But the online guide walks you through those options, with a handy worksheet to keep track of key information, etc.

Check it out.
(Corrected two links. Thanks to Public Data Ferret for the heads-up.)
Vicarious liability of employers for sexual assault

Vicarious liability of employers for sexual assault

The Manitoba Court of Appeal has recently released a case dealing with vicarious liability of an employer for sexual assault by one of its employees. The Court provides a useful summary of the principles used in determining vicarious liability, as well as a summary of case law involving employers.

In Robertson v. Manitoba Keewatinowi Okimakanak Inc., [2011] M.J. No. 24 (C.A), the plaintiff was an executive assistant who made plans at work with her supervisor (Hart) to socialize after work to celebrate her birthday. They went to a restaurant for dinner and then to Hart’s residence where he sexually assaulted the plaintiff. The plaintiff notified the employer about the assault, who investigated the incident and terminated the Hart’s employment. The plaintiff sued both the Hart and the employer. The employer was successful in a motion to strike the Statement of Claim and the plaintiff appealed.

The test for a finding of vicarious liability was set out by the Supreme Court in Bazley v. Curry, [1999] 2 S.C.R. 534, which the Manitoba Court of Appeal summarized as follows:

1. The test for vicarious liability should focus on whether the employer’s enterprise and empowerment of the employee materially increased the risk of the sexual assault and hence the harm;
2. The enterprise and employment must not only provide the locale or the bare opportunity for the employee to commit a wrong, it must materially enhance the risk in the sense of significantly contributing to it;
3. The appropriate inquiry is whether the employee’s wrongful act was so closely connected to the employment relationship that the imposition of vicarious liability is justified in policy and principle;
4. In determining the sufficiency of the connection between the employer’s creation or enhancement of the risk and wrong complained of, subsidiary factors will be considered such as a) the opportunity that the enterprise afforded the employee to abuse his/her power; b) the extent to which the wrongful act may have furthered the employer’s aims; c) the extent to which the wrongful act was related to friction, confrontation or intimacy inherent in the employer’s enterprise; d) the extent of power; and e) the vulnerability of potential victims to wrongful exercise of the employee’s power.
5. An incidental attack by an employee that merely happens to take place on the employer’s premises during working hours will scarcely justify holding the employer liable because such an attack is unlikely to be related to the business the employer is conducting or what the employee was asked to do, and, hence, to any risk that was created.

The court held that the facts did not support a finding that the employment went beyond providing a bare opportunity, noting that the assault did not occur in the workplace or during work hours, there was no allegation of inappropriate behaviour on prior occasions, there was no allegation that Hart exercised any power in relation to the plaintiff beyond that which is required in every supervisory position, and there was no allegation that the plaintiff was particularly vulnerable to the wrongful exercise of the Hart’s power.

How to find old life insurance policies (and other unclaimed property)

The case: A woman recently called us, trying to track down a life insurance policy that her grandmother had bought in 1971. The policy had been sold by one company to another.

"Makes me wonder how many policies go unclaimed," she said.

A lot. According to the New York Times, hundreds of millions of dollars each year.

So how do you track down a relative's old policy?

  • Gather as much information as possible: name, insurer and any relevant documents. Try to find the policy itself, which will have a number on it. Make sure you have a copy of the death certificate.

  • Tip: If you can't find the company, try going through the person's financial records, looking for payments made to an insurer. Also, look through old mail -- the company may have sent periodic statements or billing reminders. If you know which company they had their auto= or homeowners coverage with, consider contacting that company. People often use the same insurer for life insurance.

  • Then, make sure the company still exists, or if it merged with another company. If you live in Washington state, we can help with this, for free. Call us at 1-800-562-6900. If you live in another state, call your state's insurance regulator for help.

  • If you can't find any information, even the name of the company, you may want to pay a search company to run your relative's name against insurance industry databases or to contact a large number of insurers directly.

  • Tip: Online companies can also search for unclaimed property for you, but with a little time at your computer and the sites listed above, you can do the same thing, for free, yourself.

As for that life insurance case, we helped the woman figure out the current company holding the policy and file a claim.

"This is incredible," she wrote. "We can't thank you enough."

Bonus round: Here are our tips if you're buying life insurance or an annuity.
Motion to add defendants after limitation period dismissed

Motion to add defendants after limitation period dismissed

Higgins v. Barrie (City of), 2011 O.N.S.C. 2233 (S.C.J.)

This was a motion by the plaintiff to amend the Statement of Claim to add additional defendants after the expiry of the limitation period on the basis of discoverability.

The plaintiff slipped and fell on March 13, 2006 and alleged that the City of Barrie was negligent in failing to maintain the site of the slip and fall. Barrie’s defence was filed May 13, 2008. Examinations for Discovery took place August 5, 2010 and September 13, 2010. At the examination for discovery of the City representative, counsel advised that the proposed defendant had been contracted by the City to remove snow from the area where the plaintiff fell. The contractor had in turn subcontracted to the second proposed defendant. On November 25, 2010, Barrie’s counsel advised of the name of the subcontractor. Plaintiff’s counsel performed a corporate search on November 30, 2010 and brought a motion to add the proposed defendants December 14, 2010.

Justice DiTomaso dismissed the plaintiff’s motion. The court noted that the passing of the limitation period gives rise to a presumption of prejudice. There is a reverse onus and evidentiary burden on the plaintiff. In the circumstances, the plaintiff’s motion materials failed to disclose any evidence of pre-discovery diligence on the part of the plaintiff or his counsel to determine the identity of the proposed defendants. The motion materials failed to disclose any evidence of any reason why the plaintiff could not have taken any steps to discover the identity of the proposed defendants prior to the examination for discovery. Justice DiTomaso held that waiting 4 ½ years until the examination for discovery of a City representative to make inquiries about potential additional defendants did not amount to due diligent or reasonable efforts. The affidavit of the plaintiff’s legal assistant was totally deficient in providing evidence of due diligence or reasonable efforts made to ascertain the involvement of the proposed defendants or any other defendants. The plaintiff therefore had not met his onus and the motion was dismissed.

Justice DiTomaso’s decision is extremely useful for proposed defendants responding to a plaintiff’s motion to amend. There is a very helpful summary of the case law with respect to adding defendants and the due diligence requirement.

Thank you to Ted Key for bringing this case to our attention.
8 things to know about pet insurance -- and what's it cost?

8 things to know about pet insurance -- and what's it cost?

1) What's it cost? Here in Washington, according to rates filed with our office:
  • Coverage for cats ranges from $83 to $926 a year; most policies are $150-$250 annually.
  • Coverage for a dog ranges from $107 to $1,059 a year, but most coverage is between $225 and $400 annually.
2) Coverage varies a lot. Some policies cover a broad range of things: accidents, sickness, surgery, x-rays, drugs, hospitalization, cancer treatment, etc. Others are much narrower, covering accidents and illness after a waiting period.

3) Look for exclusions. Insurers consider hereditary conditions pre-existing conditions and may exclude them or limit coverage. They may also exclude or limit coverage for incurable conditions like diabetes or cancer.

4) Qualifying: A vet may have to examine your pet and certify its health before you can insure it.

5) The rules can change when the policy renews. If your pet's treated for something, some insurers may consider that a pre-existing condition when the policy renews, meaning they'll exclude coverage for it.

6) And they can change based on your type of pet. Exclusions may vary by type of pet and breed.

7) Who pays the bills? Some companies will pay the vet directly, but often you'll be responsible for the full amount at the time of treatment.

8) Which vet? Some insurers will require you to use a specific network of vets.

For more specifics, please see our pet insurance page.
Two agents lose their licenses for misappropriating clients' money

Two agents lose their licenses for misappropriating clients' money

Insurance Commissioner Mike Kreidler has taken action against two insurance agents who misappropriated thousands of dollars from their clients.
• Nancy M. Bishop, of Puyallup, has been notified that the insurance commissioner’s office refuses to renew her insurance license. She has been barred from doing insurance business in Washington and ordered to repay consumers more than $131,000.
A state examination of Bishop’s business records revealed that she violated state insurance laws in dozens of instances, including repeatedly accepting premium payments for policies that did not exist, and keeping the money herself. She also wrongly kept some clients’ refunds and issued false certificates of coverage.
The examination found that Bishop owes dozens of Washington consumers more than $131,000, including overcharges and misappropriated funds.
The violations, according to Kreidler’s order, show Bishop to be “untrustworthy and a source of injury and loss to the public and not qualified to be an insurance producer in the state of Washington.”
• Isaac Mayanja, an agent in Redmond, has had his insurance license revoked.
In 2010, a state investigation determined that Mayanja sold at least 19 unapproved annuities to Washington residents. He also repeatedly engaged in the unauthorized withdrawal of clients’ funds, including forgery and misappropriation of their money.
Specifically, he submitted withdrawal forms totaling $15,570 for several clients’ annuities, changing their addresses on the forms to his own address and then transferring the money to his own personal bank accounts.
In both cases, the agents have the right to demand a hearing. The orders take effect immediately.
Gross Negligence

Gross Negligence

The Court of Appeal for Ontario has upheld a decision which found that the City of Mississauga’s response to a winter storm event was reasonable, Billings v. Mississauga (City), 2011 ONCA 247, [2011] O.J. No. 1449 (C.A.).

The plaintiff, Douglas Billings, claimed injuries suffered in a slip and fall accident on a City sidewalk following a major snow and ice storm.

The sidewalk in question had not been cleared of snow and ice within 36 hours after the winter storm.  The City’s snow removal policy required that snow and ice be removed from sidewalks within 36 hours and the City had failed to meet that target. Nevertheless, the trial judge found that the storm had been an extraordinary event. The trial judge carefully reviewed the City’s systems, personnel and policies for dealing with snow storms and concluded that the City’s response to the storm was "completely reasonable."  The City’s response to the storm did not amount to “gross negligence”, which is the standard mandated by statute.

The Court of Appeal agreed with the trial judge’s conclusion.

This case should assist municipalities in defending claims of personal injury caused by snow or ice on a municipal sidewalk. It is interesting that the City was found to have acted reasonably even though it did not meet its objective of clearing snow and ice from sidewalks within 36 hours after a storm event.
Important: Open enrollment for many kids ends April 30th

Important: Open enrollment for many kids ends April 30th

We cannot say this enough: If you want to buy an individual health plan for your child or enroll them in your individual health plan, you have until April 30 to do it. Do not delay.

Individual coverage is typically bought by people who don't have access to employer-sponsored coverage, or whose employer doesn't cover dependents.

The next open-enrollment period for kids this year won't be until Sept. 15 through Oct. 31.

For more on this, please see our March 14 news release.
Seattle couple pleads guilty in storm-damage insurance scheme

Seattle couple pleads guilty in storm-damage insurance scheme

The owners of a Seattle construction company have pleaded guilty to attempted theft for an insurance-billing scheme based on inflated storm-cleanup bills.

James and Cheryl-Lin Philo pleaded guilty March 25th in King County Superior Court to two counts of second-degree attempted theft. In addition, their company, Philo Construction Co., of Seattle, is guilty of one count of first-degree theft.

An investigation by Insurance Commissioner's Mike Kreidler's anti-fraud unit found dozens of cases of apparent fraudulent billing by the company.

Here's what happened: In December 2006, a major windstorm swept across Washington, knocking down trees and causing substantial damage to a numerous homes. The Philos hired subcontractors to remove many of those trees from customers’ homes.

In March 2007, a former employee contacted our office, saying that Philo was submitting inflated invoices to insurers. Other workers provided information as well.

An investigation by the agency’s Special Investigations Unit, working with more than 15 insurance companies, found that the Philos had been asking their subcontractors for two invoices for each job. The Philos paid the subcontractors the smaller amount, and then submitted the larger invoice to their customers’ insurance companies for reimbursement.

The markup averaged close to 30 percent, plus another 20 percent that insurers allow for profit and overhead. For example, a $2,150 bill from a tree service company was reported to the insurer as a $2,795 job. Once profit, overhead and sales tax were added, the Philos were paid a total of $3,649.

The Philos also created a fictitious company, Pro Line Construction Resources, to act as a subcontractor when they needed to support a particularly high estimate.

The Philos were each assessed a $500 victim penalty assessment. They'll also pay restitution totalling $19,849.15, and $220 in court costs.
Self-Insurance Receives Seal of Approval

Self-Insurance Receives Seal of Approval

For the past several months I have been managing expectations about the content of separate reports on self-insured group health plans being developed by DOL and HHS. Or more to the point, I have preparing people for reports that conclude all sorts of awful things about self-insured plans. Not that I believe such anticipated criticisms are valid, but rather that it was obvious that self-insurance was “set up” to take a hit based on the PPACA legislative language mandating the studies, in particular the HHS study on the large group market. The stated objective of this study was to compare self-insured plans with fully-insured plans, which is fair enough. But Section 1254 instructs the HHS to investigate multiple perceived problems with self-insured plans while not including similar guidance for fully-insured plans, therefore essentially setting up a one-way fishing expedition. And by the way, this section along with the preceding section mandating the DOL report, were inserted at the last minute as part of the reconciliation process almost certainly at the request of the health insurance industry. So the fix was in from the jump. It has also been my view that there is a negative bias toward self-insurance within the regulatory agencies which would taint the review and reporting process. I say this based on fact that some key officials within these department have previously worked for members of Congress and/or think tanks that have been critical of self-insurance. My suspicion of such bias was heightened after a meeting with HHIS-contracted researchers who asked a series of very pointed about self-insurance that seemed to be “planted” by those with an interest in making self-insurance look bad. The researchers took a particular interest in what they termed “sham self-insurance,” translated to mean self-insured health plans utilizing stop-loss insurance with low attachment points. Now this line of questioning was easily dealt with of course, but we did get the impression that this could well be a situation where the agencies were digging for evidence to support pre-determined conclusions. But apparently there was not a thumb on the scale after all based on a review of the final reports that were released this week. So much for my prescient reputation! The main concern about the DOL report was that they would use bad and/or insufficient data to conclude there are solvency problems with self-insured health plans. But the agency acknowledged that they could not reach any policy conclusions due the lack of quality data. The HHS report appeared to be an opportunity for a host of self-insurance criticisms to be validated by the federal government. You know, the regular canards such as self-insured plans are less costly than traditional issuance because they deny lots of claims and offer skimpy benefits. But I am sure to the consternation of our friends at AHIP and others with market share or other motivations, the HHS report effectively refuted all of the common self-insurance criticisms by concluding little or no difference as compared to fully-insured plans. And for the icing on the cake, consider a little nugget tucked into an appendix of the DOL report which noted that from 2009 to 2010 for employers with more than 200 covered lives, the average fully-insured premium increased by $808 compared to an average increase of $248 for self-insured premiums. So instead of getting branded with a regulatory scarlet letter, self-insurance has effectively received a seal of approval. What an interesting turn of events.
Samaritan Ministries ordered to stop offering unauthorized insurance in Washington state

Samaritan Ministries ordered to stop offering unauthorized insurance in Washington state

This post has been updated. See below.

Washington state Insurance Commissioner Mike Kreidler on Friday ordered a health-care sharing ministry to stop offering unauthorized insurance in Washington.

Illinois-based Samaritan Ministries International, a nonprofit corporation, maintains that its member “need-sharing” program is not insurance. Under Washington state law, however, the program is considered insurance.

Insurers doing business in Washington must register with the state, submit their policies and rates for review, and meet state financial solvency requirements. Samaritan Ministries hasn’t done any of those things.

Kreidler on Friday issued a cease-and-desist order telling Samaritan to stop engaging in the unauthorized business of insurance in Washington state, which includes organizing the transfer of money between members.

“Our insurance laws exist to protect consumers and make sure that insurers live up to their promises,” said Kreidler. “Members of groups like this don’t have those protections.”

Samaritan Ministries members agree to pay monthly shares of $135 to $320 to other members who have medical costs, plus a $170-a-year administrative fee. A separate program is available to cover auto-accident injuries.

Members submit medical claims, and the group directs members to send their money to members with medical bills. The group says it has a total of 15,500 members in all 50 states, with shares totaling about $3.5 million per month.

The cease and desist order includes Samaritan Ministries International, its Christian Health Care Newsletter and 20 individuals.
Samaritan Ministries has the right to demand a hearing. The order takes effect immediately.

Update (5/31/2011) The order has been rescinded. On May 11, 2011, Washington Gov. Chris Gregoire signed Senate Bill 5122 into law, excluding health sharing ministries such as Samaritan from regulation under the Washington state insurance code.