Motor vehicle accidents often leave victims struggling to pay medical bills. Even if victims have insurance coverage through their employer, plan administrators may look for any loophole possible to deny benefits. A recent federal case in Georgia illustrates just how extensive litigation may become in such circumstances.
Faison v. Donalsonville Hospital, Inc.
This case began when a Georgia State Patrol officer attempted a routine traffic stop when he observed a motorcycle traveling 15 miles per hour over the highway speed limit. The motorcycle driver, who apparently feared a stop because he did not have a valid license or proper registration, decided to increase his speed in an attempt to elude the officer. Traveling upwards of 120 miles per hour, the driver lost control his motorcycle while navigating a curve, causing the vehicle to skid off the road. The driver suffered serious injuries as a result of this accident.
The driver was airlifted to a nearby hospital, where he also happened to be an employee. Over the next two months, he amassed more than $480,000 in hospitalization and other medical costs related to the accident. As the driver had health insurance through the hospital, he applied for benefits from the insurance plan’s third-party administrator.
The administrator denied the claim, citing an exclusion for injuries arising from “illegal acts.” Following the accident, Georgia police charged the driver with five separate misdemeanors, including speeding and fleeing the police. Each of these charges carried a maximum possible jail sentence of less than one year. Ultimately, the driver pleaded guilty to all five counts and was only sentenced to probation.
Under the driver’s health insurance plan, the administrator could deny coverage if the employee engaged in “any act or series of acts that, if prosecuted as a criminal offense, a sentence to a term of imprisonment in excess of one year could be imposed.” The administrator found that taking all five misdemeanors together, the maximum possible sentence was greater than one year, and therefore denied coverage. The hospital agreed with the administrator’s decision.
The driver challenged the decision in court. In 2012, a federal judge ruled in the driver’s favor, holding “the Hospital’s decision was ‘de novo wrong’,” because the term “offense” in the illegal acts exclusion only applied to a single instance. The hospital could not simply add up multiple offenses to justify denying coverage. The judge also took note of the conflict of interest, as the hospital was both the driver’s insurer and largest creditor. Accordingly, the judge ordered the hospital to pay the driver the $480,000 in medical costs plus another $55,000 in attorney’s fees.
But the litigation did not end there. After the U.S. 11th Circuit Court of Appeals in Atlanta denied the hospital’s appeal of the judgment, it proceeded to argue before the district court it was entitled to “relief from judgment” because of new information. Specifically, the hospital claimed it had written off the driver’s original medical bills as a charitable donation in June 2010. This, the hospital argued, mitigated any damage award to the driver. The judge disagreed and denied the motion.
The hospital thus appealed for the second time to the 11th Circuit. In an unsigned May 26 opinion, the appeals court again sided with the trial judge. The court said “the Hospital did not show that [the driver] was not still liable” for his full original medical bill. In other words, the charitable credit did not, in and of itself, prove the driver no longer owed the hospital money. And as the trial judge explained, reducing the judgment as the hospital requested would actually violate the terms of the employee’s health insurance policy, which expressly required the hospital to pay out all legitimate medical claims.