You Be the Judge: Pre-existing Conditions

When Jennifer Latham was severely injured in a car accident, her health insurance company threatened to rescind her policy. Find out how the court ruled in this issue's "You Be the Judge."

health insurance form showing unsuccessful medical application

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On October 23, 2005, Jennifer Latham and her husband Alex were severely injured when a meth dealer, fleeing police in Longmont, Colorado, ran a stop sign and broadsided their car. Jennifer suffered shattered legs, head trauma, and internal injuries.

Two months after the accident, Jennifer received a letter from her health insurance company, Assurant Health, stating her policy was being rescinded because she failed to disclose pertinent history on her application, including a 2004 emergency room visit for shortness of breath, which after an EKG and examination doctors blamed on anxiety. Also mentioned was a visit to a clinic for pelvic discomfort followed by a discussion about uterine prolapse, a condition that was not diagnosed and already excluded from her policy.

According to the letter, Jennifer had 15 days to return a consent form removing herself from coverage, or Assurant would revoke health coverage for her children, too. (In Colorado, there are only two ways to legally rescind a health insurance policy: via a court order or consent of a policyholder.) Despite receiving a letter from Jennifer’s lawyer requesting more time and information, Assurant terminated the policy and refunded Jennifer’s premiums with no appeal.

Jennifer sued Assurant for bad faith breach of contract, claiming it wrongfully denied her benefits under the policy. At trial, Assurant explained its underwriting policies were standard in the industry and designed to make insurance as affordable as possible. Assurant maintained applicants must disclose pertinent medical history, and said if it had known Jennifer suffered shortness of breath, her application would not have been accepted. Assurant also pointed out that Jennifer’s medical bills had already been paid by auto insurance policies. Jennifer’s attorney informed the jury that because of Assurant’s wrongful determination, Jennifer and her children might never be able to get health insurance again. He blasted the company for playing a game of “gotcha” with Jennifer’s life, warning, “They can take away anybody’s claim.”

The Decision:

The jury decided that Assurant breached its contract with Jennifer Latham and owed her: $183,551 for medical bills; $7.3 million for emotional distress; $2 million for economic damages resulting from bad faith; plus additional sums for her children’s future medical expenses, economic damages, noneconomic damages—all told, the package of punitive and compensatory damages totaled $37.3 million.

—Latham v. Assurant Health, 2010

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