A high-profile California insurance bad faith lawsuit brought by Gillen Washington and his attorney Scott Glovsky against his health insurance company, Aetna, has now been settled.  In this case, first reported on by CNN, evidence emerged in the form of the Aetna-in house doctor’s testimony that Aetna medical directors make decisions on policyholders’ claims without first reading the medical records submitted to Aetna by policyholders and their doctors.  When the California Department of Insurance learned of this evidence, it launched an investigation into Aetna’s claim handling practices in that state. Several other Departments of Insurance in other states followed suit and began investigating Aetna’s practices as well.

In response, Aetna took an aggressive stance.  It issued a press release in which it alleged a “gross misrepresentation” of the evidence in Mr. Washington’s case.  Aetna pointed to a statement issued by the Aetna in-house doctor and claimed, among other things, his deposition testimony had been taken out of context.  Further, with regard to Mr. Washington’s case, Aetna stated in its press release:  “Our policies always have our members’ best interests in mind.  When those policies are called into question, we will defend them.”

However, as CNN reported last week, Aetna has now settled Mr. Washington’s case, choosing to do so instead of defending its policies when they had been called into question.  Aetna did not offer an explanation as to why it had settled the Washington case, instead saying the settlement was not an admission of liability and Aetna does not comment on settlements.  The CNN story went on to say:

News of the settlement raised eyebrows in the legal community. “In my experience with Aetna, they don’t settle cases easily, despite their public pronouncements in the media,” said Doug Terry, an Oklahoma attorney who won a $25 million verdict against Aetna last fall over a “bad faith” case in which a cancer patient was denied coverage.

Hopefully, health insurance companies have learned from Aetna’s experience in Mr. Washington’s case in California that deciding the health insurance claims of its policyholders without doing the proper inquiry before denying them is a practice to be abolished.  A proper inquiry requires a careful review by well-qualified, well-trained, non-biased personnel of all the pertinent evidence gathered in a complete investigation of the facts.  If health insurance companies are not performing these basic claim-handling functions (in return for their policyholders’ hard-earned premium dollars) they should be held accountable, either by regulators or in court.