7th Circuit to Rehear Insurance Duty Case

     CHICAGO (CN) – The 7th Circuit agreed to rehear arguments over whether a medical insurance provider breached its duties to a policyholder by failing to warn her that emergency brain tumor surgery she underwent would not be covered because the hospital was outside of the insurer’s preferred network.



     The ruling revived a lawsuit filed by James Killian against his now-deceased wife’s insurance company, Concert Health Plan Insurance Company.
     After discovering that she had lung cancer that had spread to her brain, Susan Killian underwent aggressive emergency treatment.
     Susan’s medical insurance included lower-cost medical services from healthcare providers deemed to be within a given network. Her insurance information did not specify which providers were in-network, but instead directed her to call a Concert phone line to find out.
     When Killian called to determine whether Rush Hospital, where his wife would be treated, was in-network, customer service representatives provided no answer.
     Susan died a few months later. Concert refused to cover $80,000 of her medical expenses, explaining that Rush was an out-of-network hospital.
     Killian filed suit, seeking reimbursement for the medical expenses, relief for breach of fiduciary duty, and statutory damages for failure to produce plan documents. The district court dismissed the claims, but awarded the minimum statutory damages relating to the plan documents.
     On appeal the 7th Circuit affirmed, voting 2-1.
     Judge Kenneth Ripple dissented in part, however, writing that Concert had breached its fiduciary duty to Killian by failing to advise him whether or not Rush was in-network.
     Because Concert did not give claimants a list of in-network providers and instead directed them to call the customer service hotline before undergoing treatment, the company exposed itself to liability for its representatives’ response, he determined. In an unsigned opinion released Thursday the court agreed to rehear the case, ostensibly to address Ripple’s qualms. The date for oral arguments has not yet been set.

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