Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jan 5, 2020

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The South Carolina Supreme Court recently upheld a lower court’s bad faith insurance decision against health care provider, Fortis Insurance Company, for illegally revoking a college student’s health insurance over a clerical error and then refusing to correct it. The Court said that a $10 million punitive damages award was appropriate due to the insurer’s “highly reprehensible” behavior.

South Carolina bad faith insurance

This bad faith insurance lawsuit involves a college student who took on a big insurance company and won. According to news reports, 17 year old Jerome Mitchell, Jr. was HIV positive, but did not know it until he attempted to donate blood through the Red Cross in 2002. A few months beforehand, he had applied for, and received, health insurance from Fortis as he was starting college and could no longer be on his parent’s policy.

When Fortis found out about Mitchell’s HIV status, it revoked his policy claiming that he lied on his application. He filed a lawsuit against Fortis for bad faith insurance practices. His attorney was able to prove that not only did Fortis lack any proof that Mitchell had lied, but that the entire incident was due to a clerical error. However, even after Fortis knew about the clerical error, it refused to reinstate Mitchell’s policy.

Highly reprehensible behavior

The lawsuit eventually reached the South Carolina Supreme Court which upheld a lower court decision in Mitchell’s favor. Although it reduced the lower court’s punitive damages award of $15 million to $10 million, justices called the insurer’s behavior “highly reprehensible.”

With health care costs at an all time high, insurance companies often look for ways to revoke policies that may carry more risk than they originally bargained for. This type of behavior, while reprehensible, is also illegal. Insurance is a shifting of risk in exchange for a premium. That risk may increase after the policy is in place, but revoking a policy due to that increase is bad faith and actionable.

If you’ve been denied valid insurance benefits, either through delaying tactics or an outright denial, contact an experienced bad faith insurance attorney to discuss your situation. You may be entitled to compensation and/or having your benefits reinstated.