Lawsuit Filed Against Nationwide Insurance For Company Policies

A case has been filed against Nationwide Life Insurance Company in the U.S. District Court. The possible lawsuit involves health plans purchased by Washington State residents through employers between April 16th, 2003, and August 27, 2008.

The suit was filed by Lauren Gustafson-Omer and John Gabriel, both of Seattle, and Ruth Bjorklund, of Bainbridge Island. The parties expressed interest in expanding the case into a class action suit with 465 other people.

According to the briefs, the plaintiffs are seeking reparations of up to $10,000 for each violation of Washington’s Consumer Protection Act, as well as refunds of premiums, payment of denied claims, and other legal fees.

The lawyer representing the plaintiffs, Eleanor Hamburger, suggested that if the case was granted class-action status, and the complaint is upheld, Nationwide would have to pay over $4.6 million in consumer protection violations. Further damages cited may increase the total amount to $7 million or more.

There have been no detailed comments from Nationwide representatives other than that of Elizabeth B. Stelzer, working in corporate headquarters. She said that the company was aware of the case and that it was looking into the matter.

The focus of the suit is fixed-payment or fixed indemnity plans. A number of consumer groups have expressed their criticisms of the plan. These plans differ from plans that pay a percentage of potential medical expenses or which place a cap on what the consumer will have to pay. Instead, they establish a maximum payment for individual services and expenses well below what is charged by medical and health care providers.

Prior to July 22, 2007, such plans were not legal in the state of Washington. Today, they are permitted under the condition that insurers offer full disclosure to consumers and provided with a certificate of authorization to provide coverage.

These plans are not properly covered by the legislation regulating portability of coverage. As a consequence, those consumers who look for comprehensive coverage after a having fixed-indemnity plan would be required to obtain complete medical exams-with the possibility of disqualifications for any pre-existing conditions.