Another Insurance Nightmare

Heather Smith's tribulations included not only Tom Luther's assault, but also attacks by insurance companies and their lawyers.

Life finally seemed to be turning around. She landed a job with Bonfils Blood Center, which provided the blood that had helped save her the night she was stabbed. The Denver district attorney was charging Thomas Luther with first-degree attempted murder. The trial would proceed after he was tried in January 1996 for the murder of Cher Elder.

On June 27, Smith underwent surgery. The vertebrae were carefully returned to their correct position--a move the surgeon had warned carried a risk of paralysis--and platinum plates were inserted to secure the bone.

In July, the bills--$76,000 all told--began to arrive. And so did a notice from Allstate stating the company would not pay.

Apparently, American Medical Security had been corresponding with Allstate and was demanding that it be reimbursed for the approximately $60,000 it had paid out for Smith's trauma surgeries.

Rubbing salt in the wound, in November Allstate filed a claim against Smith and American Medical in U.S. District Court, asking the judge to decide whether American Medical should receive the benefits or if the money should go to pay Smith's bills for the neck surgery.

Smith hired attorney Ronald Podboy, a former Denver deputy district attorney, to represent her. A month later, American Medical Security filed a countersuit against Smith and Allstate claiming that she was being "unjustly enriched" by Allstate paying for her neck surgery.

"Yeah, I tell you," Smith says bitterly, "I really felt unjustly enriched after being stabbed five times, having my neck broken and then having to go through surgery."

American Medical spokeswoman Jennifer Faulhaber, when asked about the company's stance that Heather Smith was being "unjustly enriched," replies, "We will not be making any comments at this time. It is not our policy to comment to newspapers."

At the time, American Medical insisted that it be reimbursed before the bills for the neck surgery were paid. That would leave only $27,000 of the $100,000 (another $13,000 had already been paid for other medical expenses) toward Smith's outstanding debt of $76,000.

Faced with a remaining debt of $49,000 (which didn't include her psychiatric bills or her attorney fees), Smith was warned by Podboy that she might have no other choice than to declare bankruptcy. "For Heather, it was a horrible possibility," Podboy recalls. "Not only because of the technical ramifications--ruining her credit for the next seven, ten years--but it would have been a defeat, a defeat she didn't feel she should be forced to accept just because she was attacked by some maniac.

"And then she was being accused in federal court of being 'unjustly enriched'...by lawyers who jump to the defense of insurance companies who don't want to pay."

In February 1996, Thomas Luther was found guilty in Jefferson County of second-degree murder for Cher Elder's death. Next, it would be Smith's turn to face Luther and his attorney, Lauren Cleaver, who had labeled her accusations "a bogus case."

"I thought that after I survived the assault, nearly losing my life, that things had gotten as bad as they would get," Smith says. "But now I was having to defend my character to the insurance companies and to Lauren Cleaver.

"It was the worst time of my life...even worse than being stabbed five times. I don't think I could ever kill myself, but I certainly thought that life sucked and wondered what I had ever done to deserve this."

Depressed and haunted by nightmares, Smith began to wonder if the things the insurance companies and Cleaver were intimating were true. Maybe she was at fault.

"But one day, I said, 'Enough of this.' I couldn't let the bad guys--Thomas Luther and the insurance companies--beat me. So I made a decision to start trying to get through each day and not worry about tomorrow."

That didn't necessarily sweep away her problems. By April, Smith was resigned to declaring bankruptcy. Podboy had been trying to negotiate with American Medical to accept less. The company's attorney "said that would be like accepting a poke in the eye," Podboy recalls. "I said, 'No, more like a stab in the neck.'" The sarcasm was noted, but the insurance companies weren't budging.

But two weeks before the trial, Bonfils, which is self-insured, offered to pay the outstanding debt for Smith's neck surgery if American Medical and Allstate would agree to pick up the rest.

Bonfils would not consider her broken neck a pre-existing condition. "Besides, we've had enough free advertising out of you," joked Smith's boss, Jackie Campeau, referring to a Bonfils TV spot seeking blood donors that featured Smith talking about her experience.

Podboy went to work to hammer out the agreement between Bonfils and the insurance companies, including asking Allstate to pay attorney fees. "Nothing's signed yet," he says, but he's confident the worst is over. And in the meantime, Podboy and attorney David Greene have filed a malpractice suit on behalf of Smith against the orthopedic surgeon who examined her a month after the attack and failed to notice her broken neck.

"Bonfils was a lifesaver for me...twice," Smith says. "It was a great burden off my shoulders, and that's when I knew that I could get through the trial. Bonfils came through for me when they didn't have to...not Allstate or American Medical, the money-grubbers."

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