Cancer Patient Wins $9 Million From HealthNet In Arbitration Settlement

An arbitrator called HealthNet’s practices “despicable” after awarding $9 million to a cancer patient who whose medical coverage was canceled by the company after she was diagnosed with breast cancer.

The award issued by an arbitration judge was the first of its kind and prompted Health Net to announce it was scrapping its cancellation practices that are under fire from state regulators, patients and the Los Angeles city attorney.

Arbitrator Sam Cianchetti, a retired Los Angeles County Superior Court judge, found that Health Net violated numerous state laws in canceling Patsy Bates’ policy and declared the company’s actions “despicable.”

Cianchetti also blasted the company for tying employee bonuses to the number of policies canceled and the amount of money saved.

“It’s difficult to imagine a policy more reprehensible than tying bonuses to encourage the rescission of health insurance that keeps the public well and alive,” he said in a 21-page opinion.

Ms. Bates is self-employed and transferred her coverage to HealthNet in order to get a better rate.

“Bates was contacted by Mr. Robert Torrez, who called regarding health insurance. When advised she already had health insurance, Torrez suggested he might be able to get her a better rate. An appointment was made,” reads the arbitration award.

The arbitrator found that HealthNet’s agent did not properly explain and review the forms Ms. Bates was required to sign and also changed her weight on the application without her written consent.

“When asked about her weight, she told him her weight on her driver’s license was 185lbs. She never told Torrez to change the weight, nor was she aware that the weight had been changed.”

After Ms. Bates was diagnosed with breast cancer, HealthNet rescinded her coverage because of the weight change and left her with over $100,000 in unpaid medical bills.

Health Net ordered to pay $9 million after canceling cancer patient’s policy [LATimes]
Arbitration Award (PDF) [LA Times]

Comments

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  1. Parting says:

    I just hope she will get this money soon. Not in 10 years.

  2. CumaeanSibyl says:

    Sorry to point this out, but you’ve got “Health” spelled wrong in most of the article, Meg.

  3. jaydez says:

    Mr Cianchetti just mase sure he never gets another case.

  4. ColoradoShark says:

    Looks like there is one arbitrator who won’t be getting any more business! You know, it sounds like Sam Cianchetti has a conscience and forgot to sell his sold to the devil.

  5. Darkwish says:

    Can they be sued if they don’t follow the judgement of their own binding arbitration? Hopefully it won’t come to that and she’ll get her money quickly.

  6. Coder4Life says:

    oh wow, this is a huge win for the consumer. This is what should happen each time a customer is rejected for health insurance once they have it and they try to back out.

    I also think each time this happens the executives should take pay cuts.

  7. UpsetPanda says:

    My friend Heath is going to be very annoyed he’s got to pay $9 million for this “network” he doesn’t have.

  8. RobinB says:

    As a B.C. survivor I can only say –good for her!

  9. cef21 says:

    @Darkwish: Not just sued. With that judgment, she can get a judgment entered and ask the Sheriff to garnish the insurer’s bank account.

  10. FightOnTrojans says:

    Something I found significant not mentioned above but mentioned in the article is the following quote: ‘Woodland Hills-based Health Net responded by announcing substantial changes, including a pledge that it would not cancel policyholders “in the future without first seeking approval from a binding external third-party review process.’” I nominate His Honor Cianchetti to the 3rd party reviewer. That should help him out during his retirement.

  11. solidstate42 says:

    Since the scope judicial review of arbitration awards has been interpreted by courts to be very limited, it looks like HealthNet is going to pay up.

  12. elisa says:

    I sent this in (although I might have been one of many), glad to see it’s posted!

    Especially cool b/c it came from an arbitrator, notorious for not being the friendliest to consumers…

  13. ideagirl says:

    Evidently they missed this judge when they were handing our pay-offs

  14. DrGirlfriend says:

    Awesome. Good for Mr. Cianchetti – not only did he find in the patient’s favor, but he reamed HealthNet too.

  15. dakotad555 says:

    If they fire the arbitrator for finding against them, he could then file a wrongful termination lawsuit, and win 9 million dollars for himself.

  16. azntg says:

    Good call Sam!

  17. Mike_ says:

    American Public Media’s The Story did a lengthy segment on Patsy Bates earlier this month. The complete interview is here. It was quite upsetting. I’m glad to hear she won.

  18. goodkitty says:

    Wow, there are consumer-friendly arbitrators out there? Whoever picked him is going to get FIRED.

    But seriously… tying rewards to cancellations of costly policies? That sounds fine to me… for a business. And if you look at health care as a business, there’s not a lot wrong here. They make money if you don’t use their service.

    The arbitrator’s comment about this corporation’s activities keeping the ‘well-being’ of the public is exactly the issue at hand though. Health care cannot be an economic opportunity, akin to hiring corporations to run elections and having people pay for ‘election fees’. It must be a universal right that is not a business opportunity.

    The problems are not due to these evil companies, because big corporations will always screw their customers, it’s leaving something so fundamental as our ability to continue living in the hands of such opportunistic structures that is at fault. We cannot legislate them enough, we must simply have a free health care system. I can live without cell phones, I can choose to not pay for a car, but I eventually can’t live without health care.

  19. forgottenpassword says:

    WHAT! an arbitrator that isnt in the businesses’ pocket!??!?!?!!?

  20. forgottenpassword says:

    @Darkwish:

    they probably have an extra clause that any arbitrator’s judgement (NOT in the favor of the business) has to go into arbitration with another arbitrator. lol

  21. Unnamed Source says:

    Must have been an awesome judge as well.

  22. balthisar says:

    But… “binding” arbitration means there’s no appeal.

    Are we suddenly fans of arbitration here?

  23. humphrmi says:

    It’s gotta be pretty bad when your own hand-picked arbitrators find against you for millions of dollars.

  24. ColoradoShark says:

    @balthisar: Just because a broken clock has the right time twice a day doesn’t make it good clock.

  25. Elviswasntmyhero says:

    Kudos to the retired LA County Superior Court judge who in one fell swoop both eliminated himself from further consideration as an arbitrator and became eligible for the “Ludovic-Trarieux” Prize 2008.

    [www.ludovictrarieux.org]

    Well, at least he should be.

    Again, Bravo!

  26. elvish says:

    I certainly wished she will get her money. Most likely not though. Research has shown that only 5% of all punitive damage cases get paid.

  27. cde says:

    @elvish: I searched. Found Nothing. What Research?

    And besides, this is damages awarded in BINDING arbitration. The company has no choice.

  28. Kevinber says:

    The arbiter, Sam Cianchetti, is a co-founder of an arbitration company with his brother. The arbitration company is IVAMS. It is unlikely that he will be separated from the company he and his brother founded and run.

    The company appears to be one of the early arbitration companies. Perhaps, indeed, their ethical bent needs to be rectified by the free market.

  29. brennie says:

    “Cindy Ehnes, director of the state Department of Managed Health Care, which oversees health maintenance organizations, said she was “pleased the courts are joining us, along with the public, the media, other regulators and elected officials in demanding the industry clean up its act.” “

    Wow, the overseeing authority appointed by the state has apparently been sitting around waiting for somone to do this so she can chime in that she thinks it’s bitchin’? Holy smokes, what does she do the rest of the year?

    @elvish: Still waiting on that research…..

  30. rikkus256 says:

    This arbitrator is pretty smart. He knows HealthNet is currently being heavily investigated for violating lots and lots of laws, so he is trying not to be part of the investigation.

  31. boxjockey68 says:

    Good for her, and every other person, or group that is treated unfairly or unjustly be an insurance company….these companies are getting more & more crooked by the day it seems, I would rather deal with a pushy used car salesman than these unscrupulous money hungry crooked good for nothing companies.

  32. northernplateguy says:

    @Coder4Life: how aboout pay cuts and paper cuts! That would hurt the execs!

  33. shelleyp says:

    I find it interesting that Health Net was aware of the finding before the finding was issued.

  34. sue_me says:

    @Ray J.: It is also the sentence of this court that you be taken from this courtroom to a place of execution and be caned twenty times for every customer who was wrongly denied coverage.

    25 lashes * millions of customers=caned 25+million times. Ouchie.

  35. rjhiggins says:

    Wait, nobody has found *some* reason to blame the consumer here? This could be a first!

  36. mobbo says:

    There is a special place in hell for the execs of that company… tying BONUSES to how many policies they can cancel? How can any human being play around with someone’s LIFE like that? I watched Sicko and was skeptical, but this case confirms it for me: our healthcare system is completely broken.

    Hopefully someone can answer this but:

    -Do insurance companies really have entire departments that try to find a reason to cancel your policy once you become unprofitable?

    -Can my policy be cancelled in the middle of cancer treatment or are there laws protecting that?

    This is going to sound really harsh (maybe), but I hope when those execs die an come back in another life, they get cancer and have their policies cancelled on them.

  37. cde says:

    @rjhiggins: …

    Okay, I’ll bite.

    It was her fault for getting cancer in the first place….

    Happy now? :P

  38. m4ximusprim3 says:

    @rjhiggins: 185lbs?? I’d have cancelled her policy for NOT changing her weight! Fattie!

  39. BrockBrockman says:

    Oh, so arbitration isn’t always bad? How about that.

  40. dwyer64 says:

    This woman did not deserve any award and reading these comments makes me shake my head at the place we’ve come to in this country.

    She lied about her weight and medical history on her application in order to get approved for a cheaper insurance policy she never would have qualified for if she had told the truth. Regardless of Health Net’s cancellation process (which I will readily admit looks suspect), it’s her own fault she had her policy cancelled. She lied to try to save money on her health insurance premiums, and when it caught up with her, she cried to her lawyers about the ‘evil’ insurance company.

    Shame on her, shame on the arbitrator, and shame on the people who so readily take her side, even though all these facts were printed in the LA Times and other newspapers. You want to know why health insurance is so expensive? It’s things like this. When you go to renew your policy, just remember that this woman’s $9 million will show up in YOUR premiums next year.

  41. cadet526 says:

    She lied on her application, she got canceled. I don’t see how cancer or bonuses have anything to do with it. If the person at Health Net was not paid a bonus, would she still be canceled? YES!! She lied, claimed poor and ignorant, then blamed the broker for filling out the form incorrectly. She signed the form saying it was true. If I ever get audited by the IRS, I’m going to blame my tax guy. Wonder how that will work out….