Bergonzi v Central States Health and Life Company of Omaha
Central States Health and Life Company of Omaha "Cancer and Dreaded Disease" Policyholders Agree to $20 Million Settlement
The parties have reached a $20 million settlement in an action filed against Midwestern insurance company Central States Health and Life Company of Omaha on behalf of cancer patients and their families who alleged that the company refused to pay for certain treatments allegedly covered under cancer insurance policies it sold, in violation of its contracts with the patients. Persons eligible to take part in the settlement should contact class counsel for more information.
Under the settlement agreement, Central States Health & Life Company of Omaha will pay $7.5 million to more than 1,200 cancer patients who were denied coverage under those policies. These class members are part of the monetary damages class. The agreement also calls for the establishment of a $10 million settlement fund to pay for future medical expenses of people who have cancer policies with the company. The class action potentially involves almost 15,000 people in 35 states who bought policies from the insurer, known as CSO.
CSO began selling the cancer insurance policies in 1987. The class representative, Kay Bergonzi, claimed that the company refused to pay her claims for radiation and chemotherapy after she contracted cancer and began treatment. According to Ms. Bergonzi, the company underpaid or denied cancer claims based on an "overly restrictive interpretation" of chemotherapy, radiation therapy, and surgical benefit provisions of the CSO cancer policies.
Among the practices alleged by the plaintiffs was CSO's refusal to pay for anything but the actual delivery of cancer-fighting medications. The action noted that "radiation treatment requires much more than simply standing the patient in front of a machine and flipping a switch." A number of complex steps--including treatment planning, dosage calculation, and lead blocking to protect noncancerous organs--are needed to provide safe and effective treatment. CSO allegedly implemented a policy change in 1998 to disallow coverage for everything but "treatment delivery," such as focusing the radiation beams during radiation therapy. CSO marketed its "Cancer and Dreaded Disease" policies through large employers in South Dakota and other states. The wording of the policy allegedly suggested that the coverage would pay nearly everything that major medical insurance will pay for.
In addition to the payments, the agreement establishes additional coverage under CSO's cancer policies, including a one-time $300 hematologic support benefit to cover drugs dispensed on a day when the patient did not receive a cancer therapy treatment. The company also will provide a one-time $300 anti-nausea benefit for treatment on day when neither chemotherapy nor radiation was administered, under the terms of the agreement. These one-time-only benefits will be paid only if the patients have not received such a benefit in the past.
The settlement was finalized in a hearing that was held on November 18, 2003.
