Week Adjourned: 6.5.15 – Hep C Drug Denial, Santa Barbara Spill, Phoenix Life

HarvoniTop Class Action Lawsuits

How ill is ill enough? And why should the insurer get to decide instead of the physician? These are the issues at the heart of a denied insurance claim lawsuit filed against Blue Cross. The lawsuit alleges the insurer denies its policy holders access to a newly approved and expensive new hepatitis C drug made by Gilead Sciences.

According to the hepatitis C drug lawsuit, the medical insurer has refused its contractual duty to provide coverage for medically necessary treatments for a client who has had hepatitis C for 10 year, and others similarly situated. According to the lawsuit, lead plaintiff Janie Kondell was denied coverage because her “liver had not sufficiently deteriorated.”

“In other words, defendant decided that Ms. Kondell hadn’t suffered enough, and her liver hadn’t been damaged enough, by a disease that causes irreparable harm and death, for which a cure is finally available,” the lawsuit states.

The US Food and Drug Administration approved the treatment, Harvoni, in October 2014. According to the complaint, the drug has a 95-99 percent cure rate. The once-daily pill can cost from $64,000 for an eight-week treatment to $99,000 for a 12-week treatment, and has few side effects.

According to the complaint, prior to approval of Harvoni, the existing treatment for Hep C, a contagious, chronic, potentially fatal condition resulting in liver damage, cirrhosis, infections, cancer, heart attacks and death, was only 70 percent effective and came with significant side effects.

“Hepatitis C is only the second disease or condition for which a cure has been discovered within a single lifespan of the disease or condition discovery,” the complaint states. “Hepatitis C was discovered in 1990 and the cure was approved in 2014. Hepatitis C could be completely eradicated in a few years as a result of Harvoni, assuming patients, such as Kondell, have access to this incredible cure.”

According to the complaint, Kondell has been a policyholder at Florida Blue for over 20 years. She was diagnosed with Hep C, and in February 2015 her physician prescribed Harvoni. Florida Blue immediately denied coverage, the complaint states. Although her doctor appealed the insurer’s decision twice Florida Blue continued to deny coverage, claiming Kondell’s liver wasn’t severely damaged.

“No known medical study supports this denial, and nothing in Kondell’s policy (or any of the class members’ policies) grants defendant the right to withhold a potentially life-saving cure, particularly on the perverse and pretextual ‘basis’ that it is not ‘medically necessary,’” the complaint states.

The complaint claims that Blue Cross is in violation of Florida’s Deceptive and Unfair Trade Practices Act and breached the contract of all policyholders diagnosed with hepatitis C who were denied coverage. The suit is asking the court to demand Florida Blue cover the treatment and seeks unspecified damages in excess of $5 million.

The case is Kondell v. Blue Cross and Blue Shield of Florida Inc., case number 0:15-cv-61118, in the U.S. District Court for the Southern District of Florida.

Oil Spill Launches Legal Clean-Up…The people of Santa Barbara have filed an environmental class action lawsuit against Plains All American Pipeline (NYSE:PAA) stemming from the Refugio State Beach oil spill in Santa Barbara. The class action complaint alleges the Texas-based company negligently operated the pipeline, Line 901, causing a rupture that discharged over 100,000 gallons of crude oil onto beaches and into the Pacific Ocean, damaging ecologically and economically significant natural resources. The complaint claims violations of state and federal laws.

“In Santa Barbara, those environmental impacts translate to profound economic impacts. In the short term, the oil from Plains All American’s ruptured pipeline has closed fishing grounds and shellfish areas, and caused canceled reservations from tourists who otherwise would be spending their money on hotels, restaurants, kayaking or surf trips, and fishing charters,” the complaint states.

The complaint was filed on behalf of Stace Cheverez, a sea urchin diver and nearshore fisherman. Plains All American’s oil spill has led to the closure of areas where Cheverez customarily fishes for commercially valuable nearshore species like Grass Rockfish.

Sadly, Plains All American Pipeline is no stranger to oil spills. The company has accumulated 175 safety and maintenance infractions since 2006. The Pipeline and Hazardous Materials Safety Administration shows Plains’ rate of incidents per mile of pipe is more than three times the national average. “In short, Defendant has an ugly tradition of operating pipelines that fail. The communities through which it transports oil suffer the consequences,” the complaint alleges. Not the neighbor any of us would desire, never mind being a good corporate citizen. What ever happened to that?

The spill, which triggered California Governor Jerry Brown to declare a state of emergency, may have extreme effects on both the environment and economy. Two beaches have been closed and nearby hotels have been fielding calls from concerned visitors who planned on visiting Santa Barbara, one of Southern California’s top tourist destinations, over Memorial Day weekend. 

Top Settlements

Phoenix to pony up $42M in bad faith insurance settlement …the bad faith insurance class action lawsuit alleged the insurer unfairly raised rates on premium-adjustable universal life insurance policies. Additionally, the company has also agreed to freeze its rates for five years. Nice.

The Phoenix Life settlement also prevents Phoenix from challenging the validity of any class member’s PAUL policy as an unlawful “life wager,” which the insurer has frequently done in order to avoid paying death benefits, according to the lawsuit.

The class action lawsuit was filed following an announcement by Phoenix Life that it was raising COI rates on PAUL policies in 2010 and again in 2011. The lawsuit alleged the insurer was treating life settlement investors unfairly. Unlike whole life insurance policies that require fixed monthly premium payments, PAUL policies only require premiums to cover COI charges and other expenses, allowing policyholders to minimize their investments, according to the plaintiffs.

The PAUL policyholders claimed Phoenix discriminated against life settlement investors who pay their premiums on time by hiking the COI rates and did so because the company comes out ahead when policies lapse, and it’s able to avoid paying death benefits.

The more than 1,000 class members will be sent checks in the mail, unless they opt out of the settlement. A $25,000 incentive award has been granted for named plaintiff Martin Fleisher.

The case is Fleisher v. Phoenix Life Insurance Co., case number 1:11-cv-08405, in the U.S. District Court for the Southern District of New York.

Hokee Dokee—That’s a wrap folks…See you at the Bar!