$389,000 Arbitration Award for Wrongful Denial of Insurance Coverage

Katie had congenitally defective jawbones: her jawbones are abnormally small and inadequate to hold very many permanent teeth.  She is also congenitally missing one-third of her permanent teeth.  And these conditions do and will lead to her jawbones deteriorating year by year for the rest of her life.  To ameliorate these conditions, Katie’s doctors developed a surgical plan: crack open the ridges of Katie’s jawbones; graft bone from her chin to fill in these cracks in order to build up Katie’s jawbones; surgically place dental implants into Katie’s reconstructed jawbones.

Katie’s doctors explained to Health Net that this treatment plan was medically necessary to address Katie’s jawbone condition and, therefore, the medical care was covered under Katie’s Health Net insurance policy.

But without consideration for the opinions of Katie’s doctors, and without conducting any investigation into the medical necessity of this treatment, Health Net denied insurance coverage for all or any part of this medical treatment.  As a result, Katie’s parents incurred approximately $30,000 in medical bills.  The Carters paid for this surgery by mortgaging their home, taking from savings and depleting some of Katie’s college savings fund.

Katie was forced to sue Health Net.  Health Net turned this minor lawsuit into a full blown war.  With Health Net’s financial might, this would not be a fair war.  It would be Napoleon versus the Russian Emperor circa 1812.  Health Net hired two law firms to fight Katie.  Health Net refused to turn over its files to show how it justified denying Katie’s claim for reimbursement.  Health Net refused to present its employees for their depositions.  Health Net delayed at every stage.  Health Net filed over one-half dozen different motions with the Judge.  Health Net’s strategy was to burden Katie with legal bills she couldn’t pay and thereby force her to give up.

Katie kept on fighting.  The Judge ordered Health Net to turn over its files and appear at depositions; and the Judge denied almost all of Health Net’s motions.  During the arbitration evidentiary hearing (the “trial”), Health Net called two physicians who made the “medical decision” to deny coverage.  Mr. Ochrach’s cross-examination impeached the testimony of both physicians, proving that they denied Katie’s request for coverage without giving any weight to Katie’s medical condition and the actual language in the Health Net insurance policy.  After a full year of legal battles usually reserved for the most expensive class action lawsuits, the bell tolled for Health Net.  The judge concluded that the only “fair reading” of the Health Net insurance policy required a finding that Katie’s treatment was covered.  The Judge awarded Katie a judgment against Health Net for her $27,000 in medical expenses plus another $154,000 – for a total award of $181,000.

Health Net didn’t stop there.  Health Net continued battling this case for two more years, forcing the case into the Federal District Court in Sacramento, the 9th Circuit Court of Appeals in San Francisco, and back to State court in Auburn.  Katie kept on fighting . . . and she won.  Katie received a final Judgment against Health Net in the amount of $389,000.

Katie’s story is a chapter out of the John Grisham novel Runaway Jury.  Health Net obviously knew it was responsible for Katie’s medical bills, but it denied her claim.  The behemoth Health Net then spent an estimated half million dollars fighting Katie, expecting Katie to eventually cry “Uncle.”  But Katie persevered and defeated the giant company.

Justice is served.