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Failing to disclose your medical history can cause you problems when you’re buying insurance, and leave you "holding the bag" on a large claim.

Recently, my TMBN colleague, Marc  Kashinsky, had an interesting comment left on a post. Briefly, the commenter had supplied inaccurate information when purchasing an individual medical plan; the plan was eventually cancelled by the carrier. To compound matters, the commenter was apparently in the middle of a large claim, and faces substantial economic loss as a result.

I’ll leave it to others to debate the merits of our system as regards such situations, and concentrate on what seemed to have occurred, and how others can avoid a similar fate.

First, a little background: HIPAA (the Health Insurance Portability and Accountability Act), comprises a number of disparate items, including what happens when one loses one's insurance, changes jobs, or even sells a life insurance policy. It does not, however, extend much protection as regards the individual medical insurance market.

HIPAA coordinates, to an extent, with another (older) piece of the pie: The Consolidated Omnibus Budget Reconciliation Act (COBRA), which also addressed some health insurance issues. Together, they act to protect workers who change employers, so that any pre-existing conditions are covered, and folks don’t easily “fall through the cracks.”

As with any such system, there are “holes,” and one must be careful in navigating them. There are also rules, and one must be careful to follow them closely.

In this case, the commenter (we’ll call him Monty), was laid off from his job, and elected COBRA continuation (which allows one to keep one's existing group cover for 18 months). Since most group plans are subsidized (the employer pays a portion of the premium), “sticker shock” at the cost of this coverage is not unusual. Monty decided, after a few months, to drop the coverage and “go naked” (without insurance), thinking (as many of us do) that he’d probably have few, if any, claims.

Eventually, he decided to buy an individual plan, and made application. His agent apparently supplied him with the wrong application, and Monty had to submit a corrected one a week or so later. Before he did so, however, he had a medical procedure, and then failed to disclose this on the (new) application. Further complicating matters was the fact that the agent apparently told Monty that he would transfer the (now incomplete) information from the old app to the new, and all would be fine. Unfortunately for Monty, his signature warranted that the information was accurate, and thus his fate was sealed.

There are a number of lessons to be learned from this sad story: first, while HIPAA is helpful when changing from group to group, it doesn’t protect us in the individual market. Carriers are free to exclude or limit coverage for pre-existing conditions, or charge an extra premium to cover them (even when we’re coming from a group plan).

Second, why we visit a provider really doesn’t matter: the fact that we did so is relevant, and must be disclosed on an application. And it’s always a good idea to review that application; had Monty done so, he might have noticed the absence of the test, and made a correction.

As an aside: it is my practice to let the insured complete the application himself, rather than filling it in for him. Of course, I’m there to answer any questions that may arise, and to make sure that nothing gets skipped.

Third, HIPAA and COBRA do work together to protect folks who have substantial medical problems, but one must be careful to follow the rules for these protections to apply. For example, had Monty kept the COBRA plan in place for the full 18 months, he would have had access to a guaranteed issue plan that would have covered his newfound condition.

Finally, it doesn’t really matter whether or not we agree with how the system works (well, of course it does, but I’m being practical here, not philosophical): if an application asks you whether or not you’ve had any medical advice lately, and you’ve just had an MRI (for example), then the answer is “yes.” Getting mad at “the system” because you failed to follow the rules may make you feel better, but it won’t solve your problem(s).

Be well!

Henry Stern, LUTCF is an independent insurance agent in Dayton, OH. A licensed Continuing Education instructor for Ohio and Kentucky, he has well over 20 years of experience in “the biz.”  He blogs every day (or so it seems) at InsureBlog.

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from InsureBlog on Sun, 11/12/2006 - 11:56am

In this week's column, we look at how failing to disclose your medical history can cause problems when buying insurance. You could wind up with a big loss on a large claim.

Comments (7)

Submitted by sbd (not verified) on Fri, 11/17/2006 - 4:40am.

It's Monty here!!  Thanks for trying to help me to remain anonymous but at this point, I have nothing to hide and the jury will decide this issue at some point, soon I hope.

I do want to thank you for giving me a different perspective on my situation.  I appologize if I was abrupt before, but if you read my linked Complaint at the end of this post, I am sure you will understand why.

Here are a few more things to consider.

The fact that I started the enrollment process in November and finished in January proves that I was not in a hurry to get coverage because I needed to defraud an insurer.  Also, the only reason I had that scan on January 13 was because no one else would book that day because it was Friday the 13th.  It was either that day or wait 2 months for the next available date.  Since I had been trying to get my dad to have the scan for 6 months, I figured the quicker the better.  If I would have been superstitious, I would have saved myself a lot of grief it seems.

When I had the scan on the 13th, I had no symptoms and it was not done for any medical reason whatsoever.  I did not have the results of this scan on the 18th and did not schedule a follow up consultation to go over the results.

When I was told by phone on February 3 that I had a tumor, I did not hide the results of this scan from my doctors.  As a matter of fact, when I met with my PCP I gave him both a paper copy of the report as well as a CD that contained a 3-D holographic fly through video of the entire scan.

When I was referred to the Urologist, I also provided him with both a written report and the CD images as well.  The doctor who gave me the second opinion was also given the written report and the CD.  When I met with the Oncologist, he was also made aware of the scan that found the tumor, so there was no intent here to decieve which California Law requires.

Every doctor I had seen within the plan had a written report and CD images of my scan and all of them knew that my coverage started on February 1, 2006 as each had to verify coverage for a new patient. 

Even with the written report and CD images, the Urologist and my PCP ordered an additional MRI to confirm diagnosis as well.

I think that if you knew the entire hell I have gone through, maybe you might think different.  My lawsuit was filed yesterday against UnitedHealth and Pacificare.  The complaint explains the situation and provides more detail on my entire saga with this HMO.

You can read it here.


Submitted by hgstern on Fri, 11/17/2006 - 2:29pm.

your plea for understanding isn't going to get you very far:

"I didn't mean to speed, officer; actually, it's someone else's car, and I'm not even in a hurry."

Think that'll get me out of a ticket?

Submitted by sbd (not verified) on Sun, 11/19/2006 - 2:40am.

1389.3.  No health care service plan shall engage in the practice of postclaims underwriting.  For purposes of this section, "postclaims underwriting" means the rescinding, canceling, or limiting of a plan contract due to the plan's failure to complete medical underwriting and resolve all reasonable questions arising from written information submitted on or with an application before issuing the plan contract.  This section shall not limit a plan's remedies upon a showing of willful misrepresentation.

If an applicant for insurance has no present knowledge of the facts sought, or fails to appreciate the significance of information related to him, his incorrect or incomplete responses will not constitute grounds for rescission. Moreover, questions concerning illness or disease do not relate to minor indispositions, but are to be construed as referring to serious ailments which undermine the general health. 

JEFFERSON STANDARD LIFE INSURANCE COMPANY, Plaintiff and Appellant, v. RAY DRAPER ANDERSON, Defendant and Respondent

Civ. No. 7612

Court of Appeal of California, Fourth Appellate District

The partner made the application for insurance on the life of his business partner, the insured. The insurance company sought recission of the policy following the insured's death on the ground of false misrepresentation. The trial court entered judgment in favor of the partner. On appeal, the court held that even assuming that the insured was suffering from an ailment or disease at the time he answered the questions in the application, he had no knowledge thereof and that it was not a ground for the insurance company's avoidance of the policy. The court held that the evidence adequately supported the trial court's finding that the insured's failure to list the examination given him at a clinic used for business publicity purposes was not a cause for his consulting a doctor and did not constitute a false representation. The court held that the insured's negative answer to the question whether he had been a patient in a hospital was not false and affirmed the judgment from the trial court.

Among other things, the trial court found: "That it is not true the decedent Coltrain made any false representation as to his physical condition which would affect his insurability and concerning which any question was asked in the application for insurance."

The foregoing finding disposes of plaintiff's contention based on the allegation in its complaint that Coltrain falsely represented that he never had suffered from or been suspected of having any ailment or disease of the heart or chest. Even assuming Coltrain was suffering from such an ailment or disease at the time he answered the questions in the application he had no knowledge thereof. Where an applicant for insurance is asked whether he has suffered from or been suspected of having a specific ailment, his answer in the negative, although contrary to the fact, if the result of ignorance and made in good faith is not a ground for avoidance of the policy. ( Cohen v. Penn Mut. Life Ins. Co., 48 Cal.2d 720, 726 [312 P.2d 241]; Telford v. New York Life Ins. Co., 9 Cal.2d 103, 106 [69 P.2d 835]; Travelers Ins. Co. v. Byers, 123 Cal.App. 473, 481 [11 P.2d 444].)

Likewise, by this inquiry Coltrain was not asked to disclose that he had been examined by a doctor at Scripps Clinic. He did not seek the examination to ascertain the cause of any "Ailment, Disease or Injury" and, thus, did not "consult a doctor" in the clinic for this purpose. The evidence adequately supports the court's finding that Coltrain's failure to list the examination given him at Scripps Clinic was not a "cause" for his consulting a doctor and did not constitute a false representation.


METROPOLITAN LIFE INSURANCE COMPANY, Plaintiff and Appellant, v. JOSEPHINE DEVORE, Individually and as Administratrix, etc., Defendant and Respondent. JOSEPHINE DEVORE, Plaintiff and Respondent, v. METROPOLITAN LIFE INSURANCE COMPANY, Defendant and Appellant. (Consolidated Cases)

L. A. No. 27982

Supreme Court of California

Prior to his death, the insured signed an amended insurance application about one month after the initial application, which amendment provided that the insured "confirmed the statements therein made as of the date hereof." The insurer contended that the statement referred to the date of the amendment, and not the date of the initial application, thus making the insured's answers fraudulent. The court held that the date provision was ambiguous, and in view of the rule that ambiguities must be interpreted against the insurer, the insured could have reasonably understood that he was confirming the answers in his original application. The court held that the rule that a representation was presumed to be made at the completion of the insurance contract, was a rebuttable presumption. The court found that the presumption was properly rebutted by findings that the representations were referable to an earlier time. The court held that the insurer could not rely on the "good health" provision of its conditional insurability because the insured reasonably believed he was in good health at the effective date of the policy and his doctor had not informed him of his new illness.

(Huey P. Savage v. Louisiana Health Service & Indemnity Co. d/b/a/ Blue Cross/Blue Shield of Louisiana, No. 33,853-CA, La. App., 2nd Cir.).

The Fifth District Court for the Parish of West Carroll, La., found that BCBS had not attached Savage's policy application to his policy and said that the application therefore was not admissible to prove a material misrepresentation. The trial court also found no pre-existing condition and that the health insurer was therefore liable for treatment expenses. Finally, the trial court awarded attorney fees for both actions.


Submitted by hgstern on Sun, 11/19/2006 - 11:49am.

You deliberately omitted salient facts (VERY recent medical exam) when you made application.

Looks like "willful misrepresentation" to me.

Guess we'll have to see how the court looks at it.

Good luck!

Submitted by SBD (not verified) on Sun, 11/19/2006 - 10:17pm.

Where do you get off by saying that I deliberately "omitted a salient fact" when I answered the questions on January 10.  That application needed to be resubmitted due to it being a 2005 app rather than a 2006 app and for no other reason.  The scan on January 13 was not for an "ailment, disease, etc.".

Just because you can't admit you are wrong does not give you the right to say that I deliberately omitted a salient fact.  You are not in a position to play judge over my honesty or integrity and are quite frankly rude and lacking factual basis in your belief.  Your behavior of attacking someone on your blog is probably the reason no one actually posts comments on this blog.

I just gave you court decisions that prove you are wrong and instead of acknowleding them, you respond by calling me a liar.  Good job, I hope the Medical Blog Network doesn't condone your behavior.


Submitted by hippocrates on Sun, 11/19/2006 - 11:16pm.

I must weigh in, since I got a message from SBD asking "that this blogger [Hank] apologize for his behavior or be removed from network [for calling me a liar]".

This request is very disturbing. I did not see anything on this thread rising to the level of personal attack. What I see is dispute of facts, conclusions and who to believe, which is reasonable. There is certainly no cause to get anyone kicked out. Bloggers and commenters have their own opinions and the Network is not endorsing any of them, unless explicitly stated.

SBD - I suggest you cool down and use this discussion to help prepare for your case. I bet the defense counsel will be tougher.

Hank - I would leave it up to you to explain what you meant and address SBD's concerns about questioning integrity.

Submitted by hgstern on Mon, 11/20/2006 - 6:05am.

It's really quite simple: According to the facts he posted, SBD (an unfortunate moniker, BTW) underwent a medical procedure (body scan) on January 13th. On January 18th, he submitted an application for health insurance, but neglected to disclose this. The insurance company relied on the application when it agreed to issue coverage.

Why he underwent the scan may have been relevant at the time of application; we'll never know. As it stands, when he submitted the application on the 18th, he misrepresented his health history. Case closed.

You'll notice that I make no reference above to the initial app (on the 10th); this is because that one is irrelevant. That is, the company only saw the app dated 1/18, and thus it became the one on which approval was based. Everything else is just static.

When one completes and submits an application for insurance, one warrants that the information is accurate to the best of one's knowledge. No one is disputing whether or not SBD knew of his tragic condition, but it is obvious that he deliberately withheld the fact that he'd recently had a procedure (having undergone it less than a week before).

Seems pretty clear cut to me.

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