Written by AMLO.

MFTL wins judgment against Fortis Insurance Company

Client v. Fortis Insurance Company

Clark Circuit Court

Larry and Karen purchased an individual health insurance policy with Fortis Insurance Company. Months later, Karen required emergency surgery. Instead of paying the bills, Fortis engaged in "post-claim underwriting." In other words, Fortis ordered her medical records and then "voided" the entire insurance policy after the fact. Fortis claim they would not have insured Karen if they had known that she had a certain condition (which is present is approximately 60% of women) and usually requires no medical treatment.

MFTL argued successfully that health insurance policies are different than other policies - that Fortis cannot void its health insurance policies unless there was an intentional misrepresentation in the application. An older statute, KRS 304.14 - 110 was relied upon by Fortis. This was applicable to all insurance policies and allowed insurance companies to void coverage even if the misrepresentation made in the application was innocent. However, the legislature had later enacted a different statute, KRS 304.1780 - 240, which applied only to health insurance policies. It provides that a health insurance carrier must continue coverage unless there is an intentional misrepresentation.

The Clark Circuit Court agreed with MFTL and provided that the policy cannot be terminated and the bills must be paid unless Fortis could prove an intentional misrepresentation of material facts.

How does this affect people in Kentucky??

This decision is very important. It prevents health insurance companies from taking premiums, and the waiting until a claim is filed before they do their underwriting (assessing the risk) and using some vague answer to a question on the application to avoid claims. At that point the policyholder cannot shop around and get another policy, like they could if the company fulfilled its underwriting obligation up front. Many times the questions on an application are vaguely worded so that you will innocently omit something about your health- for instance, "Do you now or have you ever been treated, diagnosed, or told you should see a doctor for .(k) cancer, mental, skin or breast disorder?" Even doctors do not agree on what is a disorder.