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Health Net, Inc.
Monacelli v. Gem Insurance Company, et al. (Bad Faith and Misrepresentation)
Date: 05/01/1998 (Date of Settlement)
Misconduct Type: Health
Enforcement Agency: Non-Governmental
Contracting Party: Non-Governmental
Court Type: Civil
Synopsis: In December 1994, a lawsuit was filed against Health Net subsidiary Gem Insurance Company for bad faith and misrepresentation. The claims "arose from the rescission of their health insurance policy based on their alleged failure to disclose an X-ray, taken one year before the Plaintiffs filled out their insurance application, which revealed an undiagnosed mass on [the plaintiff's] lung." A jury ruling in 1997 awarded $16 million to the plaintiffs, however, an appeal and subsequent settlement in May 1998 reduced the damages to $3 million ($1 million in compensatory damages and $2 million in punitive damages). The court also awarded plaintiffs approximately $233,000 in attorneys' fees and interest.
- 1. SEC 10-Q