Longmont teacher Jennifer Latham and her husband Frank both suffered broken bones, internal injuries and brain injuries from the crash. But Time Insurance, also known as Fortis and Assurant Health, rescinded a health insurance policy Jennifer had recently taken out, claiming that she'd failed to disclose a complete and accurate health history on its application form--leaving her with more than $180,000 in medical bills.
Time is notorious in the health insurance industry for its "post-claim underwriting"--going back to the application after a claim is made to determine if misrepresentations were made that would warrant revoking the policy, even if the medical conditions involved have nothing to do with the claim. A similar case in South Carolina, in which the company rejected coverage for a teenager who discovered through a blood donation that he had AIDS, resulted in a $10 million punitive judgment. That verdict was upheld last fall by the state's supreme court.
In closing arguments of the two-week Boulder trial, Latham attorney Marc Levy asked for $2 million in economic damages and roughly $5 million in punitive damages. "You are the final stop," he told the Boulder County jury of four women and two men. "You are the conscience of the community. Is this the way we want health insurance companies to act?"
Time attorney Walter Wilson maintained that Latham had failed to disclose certain medical information on the application, including one trip to an emergency room for "shortness of breath" that Latham maintains was a panic attack. He argued that evidence of her "alleged emotional distress" from cancellation of her health insurance "is scant at best and nonexistent in reality."
But Latham, who now walks with a limp and still struggles with effects of the accident, testified, "I may be silly, I may be stupid, but I'm not a liar...I always thought that insurance companies were there to help you."
Levy says that he's stunned by the verdict and that his client almost fainted. "The first thing she said was, 'Maybe this will change the way they do business,'" he says.
Testimony from Time officials indicated that the company only rescinds half of one percent of its policies--but that resulted in more than 8000 rescissions over a five-year period, saving the company $150 million in unpaid claims.
The Latham case and the practice of rescission in the health insurance industry is the subject of an upcoming Westword feature. Stay tuned.