What to do i my insurance company told me that y was cancelled when it wasn’t?

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What to do i my insurance company told me that y was cancelled when it wasn’t?

Doctor ordered an expensive drugmy wife that had to be preauthorized by my insurance. The insurance company told my doctor that my insurance policy had been cancelled. My employer said they had paid. Called the union trust office (the one that actually pays the insurance company directly) and they had paid Blue Cross. My wife gets worse due to not having the drug has to be admitted to the hospital for 5 days as they stabilize her enough to give her the drug. Should I sue Blue Cross for pain and suffering, breach of contract? Can I use small claims court for a quick and easy $7,500?

Asked on June 22, 2011 under Insurance Law, Oregon

Answers:

S.L,. Member, California Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

You could sue the insurance company for negligence and breach of contract.  Negligence is based on the failure to exercise due care (that degree of care that in this case a reasonable insurance company would have exercised under the same or similar circumstances to prevent foreseeable harm).  In order to prove negligence, you will need to prove breach of duty of care (failure to adequately check their records to determine that your policy had not been cancelled), actual cause, proximate cause, and damages.

Actual cause means but for the insurance company claiming that the policy had been cancelled, would your wife's condition have worsened?  If the answer is no, which appears to be the case, you have established actual cause.  Proximate cause means were there any unforeseeable intervening events that would have relieved the insurance company of liability?  If the answer is no, proximate cause has been established.

Damages (the amount your wife is seeking to recover in her lawsuit).  Your wife should obtain her medical bills, medical reports, and documentation of any wage loss.  Your wife should obtain her medical reports when she is released by the doctor upon completion of her medical treatment or upon being declared permanent and stationary by the doctor.  Permanent and stationary means she has reached a point where no further improvement is anticipated.  The medical reports will document the nature and extent of her injuries and will be used to determine compensation for pain and suffering.  Compensation for pain and suffering is an amount in addition to the medical bills.  Compensation for the medical bills and wage loss is straight reimbursement.

Your wife will file only one lawsuit with separate causes of action (claims) for negligence and breach of contract.

Breach of contract occurred when the insurance company claimed that the policy had been cancelled and failed to pay on the claim when the policy had not been cancelled. 

Your wife will need to file her lawsuit prior to the expiration of the applicable statute of limitations or she will lose her rights forever in the matter.

The case should NOT be filed in Small Claims Court because the damages (monetary compensation) may exceed the maximum amount that can be recovered in Small Claims Court.  The case should be filed in Superior Court.  Your state may or may not have a different name for Superior Court. 

There may be some language buried in the fine print of your insurance policy about legal disputes being resolved by arbitration.  This does NOT prevent you from filing the case in Superior Court.  It means that arbitration instead of a jury trial will determine the outcome of the case.


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