Health insurance policyholders' plan booklet omits exclusion contained in master plan: Breach of contract: Bad faith: Settlement

Law Reporter, May 2004

Hodge v. Q.C.C. Ins. Co., V.I., Territorial Ct. of the V.I., Civil No. 61-2001, May 28, 2003.

The Virgin Islands provided health insurance for its government employees, retirees, and their spouses through Blue Cross of the U.S. Virgin Islands. A group of the employees covered by the plan reached the age of eligibility for Medicare. Certain medical services are provided to all Medicare recipients through Part A; recipients may also elect to purchase additional coverage through Medicare's Part B. Blue Cross issued a booklet to every person in the Virgin Islands' government group health plan. The booklet did not state that expenses that would have been covered under Medicare's Part B were excluded from coverage. Language to this effect was in the master contract between the Virgin Islands government and Blue Cross, however.

Nearly 3,500 Medicare-eligible employees incurred medical expenses and made claims under the plan. Blue Cross denied their claims on the basis of the Plan B exclusion. Blue Cross also allegedly denied the employees' request to review the complete contract. The employees suffered financial losses and loss of benefits.

The employees sued Blue Cross, alleging breach of contract and bad faith. Plaintiffs alleged that any conflict between the terms in the master contract and the terms as described in their booklets must be resolved in their favor. Plaintiffs also alleged that defendant's actions toward them constituted bad faith. Defendant contended the language in the master contract was controlling.

The parties reached a settlement following voluntary mediation, and before a motion to certify the class of plaintiffs was filed. Defendant will pay $3.4 million, which will be divided among the prospective class members. In addition, defendant will pay plaintiffs' attorney fees.

Plaintiffs' Counsel

*Maria Tankenson Hoclge, St. Thomas, V.I.

Documents in this case are available through the Court Document Sets section in the back of this issue, courtesy of Ms. Hodge.