(Please note: the names and locations of all parties have been changed to protect the confidentiality of the participants in this automobile accident/insurance coverage case and its proceedings.)
Plaintiffs’ complaint against Blue Shield contains causes of action for breach of contract, breach of the implied covenant of good faith and fair dealing and intentional infliction of emotional distress. Plaintiffs’ primary contention is that Blue Shield engaged in prohibited post claims underwriting in violation of Health and Safety Code section 1389.5 when it waited s until after claims had been filed to look beyond the four comers of the application’s answers to ascertain whether the answers Sally Lawrence provided were accurate and complete.
The trial court sustained Blue Shield’s demurrers to plaintiffs’ complaint and granted summary judgment. On appeal, the Fourth District Court of Appeal determined that the complaint’s causes of action were viable and that Blue Shield was obliged to complete its medical underwriting and resolve all reasonable questions arising from the written application before issuing coverage. The court specifically determined that medical underwriting requires health care service providers to do more than simply assign values to the risks disclosed on the application. They must make reasonable efforts in every case to make inquiries outside the application and to answer all reasonable questions arising from the information provided on the application to make sure that a potential subscriber’s application is accurate and complete. Blue Shield did not do any of that in this case, and plaintiffs sustained significant injury and damage as a consequence of that failure.
Had Blue Shield done its investigation before issuing coverage, Is and had it then declined coverage, plaintiffs could have obtained other insurance which would have provided coverage for the injuries Bob Lawrence sustained in his accident. (See Part 3 of 11.)
For more information you are welcome to contact Sacramento personal injury lawyer, Moseley Collins.