SUPERIOR COURT FOR THE STATE OF CALIFORNIA

Transcription

1 CLAREMONT, CALIFORNIA - TELEPHONE (0) - WILLIAM M. SHERNOFF # EVANGELINE FISHER GROSSMAN #0 JOEL A. COHEN # SHERNOFF BIDART & DARRAS, LLP 00 South Indian Hill Boulevard Claremont, CA Telephone: (0) - Facsimile: (0) - Attorneys for Plaintiffs SUPERIOR COURT FOR THE STATE OF CALIFORNIA AUGUSTINE SIMOES, an individual; ANA SIMOES, an individual, vs. Plaintiffs, CALIFORNIA PHYSICIANS SERVICE dba BLUE SHIELD OF CALIFORNIA, a California corporation; and DOES through 0 inclusive, Defendants. FOR THE COUNTY OF SAN BERNARDINO Case No.: COMPLAINT. Breach of Contract. Breach of Duty of Good Faith and Fair Dealing. Declaratory relief. Violation of Business & Professions Code 0 et seq. DEMAND FOR JURY TRIAL I. INTRODUCTION. This action arises from the defendants illegal and unfair scheme of rescinding individual health plan contracts in response to claims made by plan members.. Plaintiffs are informed and believe and thereon allege that the defendants have a custom and practice of improperly rescinding plans. As a result, the defendants have reaped substantial profits by failing to pay benefits. Plan members have suffered substantial, sometimes --

2 CLAREMONT, CALIFORNIA - TELEPHONE (0) - crushing, financial burdens because their medical providers seek to collect payment directly from them. The defendants practice is particularly reprehensible because it deprives plan members of their health coverage at precisely the moment they need it and subjects them to emotional and financial distress at precisely the time when they are most vulnerable.. Plaintiffs are victims of the foregoing scheme. Mrs. Simoes underwent surgery to remove her gallbladder and defendants authorized the procedure. The defendants conducted post-claims underwriting. The defendants purported to find material omissions in plaintiffs application, purported to rescind the contract and refused to pay Mrs. Simoes medical providers. As a result, plaintiffs providers sought, and continue to seek, payment from plaintiffs.. The purported rescission of plaintiffs plan is void and the post-claims underwriting conducted by the defendants violates California law and constitutes an unfair business practice: a. There was no statutory authorization for the rescission; b. The defendants were obligated to pay Mrs. Simoes medical providers who rendered services and treatment to Mrs. Simoes in good faith after it was authorized by the defendants (Health & Safety Code [ H.&S. C. ].); and c. The defendants were prohibited from engaging in post-claims underwriting (H.&S. C..). d. The Medical History questionnaire contained in defendants form application is designed to trap innocent persons into making misstatements and omissions in their answers in order to justify rescissions. The Medical History questionnaire is unfair in that it is confusing, overbroad, ambiguous and in effect unintelligible to persons of ordinary intelligence. Further, the Medical History questionnaire is unfair in that it provides only for unqualified yes or no answers, and fails to provide for responses in circumstances where a person might not recall past events or fully understand the import of the question and the consequences of the answer.. As more fully alleged below, plaintiffs are informed and believe and thereon allege that the defendants have a custom and practice of rescinding plan contracts without --

3 CLAREMONT, CALIFORNIA - TELEPHONE (0) - statutory authorization, in violation of the foregoing statutes, and that the defendants illegal and unfair conduct is ongoing. In this action, plaintiffs seek damages for breach of contract and bad faith, a judicial declaration as to the defendants obligation to pay claims under the agreements in question, and an injunction prohibiting the defendants from continuing their illegal and unfair conduct. California. II. THE PARTIES. Plaintiffs are residents of the city of Ontario, County of San Bernardino, State of. Defendant California Physicians Service dba Blue Shield of California ( Blue Shield ) is a corporation duly organized and existing under the laws of California and authorized to transact and transacting the business of insurance in this state.. The true names or capacities, whether individual, corporate, associate, or otherwise, of defendants DOES through 0, are unknown to plaintiffs, who therefore designate those defendants by their fictitious names. Each of the defendants sued herein as a DOE is legally responsible in some manner for the events and happenings referred to, and legally caused the injuries and damages suffered by plaintiffs. Plaintiffs will amend this complaint to allege their true names and capacities when the same becomes known to plaintiffs.. Plaintiffs are informed and believe and thereon allege that at all relevant times, each of the defendants was the agent and employee of each of the remaining defendants, and in doing the things hereinafter alleged was acting within the course and scope of such agency and employment. III. JURISDICTION AND VENUE. The damages sustained by plaintiffs exceed the jurisdictional minimum of this court. --

4 CLAREMONT, CALIFORNIA - TELEPHONE (0) - IV. FACTUAL BACKGROUND. Plaintiffs applied for individual health care coverage with Blue Shield on December, 0. Plaintiffs, who have a limited understanding of English, completed their application with the assistance and under the direction of an authorized Blue Shield agent. The agent read the questions on the application aloud to plaintiffs.. Blue Shield approved plaintiffs for coverage under the PPO Savings Plan 00 (ID No. J0), effective January, 0.. On August, 0, Mrs. Simoes underwent surgery to remove her gallbladder at San Antonio Community Hospital ( San Antonio ). She was released from the hospital on the same day. The next day, on August, Mrs. Simoes was hospitalized and received treatment for a collapsed lung, the result of an infection from the previous day s surgery. Blue Shield preauthorized all procedures and hospitalizations.. San Antonio and other providers submitted claims to Blue Shield. Thereafter, Blue Shield notified plaintiffs it was reviewing the claims and obtaining information about plaintiffs medical history.. In a letter dated September, 0, Blue Shield purported to rescind plaintiffs Agreement on the ground that Mr. Simoes failed to disclose on the application a history of hypercholesterolemia; abnormal laboratory results indicating elevated blood glucose levels, elevated cholesterol levels, and abnormal/elevated SGPT (liver function); an abnormal chest x- ray indicating mild tortuosity of the thoracic aorta; and treatment with medication Lipitor. Blue Shield contended the foregoing information was material to its approval of coverage and that it would not have insured plaintiffs if it had been aware of the information. In fact, Mr. Simoes was aware of neither the abnormal chest x-ray, nor the diagnosis for abnormal/elevated SGPT. In addition, based on his conversation with the Blue Shield agent and given his limited English comprehension, Mr. Simoes did not understand that, by using the phrase abnormal blood work in question #, Blue Shield was asking him to disclose information about his slightly elevated glucose or cholesterol levels. Also, Mr. Simoes indisputably disclosed --

5 CLAREMONT, CALIFORNIA - TELEPHONE (0) - on the Application his physician s contact information and he provided Blue Shield with an Authorization for Release of Protected Health Information which defendant could have used to underwrite the policy. Blue Shield chose not to underwrite plaintiffs Application before issuing coverage for plaintiffs.. Plaintiffs are informed and believe and thereon allege that the purported rescission of their Agreement was a result of a post-claims underwriting investigation conducted by the defendants. Plaintiffs are informed and believe and thereon allege that Blue Shield s investigation was nothing more than a fishing expedition to justify a rescission of plaintiffs Agreement. Further, plaintiffs did not fully understand the meaning of questions on Blue Shield s exceedingly confusing, overbroad, ambiguous and unintelligible Medical History questionnaire or appreciate the consequences of their answers to such questions.. As a result of its purported rescission of plaintiffs Agreement, Blue Shield refused to pay claims submitted by San Antonio and other medical providers who rendered services and treatment to Mrs. Simoes in good faith pursuant to Blue Shield s authorization of such treatment. The total amount charged by Mrs. Simoes providers was approximately $0,000. Blue Shield also demanded repayment of $ in claims it had paid.. Blue Shield s purported rescission was undertaken without any statutory authorization and is therefore void.. Blue Shield s post-claims underwriting of plaintiffs file further violated H.&S. C. section., which prohibits post-claims underwriting, but without limiting a plan s remedies upon a showing of willful misrepresentation.. Mrs. Simoes was the express intended beneficiary of Blue Shield s authorization of treatments performed by San Antonio and other providers. Blue Shield s refusal to pay San Antonio and other providers violated H.&S. C. section., which prohibits a health care service plan from rescinding or modifying its authorization of services or treatment after the provider renders such service or treatment in good faith pursuant to the authorization. As a result --

6 CLAREMONT, CALIFORNIA - TELEPHONE (0) - of Blue Shield s refusal to pay, San Antonio other providers have billed plaintiffs directly for the services. FIRST CAUSE OF ACTION FOR BREACH OF CONTRACT (Against all Defendants). Plaintiffs refer to paragraphs through, inclusive, and incorporate those paragraphs as though set forth in full in this cause of action.. Plaintiffs paid all premiums due and performed all of their obligations under the Agreement.. Blue Shield s purported rescission of the Agreement constitutes a breach of contract in that Blue Shield failed to pay benefits owed under the Agreement.. As a proximate result of Blue Shield s breach of contract, plaintiffs have suffered general and consequential damages under the Agreement in an amount to be determined according to proof at the time of trial, plus interest. SECOND CAUSE OF ACTION FOR BREACH OF THE DUTY OF GOOD FAITH AND FAIR DEALING (Against all Defendants). Plaintiffs refer to paragraphs through, inclusive, and incorporate those paragraphs as though set forth in full in this cause of action.. Blue Shield has breached the duty of good faith and fair dealing owed to plaintiffs in the following respects: a. Unreasonably and in bad faith refusing to pay benefits owed under the Agreement. b. Unreasonably and in bad faith purporting to rescind plaintiffs Agreement without statutory authority for such rescission; c. Unreasonably and in bad faith conducting post-claims underwriting in violation of H.&S. C. section.; --

7 CLAREMONT, CALIFORNIA - TELEPHONE (0) - d. Unreasonably and in bad faith refusing to pay benefits to Mrs. Simoes medical providers for services and treatments rendered in violation of H.&S. C. section.; and e. Proximately causing Mrs. Simoes medical providers to bill plaintiffs directly for services and treatment that Blue Shield was obligated to pay for as result of its authorization of such services treatment.. Plaintiffs are informed and believe and thereon allege that Blue Shield has breached its duty of good faith and fair dealing owed to plaintiffs by other acts or omissions of which plaintiffs are presently unaware and which will be shown at the time of trial.. As a proximate result of the aforementioned unreasonable and bad faith conduct of Blue Shield, plaintiffs have suffered, and will continue to suffer in the future, physical injury, pain and suffering, mental and emotional distress and medical expenses in an amount to be proven at trial, plus interest.. As a further and proximate result of the unreasonable and bad faith conduct of Blue Shield, plaintiffs were compelled to retain legal counsel and to institute litigation to obtain the benefits due under the Policy. Therefore, Blue Shield is liable for those attorneys fees reasonably incurred in order to obtain their benefits under the Agreement. 0. Blue Shield s conduct as described herein was despicable and was committed maliciously, fraudulently and oppressively with the wrongful intention of injuring plaintiffs and with a willful and conscious disregard of the rights of plaintiffs. Blue Shield subjected plaintiffs to cruel and unjust hardship, and via intentional misrepresentation, deceit, or concealment of material facts, Blue Shield intended to deprive plaintiffs of property or legal rights all to the detriment of plaintiffs and to the financial benefit of Blue Shield. Accordingly, plaintiffs are entitled to recover exemplary and punitive damages under Civil Code section, in an amount according to proof, in order to punish and to make an example of Blue Shield, and to deter such conduct in the future.. Blue Shield s conduct described herein was undertaken by Blue Shield s officers, directors and managing agents, who were responsible for corporate policies, medical --

8 CLAREMONT, CALIFORNIA - TELEPHONE (0) - underwriting, claims supervision and operational decisions. The previously described conduct of said officers, directors and managing agents was therefore undertaken on behalf of the corporate defendant. Said corporate defendant further had advance knowledge of the actions and conduct of other employees, including but not limited to, underwriters and claims adjusters, whose actions and conduct were ratified, authorized, and approved by the corporate defendant.. Blue Shield s conduct is particularly reprehensible because it was part of a repeated corporate practice and not an isolated occurrence. Plaintiffs are informed and believe and thereon allege that Blue Shield has engaged in similar wrongful conduct as to individuals other than plaintiffs and that Blue Shield has substantially increased its profits as a result of causing similar harm to others. THIRD CAUSE OF ACTION FOR DECLARATORY RELIEF (Against all Defendants). Plaintiffs refer to paragraphs through, inclusive, and incorporate those paragraphs as though set forth in full in this cause of action.. Plaintiffs are a party to the Agreement with Blue Shield. Mrs. Simoes also is the third party beneficiary of Blue Shield s authorization for providers to render services and treatment to her. Mrs. Simoes obtained services and treatment with the justified expectation that her medical bills would be covered by Blue Shield, under the terms of her Agreement and pursuant to Blue Shield s authorization to providers. Mrs. Simoes providers treated her in good faith after Blue Shield authorized such treatments. The law prohibited Blue Shield from reneging on its authorization and refusing to pay the providers.. Under Code of Civil Procedure section 0, plaintiffs have an interest in their Agreement and Mrs. Simoes has an interest in Blue Shield s authorization to providers to render treatment on her behalf. A present and actual controversy between plaintiffs and Blue Shield exists in that Blue Shield s refusal to pay providers has caused providers to bill plaintiffs directly. As a result, plaintiffs are subject to collection efforts and possible lawsuits. Such actual --

9 CLAREMONT, CALIFORNIA - TELEPHONE (0) - and imminent events have caused, and will continue to cause, great harm to plaintiffs credit, economic well-being and emotional well-being.. Plaintiffs request a declaration from this Court that Blue Shield has an obligation to pay all of the claims submitted by providers who rendered services and treatment to Mrs. Simoes in good faith after Blue Shield authorized such treatment. Plaintiffs further request a declaration that they are not liable to providers for any sums that are the responsibility of Blue Shield. FOURTH CAUSE OF ACTION FOR VIOLATION OF BUSINESS & PROFESSIONS CODE SECTION 0 et seq. (Against all Defendants). Plaintiffs refer to paragraphs through, inclusive, and incorporate those paragraphs as though set forth in full in this cause of action.. Blue Shield s conduct as described herein constitutes unfair competition under Business & Professions Code section 0. As more fully alleged above, that conduct includes the following unlawful, fraudulent or unfair business acts or practices: a. Utilizing a Medical History questionnaire that is unfair as alleged above; b. Purporting to rescind policies in the absence of statutory authorization for such rescission; c. Engaging in post-claims underwriting in violation of H.&S. C. section.; d. Rescinding or modifying authorizations for services and treatments in violation of H.&S. C. section.; e. Inducing Mrs. Simoes to obtain medical services and treatment, and inducing providers to perform services and give treatment, based on authorizations that were rescinded in violation of H.&S. C. section.; f. Causing plaintiffs to be subjected to billing and collection efforts, and possible lawsuits, by providers who were not paid by Blue Shield. --

10 CLAREMONT, CALIFORNIA - TELEPHONE (0) -. Plaintiffs ha[ve] suffered injury in fact and has lost money or property as a result of [Blue Shield s] unfair competition. (Business & Professions Code [ B.&P. ].) Plaintiffs can compl[y] with Section of the Code of Civil Procedure. (B.&P..) 0. Plaintiffs are informed and believe and thereon allege that the unlawful, fraudulent or unfair conduct alleged above is continuing in nature and reflects widespread acts or practices engaged in by Blue Shield.. Plaintiffs request that this Court issue an injunction prohibiting Blue Shield from: a. Utilizing a Medical History questionnaire that is unfair as alleged above; b. Purporting to rescind policies in the absence of statutory authorization for such rescissions; c. Engaging in post-claims underwriting in violation of H.&S. C. section.; and d. Rescinding or modifying authorizations for services or treatments in violation of H.&S. C. section... Plaintiffs respectfully request an award of attorney s fees under Code of Civil procedure section.. WHEREFORE, plaintiffs pray for judgment as follows:. For general and consequential damages according to proof, plus prejudgment interest, for breach of contract;. For general and consequential damages, including physical injury, pain and suffering, mental and emotional distress and medical expenses plus prejudgment interest, for breach of the implied covenant of good faith and fair dealing;. For punitive and exemplary damages;. For a declaration of the rights and obligations of the parties under the written agreements in question;. For attorneys fees incurred to recover benefits under the policy; For injunctive relief under Business & Professions Code section 0; --

11 . For attorneys fees under Code of Civil Procedure section.;. For costs of suit incurred herein; and. For such other and further relief as the Court deems just and proper. DATED: July, 0 SHERNOFF BIDART & DARRAS LLP WILLIAM M. SHERNOFF JOEL A. COHEN EVANGELINE FISHER GROSSMAN Attorney for Plaintiffs THE LAW OFFICES OF CLAREMONT, CALIFORNIA - TELEPHONE (0) - DEMAND FOR JURY TRIAL Plaintiffs hereby demand a jury trial on all causes of action that are triable to a jury. DATED: July, 0 SHERNOFF BIDART & DARRAS LLP WILLIAM M. SHERNOFF JOEL A. COHEN EVANGELINE FISHER GROSSMAN Attorney for Plaintiff --

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