Insurance and health law developments early autumn 2011, with fresh pressed cider and cinnamon

Abuse & Neglect: NEGLECT FINDING REQUIRES PROOF OF MENTAL STATE, DELAWARE SUPREME COURT FINDS, Dep't of Health & Social Servs. v. Jain, The Delaware Supreme Court has ruled in an issue of first impression that a psychiatric nurse cannot be put on the state's adult-abuse registry without proof that she knowingly or recklessly neglected a patient. The high court said a hearing officer at the Delaware Department of Health and Social Services improperly put Madhu Jain on the registry upon finding she acted negligently or carelessly.

Bad Faith: DAMAGE CAUSED BY METH LAB ISN'T COVERED, OKLAHOMA FEDERAL JUDGE SAYS, State Farm v. Groff, State Farm did not act in bad faith when it invoked a contamination exclusion and denied coverage for damage to a rental house caused by an on-premises methamphetamine lab, an Oklahoma federal judge has ruled. U.S. Magistrate Judge Steven P. Shreder of the Eastern District of Oklahoma said the policy specifically excluded coverage for contamination, which applied to damage to the dwelling caused by methamphetamine fumes.

Bad Faith: DELAYED SETTLEMENT NOT BAD FAITH; SEVERITY OF INJURY WAS UNKNOWN, Machalette v. Southern-Owners Ins., An insurance carrier did not act in bad faith when it failed to offer a settlement to a car crash victim until it received completed interrogatories that detailed the extent of his injuries, a Florida federal judge has ruled. Prior to viewing the discovery responses, the insurance carrier had no knowledge that the injuries were so severe that an excess judgment was likely, U.S. District Judge James S. Moody Jr. of the Middle District of Florida said.

Bad Faith: DENIAL OF COVERAGE FOR 'VALLEY FEVER' ISN'T BAD FAITH, Brown v. Farmers Group, An insurance carrier did not act in bad faith when it denied coverage based on policy exclusions to an insured who contracted "chronic valley fever" after being exposed to dust in her home, a California appeals court has ruled. The 1st District Court of Appeal determined that the insurance policy unambiguously excluded coverage for various causes of loss, including the fungi that caused the disease, which negated the bad-faith claim.

Electronic Payments: NATIONWIDE MUT. INS. DELAYED ONLINE PAYMENTS TO COLLECT LATE FEES, CLASS ACTION ALLEGES, Rega v. Nationwide Mut. Ins. Co., An automobile policyholder has filed a class-action lawsuit alleging Nationwide Mutual Insurance Co. unreasonably delayed processing premiums paid online so it could collect unwarranted late fees. Peter Rega, a Nationwide policyholder from 2009 to 2010, filed the class- action complaint in the U.S. District Court for the Northern District of Ohio on behalf of himself and others who vehicles the company insured.

Federal Insurance - Health - Federal Regulations

DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare and Medicaid 42 CFR Part 411 Exclusions From Medicare and Limitations on Medicare Payment Final Rule

76 FR 60378-01

Health Care: INSURER REIMBURSED $1,600 FOR $56,000 WEIGHT-LOSS SURGERY; 10TH CIRCUIT ASKS HOW, Weight Loss Healthcare Ctrs. of Am. v. Office of Pers. Mgmt., The Office of Personnel Management needs to know the underlying data an insurer used to calculate its $1,610 reimbursement to an out-of-network provider for a government employee's $56,000 outpatient weight-loss surgery, a federal appeals court has ruled. The 10th U.S. Circuit Court of Appeals rejected the provider's argument that OPM incorrectly interpreted the employee's health plan with Blue Cross Blue Shield of Kansas.

 Insurance Coverage--Intellectual Property: NO COVERAGE FOR QUILTER'S $600,000 VOLUNTARY IP SETTLEMENT, Sunham Home Fashions v. Diamond State Ins. Co., 21 No. 51 Westlaw Journal Insurance Coverage 5, Westlaw Journal Insurance Coverage September 30, 2011

Two insurers had no duty to reimburse their policyholder when it voluntarily settled an intellectual property dispute without their consent, a New York federal judge has ruled. U.S. District Judge Denise Cote of the Southern District of New York disregarded Sunham Home Fashions' argument that Diamond State Insurance Co.'s excess policy covered the underlying lawsuit's copyright allegations as an advertising injury.

Lap-Band: LAP-BAND SURGERY MARKETERS SUED OVER CALIFORNIA WOMAN'S DEATH, Brown v. 1-800-GET-THIN, Relatives of a California woman who died three days after undergoing Lap-Band weight loss surgery have sued the advertising company they say enticed the woman with false and misleading representations to undergo the procedure.

Legislation: SENATE BILL CALLS FOR VERBAL PRESCRIPTIONS AT NURSING HOMES, U.S. Sen. Herb Kohl has introduced legislation that would permit physicians to verbally issue prescriptions for controlled substances to nursing home residents in an effort to reduce wait time for pain-relieving medications.

Maritime Law - Ship was not unseaworthy based on allegation that ship's doctor was negligent in diagnosing and treating ectopic pregnancy. A cruise ship was not unseaworthy based on an allegation that the ship's doctor was negligent in diagnosing and treating a ship photographer's ectopic pregnancy. While the affidavit submitted on the motion for summary judgment indicated that the doctor failed to follow standard diagnostic procedure, the affidavit did not challenge the doctor's qualifications. An isolated, negligent act performed by an otherwise competent crew member was not a condition of the vessel and did not render the ship unseaworthy. Flueras v. Royal Caribbean Cruises, Ltd. ,(Fla.App. 3 Dist.)  (This decision may not yet be released for publication.)

Medicare: CMS SEES PRIVATE MEDICARE PLANS GROWING IN 2012, WASHINGTON, Sept. 15 (Reuters) - More elderly and disabled Americans will enroll in private Medicare health insurance plans next year, and they will pay lower premiums for the second year in a row, U.S. health officials said. The plans, called Medicare Advantage, are run through private health insurers as an alternative to traditional fee-for-service Medicare plans.

Medicare Billing Fraud: DRUG SUPPLIER CAN'T BE LIABLE FOR KEEPING OVERPAYMENTS, COURT RULES, United States v. Omnicare, An Illinois federal judge has dismissed claims that a national pharmacy supplier unlawfully kept Medicare overpayments, finding that amendments to the False Claims Act adding "retention of an overpayment" as a basis for liability cannot be applied retroactively. U.S. District Judge James B. Zagel of the Northern District of Illinois also rejected the auditor whistle-blower's alternative argument that his allegations were sufficient to plead a violation of the pre-amendment FCA.

Natural Disasters: BROKER WORKS AS AGENT OF INSURED, NOT INSURER, 11TH CIRCUIT RULES, Landmark Am. Ins. Co. v. Moulton Props., Insurers may not have to pay for hurricane damage if the independent broker who solicited policy bids on the property owner's behalf misrepresented the extent of damage an earlier hurricane had caused to the property, a federal appeals court has ruled. The 11th U.S. Circuit Court of Appeals agreed with Landmark American Insurance Co. and Arch Specialty Insurance Co. that Peachtree Special Risk Brokers acted as an agent of Moulton Properties when it procured property coverage for the company.

Premises Liability: NURSING HOME MUST DEFEND AGAINST SLIP-AND-FALL SUIT, Christmas v. Kindred Nursing Ctrs., An Indiana appeals court has revived a home detention officer's lawsuit alleging he slipped and fell on a patch of ice outside a nursing while making an unannounced visit to a detainee employed there. The Court of Appeals held that genuine issues of material fact remain as to whether Isaiah Christmas was an invitee of the Windsor Estates Health & Rehabilitation Center at the time of his injury and whether the facility breached its duty of care.

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