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As Megan Jones waited to be prepped for her double mastectomy, three people stood by her. On her left was Warren, her husband of ten years. On her right were her closest friends in America: Dianne and Gary Cushner.

They were all trying to comfort the 48-year-old Australian, who just days before had been shocked to learn she had invasive breast cancer. "You'll be fine, my love," Megan remembers her husband saying. Dianne just kept patting her right arm, murmuring that everything would be okay. But Gary Cushner held on to Megan's right hand all the way into the pre-op room--he was the very last to leave her side--and said one thing, and one thing only. "Don't worry, cutie pie," he told her, "you're covered. Now just concentrate on getting well."

Those words would drive the course of Megan Jones's life for months to come.
"If he hadn't said that, you see," Megan says, nervously pulling on the ends of the blond wig that unartfully hides the effects of chemotherapy, "I would've gone back to Australia. They have a different system for covering medicine and hospitalization. I would've been covered there for sure."

But because Gary Cushner, the man from whom she'd bought her health-insurance policy, assured his friend up until the last possible moment that she was covered, Megan went ahead with the surgery here. "They were telling her she didn't have much time to do it," Warren Jones says. "There wasn't a lot of time to lounge about."

"I had to know then if I was covered," Megan adds. "I kept asking Gary and asking Gary. I knew it was a serious diagnosis made shortly after the policy went into effect. I knew it might cause trouble, so I asked him directly. I said, `Gary, am I covered?' And he said, `Yes.'

Six months later, when Megan Jones sued friend and agent Gary Cushner, American Medical Security and United Wisconsin Life Insurance Company--the two corporations that underwrote and administered the insurance policy--no one disputed that Cushner had uttered those words. But despite the agent's assurances, AMS refused to cover Megan Jones's double mastectomy or any of the treatments that followed.

The company wouldn't pay, it said, because Megan Jones had a pre-existing condition.

Warren and Megan Jones came to Colorado four years ago. The Joneses had just sold their lucrative accounting business back in Canberra, Australia, and planned to use the proceeds to start up a coffee-bean business called Koala Bear. (They've since sold the franchise and taken accounting jobs.) They bought a small ranch house in Highlands Ranch and later, when Warren's "mum" prepared to move in with them, a larger house in the same development.

Megan Jones met Dianne Cushner in 1992, when the Joneses leased a car from Dianne's Englewood company. Dianne introduced the couple to her husband, an insurance agent, and the four quickly became friends, getting together for weekly dinner parties and movies, and even renting adjoining condominiums in Silvercreek that Thanksgiving so they could celebrate together.

Given how close the families became, it was only natural that the Joneses would consult Gary when they had questions about insurance. When the family first moved to this country, they'd applied for health insurance with a plan called Golden Rule. While the plan accepted Megan and her son, Christopher, it had declined coverage to Warren Jones because of a heart condition. In May 1994 the family switched to a Texas-based indemnity plan that would insure Warren, too. (Megan also kept her Golden Rule policy through June.)

But when Megan visited her regular physician, Linda Williams, on September 13, 1994, she was surprised to find that the Texas company didn't cover routine office visits. "I had just assumed the Texas plan was like Golden Rule," she says. "So I got back to the office and called Warren, and he said he'd call Gary."

Gary suggested Warren drop off a copy of the family's plan so that he could review it. "I brought it round the next day," Warren testified in court.

After that review, the Joneses say, not only did Cushner advise them that their plan was "no good," he recommended a better plan through AMS, a Wisconsin-based company. "He didn't tell us he was an agent for AMS," Megan says. "He just told us it was a good plan."

On September 16, 1994, Megan says, Gary Cushner called her at work and asked her to lunch so that she could sign the application. "I said to him, `But I haven't filled it out,'" she testified. "He said, `I filled it out.' I asked him how could he have filled it out, and he said, `I got the information from your application from Texas Life.' And I said, `You're very clever.'"

Under AMS, the monthly premium for all three members of the Jones family was $413. Gary Cushner arranged for the money to be automatically deducted from the Joneses' checking account.

The application was quickly accepted by AMS and its underwriter, United Wisconsin Life Insurance Company. The policy went into effect on October 1, 1994.

On October 20 Megan Jones was diagnosed with breast cancer.
No one was more shocked than she. After all, just eight months before, Megan had received what she thought were clinical assurances that she didn't have breast cancer. At the time, Megan had noticed "dimpling" on one of her breasts, and although she assumed it was due to some irregularity with her fourteen-year-old silicone implants, she expressed concern to Dr. Williams. The physician arranged for Megan to undergo a mammography and ultrasound testing. An April 11, 1994, letter to Jones contained the findings: "The results of your recent mammogram indicate no suspicion of breast cancer."

"You know what we did when we got that letter?" Warren Jones asks. "We went out to dinner to celebrate."

After that, though, Megan continued to try to determine the source of the dimpling. On September 13 she again met with Dr. Williams (the appointment during which she learned routine office visits weren't covered), who suggested she follow up with another doctor.

Megan saw that doctor on October 14. He scheduled her for a biopsy six days later. The biopsy determined that she had breast cancer.

On November 3 Megan was sitting in the Denver West Surgical Center, flanked by her husband and her two best friends, waiting to be prepped for a double mastectomy.

A procedure that Gary Cushner assured her was covered by her new insurance policy.

On March 1, 1995, after Megan had lost both breasts, undergone her first round of chemotherapy, racked up $30,000 in doctor bills and was awaiting a second round of chemo and reconstructive surgery, she received a letter from AMS informing her that she was being denied "for all medical and drug claims" resulting from her pre-existing condition as it existed on "4-7-94, 4-11-94, and 9-13-94." Those dates referred to the two times Megan had visited her doctor concerning the "dimpling" on her breast, as well as the trip to the Mammography Center.

"Please refer to your Certificate or Summary Plan Description booklet for the definition of a pre-existing condition," the letter advised. Megan tried to do so, but her policy said nothing about pre-existing conditions.

She asked Cushner to find out what the problem might be. He called AMS and requested a review of the denial; Megan consented to release the necessary medical records. On April 19 AMS sent Cushner a letter explaining that because those records indicated an "indeterminate abnormality" prior to the October 1, 1994, date Megan Jones's policy became active, "services related to the breast mass are denied as pre-existing since the patient received treatment and consultation prior to her effective date."

In most health-insurance policies now sold in the United States--especially to individuals and small groups who don't have the bargaining power to negotiate the clause out of the contract--pre-existing condition clauses are quite common. They usually exempt from coverage any current illness or disease from which applicants knew they were suffering when they applied for insurance. Colorado law restricts the duration of any such clauses to six months, which means that after half a year, insurance companies must cover even pre-existing conditions. "Standard" is the way most insurance officials refer to such clauses. But there were a few things about Megan Jones's case that were anything but standard.

First, Megan Jones says she had no idea she had breast cancer. She says her doctor never used the word with her, and the mammogram results said there was "no suspicion of cancer." In fact, the letter from the Mammography Center was one of the reasons Megan felt comfortable about switching insurance policies.

But even more significant, Megan Jones's AMS policy didn't actually contain a pre-existing clause. Due to what the company calls computer error, AMS had issued approximately 580 policies that failed to include any pre-existing-condition language. After the company discovered the error sometime in March 1995--at about the same time it was initially refusing to cover Megan Jones--it issued letters to most of the people who possessed those 580 policies, saying it was replacing its old schedule of benefits with a new schedule of benefits that did nothing to materially change the old schedule (although the new schedule did include a pre-existing-condition clause where none had been before).

Megan Jones never got that letter. Instead, after AMS had discovered that her policy contained no pre-existing-conditions clause, she received a second denial of her claims--because of pre-existing conditions.

Devastated by the insurance company's refusal to pay her bills and in need of further surgery and treatment to try to halt the rapidly advancing cancer, she took her policy and both denial letters to a lawyer: Dan Schendzielos. On May 10 he filed Jones's lawsuit against AMS, the United Wisconsin Life Insurance Company and agent Gary Cushner. To Schendzielos, the case seemed simple: The insurer was denying coverage (that the agent had guaranteed) on the basis of a pre-existing-condition clause that didn't exist.

The insurance company responded by dropping the Joneses' insurance coverage altogether. "This means we have set it aside from the date of issue, as though it was never in effect," reads the June 23, 1995, letter from AMS. The insurance company refunded the Joneses just $120 of the almost $3,000 the family had paid in premiums, claiming that it was deducting the cost of covering Chris's broken jaw.

A week later the company filed its legal response to Jones's suit. It charged her with having "unclean hands" and "omission of material fact" in her application for coverage. Specifically, AMS said, Megan Jones had failed to check the "Cancer/Tumor" box on page two of the application.

In September Schendzielos asked Arapahoe County District Court Judge Thomas Fasing for an expedited trial date because Megan Jones's doctor thought there was a good chance the plaintiff wouldn't live out the year. AMS's attorney, James Gigax, objected to the motion, accusing Megan Jones of tactics that "emit an overpowering odor of chicanery and sharp dealing." Gigax labeled one of his motion's arguments "Merry Christmas, Mrs. Jones: A Holiday Trial Date."

What was supposed to be a five-day trial commenced on December 11 in Courtroom 5 of the Arapahoe County Judicial Building. The jury, three men and three women, was selected with few surprises, and the plaintiffs started their case by putting Megan Jones, wig and all, on the stand.

In slow, careful language wrapped in Australian idiom, Jones answered, over and over, questions about her health. Not only had she been unaware she had cancer, she told the court, but she thought she'd received a clean bill of health from the Mammography Center in April 1994. Over and over again, she answered questions about how she'd applied for her AMS policy. Cushner had filled out the application form from the information on her Texas indemnity policy, she testified. (He'd also filled it out when she wasn't present, a violation of Colorado statute.)

The Texas policy included information concerning previous illnesses that weren't mentioned on the AMS application. But that, Megan testified, was because the Texas application asked for details from the last ten years of the Joneses' lives, the AMS policy only the past two. Although she hadn't read the AMS application when Cushner filled it out, she said, now that she looked at it, she could see some inaccuracies. Her husband's name was spelled wrong, for example; her son's weight was off by about fifty pounds. And there were some omissions: For instance, her ongoing visits to Dr. Williams were not mentioned--even though it was after one of those visits that the Joneses contacted Gary Cushner to see about getting a policy that would cover such "routine" appointments. At about the same time, Cushner's wife saw Dr. Williams at Megan's suggestion.

The defense not only discussed the Texas policy at length, but also a life-insurance policy Gary Cushner had filled out on Megan's behalf the night before her October 20 biopsy. That policy did not indicate that Megan Jones was having a surgical procedure the next morning--but she argued that getting life insurance wasn't her idea in the first place.

"Mr. Cushner rang me up that night and asked if I wanted to apply for some," Megan testified. "I said send it around and I'd fill it out. But then he said no, he had nothing better to do, he'd fill it out and send it around for my signature. He told me to go on with what I was doing, which was fixing dinner."

Nowhere on that application, AMS's attorneys noted, was there mention of the fact that Megan Jones had Hodgkin's disease as a young woman.

"But that was twenty years ago," a stunned Jones replied.
"But you didn't put it down, did you?" responded Gigax.
"But I didn't fill out the form," she answered.

"Objection, your Honor," Schendzielos interjected. "This case has nothing to do with that life-insurance form. It has to do with the AMS health-insurance application."

"You didn't put down Hodgkin's on the Texas indemnity plan's application either, did you, Mrs. Jones?"

"No, I--"
"Objection, your Honor. The Texas application only calls for the applicant to go back ten years, not twenty, as would pertain to Hodgkin's."

"But you didn't mention that twenty-year-old Hodgkin's on your life-insurance policy, did you, Mrs. Jones?"

"I didn't fill out that application," Megan Jones said again. "Mr. Cushner did. I asked him if I could do it, and he said no..."

"But you signed it, didn't you, Mrs. Jones?"
"Yes, Mr. Gigax, but I didn't read it."
"You didn't read it, Mrs. Jones?"

"No, Mr. Gigax. I know that was stupid, and I will read everything from now on, but I didn't read that."

"Just like the health-insurance form that Mr. Cushner filled in for you."
"Yes, Mr. Gigax."
"And the life-insurance policy."
"He was a friend. I thought I could trust him. I've learned..."
"No further questions, your Honor."

Gary Cushner watched the entire trial from the right-hand side of the defense table, making faces when he disagreed with testimony, shaking his head and waving his hands. Judge Fasing twice warned Tracey Porter, Cushner's attorney, to try to control her client's body language.

Cushner finally took the stand near the end of the trial. Dressed in gray wool pants and an argyle sweater, he looked relaxed.

"Mr. Cushner, did you tell Megan Jones that she was covered for her surgery?" asked Schendzielos.

"Yes, I think I did."
"Mr. Cushner, you never told Megan Jones that her insurance company would pay for the operation, did you?" asked Porter.

"Oh, no," answered Gary Cushner. "No."

One of the primary witnesses for the plaintiff was Thomas L. Roberts, certified by the court as an expert in insurance-industry standards. Even if the insurance company at one time had the right to rescind its policy because of misstatements, Roberts said, it had waived that right when it twice acted upon the contract as a valid contract. "They twice invoked the pre-existing clause," Roberts testified. "They did so based on the same information they later used to rescind the policy altogether. If they wanted to exercise their right to rescind, they should've done it then."

Furthermore, Roberts said, the fact that AMS denied Megan Jones's appeal in April 1995, after the company knew her policy didn't have a pre-existing-condition clause--"in effect denying coverage based on a provision they knew wasn't in there"--was nothing less than a "deceptive practice" and "an egregious act" of bad faith.

"What is the plaintiff paying you for your testimony today, Mr. Roberts?" Gigax asked during cross-examination.

"My standard expert testimony rate," Roberts replied. "Approximately $195 per hour."

"No further questions, your Honor."

On December 18, while counsel was arguing over jury instructions in the judge's chambers, one juror asked to be released from duty. John J. Mattey, an attorney who once did defense work for insurance companies, said he was overburdened with a new baby and a more-than-full-time job that needed him. Schendzielos, who says he'd acquiesced to Mattey's presence on the jury in hopes that an attorney familiar with insurance law could help explain complicated issues to fellow jurors, told Fasing he had no problem with letting Mattey go. Both Gigax and Porter objected. Mattey stayed.

That night Mattey wrote a letter to the judge, which was entered into evidence the next day. In it, Mattey devoted two single-spaced pages to detailing the rigorous schedule of his new swimwear/swim team organization and the nights spent up with his then-five-week-old baby. He did not attempt to hide his irritation with the length of the trial, at that point three days over schedule. "It is likely that my retail store will be closed for at least some portion of one of the busiest shopping days of the year due to counsel's antics," he wrote. "The simple fact that much of yesterday was spent arguing those same instructions leads me to conclude that counsel have no respect for the time constraints and burdens which jury duty places on those individuals willing to meet their civic obligations...In light of the fact that Mr. Roberts received $195 per hour for his testimony, the $50 per day I am to receive neither appears fair or adequate at this or any time of the year."

On that same day, December 19, the jury finally received the case for deliberation. After four and a half hours, they returned four verdicts, all in favor of the defendants: AMS, United Wisconsin Life Insurance Company and Gary Cushner. (Cushner did not return Westword's calls, and his lawyer refused to allow him to comment on the case.)

After the verdict was in, Roberts said he hadn't seen such an outrageous case in years. "Very, very unprofessional. What they're doing here is called `post-claim underwriting.' They get an expensive claim in and decide, uh-oh, what can we do about it now?"

According to Barbara Yondorff, an analyst with the Colorado Division of Insurance, "post-claim underwriting" is becoming increasingly common. While she cautions that she cannot comment directly on Megan Jones's case because she's not familiar with it, she will say that it sounds like "a mess."

"We tell people: Fill out the policy carefully--but if you didn't think you had cancer because you had a letter that said there was no suspicion of cancer, I can't imagine requiring you to put it down.

"Then we tell people: Don't let your old insurance policy lapse before your new one takes effect. Well, she didn't. Then we tell them to read carefully for a pre-existing-condition clause. Well, there wasn't one. And finally, we tell people to call and check whether or not they're covered before they go into treatment. And she did. She asked her agent, and by law, he's a legal representative of the insurance company.

"I don't know every detail about the case here," warns Yondorff, "but it seems to me the Division of Insurance would have sided with the consumer in this one."

Although the jurors didn't, even Mattey admits to feeling "bad" for Megan Jones. "I couldn't even look at her," he says, then pauses. "But we were too educated to fall victim to the passion."

"I felt terrible," adds juror Patricia Kuhns. "But believe me, that trial cost me."

Kuhns believes Megan Jones didn't think she had cancer. "Oh, I would've celebrated too if I got that letter," she says of the notice from the Mammography Center. "I don't know, I guess it was that life-insurance thing that was the real kicker for me. That was the biggest thing. My husband and I have been arguing about the case ever since it's been over.

"He thinks if she hasn't been diagnosed, then why put it down? I don't know. It's like you're damned if you do and you're damned if you don't. What good are insurance companies if they only want to insure the healthy?

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