$40 Million Settlement on Behalf of 48,000 Consumers in Suit Against Health ‎Insurer

Zuckerman Spaeder LLP partners Carl S. Kravitz, Michael R. Smith, Ellen D. Marcus, and associate Jason M. Knott obtained final approval of a class action settlement for approximately 48,000 consumers who were sold a limited benefit health insurance policy and a membership in a doctor discount program marketed as providing coverage that was as good or better than major medical, but who found out otherwise when they got sick and were saddled with large unpaid bills. According to the Circuit Court of Saline County, AR which approved the settlement, “the value of the settlement exceeds $40 million,” plus it “provides … injunctive relief designed to address the gravamen of the claims at issue in this Action.” Mr. Kravitz and his colleagues at Zuckerman Spaeder achieved this result for the class after more than seven years of hard fought litigation.

“This case has always been about simple fairness and justice for ordinary people who thought they had bought health insurance, but found out, when it was too late, that their policies paid only a small part of their medical bills and that they had to pay the rest out of their own pockets. It has also been about stopping the insurance company and its agents from preying on consumers on something as fundamental as health insurance,” said Mr. Kravitz. “Under this settlement, class members will receive compensation and a measure of justice for what was done to them—and consumers should be protected in the future by the substantial governance changes that are an important part of the settlement. The governance changes are designed to prevent a repeat of the deceptive and fraudulent conduct alleged in the case.”

The complaint alleged that the health insurer and the doctor discount network, through their shared sales force, misrepresented the combination of a limited benefits health insurance policy and the doctor discount program as providing coverage that was equal to or better than major medical policies issued by companies such as Blue Cross Blue Shield. In fact the combination of products provided only a fraction of what would have been paid by major medical policy and left class members with crippling bills. The litigation class was certified in September 2009 by the Circuit Court of Saline County, AR and class certification was affirmed by the Arkansas Supreme Court in December 2010 in United Am. Ins. v. Smith (see 2010 Ark. 468 (2010)).

Smith v. Collinsworth, et al. (Circuit Court for Saline County, Arkansas, CV 2004-742-2)