As a logical lead-in to the above-posed blog headline query, we ask our readers across Oklahoma and elsewhere to consider the following facts. And please note that they are indeed facts and not something merely hypothetical to make a point. The following story is true, and not something that is particularly shocking in the annals of insurance company-linked tales.
Bottom line: A woman in one state failed to disclose on her insurance application a past visit to a dermatologist for acne treatment. That omission led to a retroactive cancelation of her policy for alleged fraud, with her insurer’s action leaving her without coverage as she embarked on a personal battle with breast cancer.
The insurer’s so-called rescission of the policy for intentionally lying arguably seems to be in bad faith, right? We suspect many of our readers might logically see company employees snapping open the policyholder’s application as soon as the cancer diagnosis came in, looking for a pretext – any reason at all – to avoid paying for treatment.
Rescission has long been a common practice in the insurance industry and the target of legions of bad-faith claims from policyholders who never heard a word from their insurers until they made a claim. It was especially common prior to the passage of the federal Affordable Care Act, which outlaws policy cancelations for failure to disclose an existing condition. Prior to the law’s passage, rescission on that ground was exceedingly common.
In fact, rescission still does occur, with insurers’ actions being judicially upheld in many instances where proof exists that a policyholder deliberately lied about material information.
That can be a judgment call, of course, and a matter of degree. Given insurers’ demonstrated conduct in rescission cases over decades, a policyholder being challenged on such grounds might reasonably want to reach out to a proven and aggressive pro-claimants’ legal team for representation.