Summary – In this case Mr. Ehrlich convinced the U.S. Court of Appeals for the Ninth Circuit that bad-faith claims against Medicare HMOs were not preempted by the Medicare Act, and could not be removed to federal court on the basis of federal preemption.
Summary (1) Trial court erred in dismissing insured’s claim on demurrer based on the genuine-dispute doctrine. Application of the doctrine was a factual issue that could not be determined on the pleadings. (2) The insurer’s contractual right to arbitrate uninsured-motorist (“UM”) claims did not relieve it from its obligation to make reasonable efforts to assess and settle the claim, and its failure to make those efforts would support a claim against it for bad faith.
Summary – On a motion for summary judgment, it was concluded there was a question of fact whether a delay of six weeks in arranging for a specialist was reasonable, in Kotler the health care services plan denied two appeals by the patient that sought reimbursement for a specialist the patient saw on his own because of the delay. (Id. at pp. 956-957.)
This was the first case in California to hold that an HMO could be sued for bad-faith for making its subscribers wait an unreasonable amount of time for medical treatment.
This was the first ERISA case in the 9th Circuit to hold that an insurer’s dual role as plan administrator and insurer created a conflict of interest that tainted its decision-making.
Held that health insurers and HMOs in California were required to comply with California statutes that regulated the use of arbitration clauses in health-insurance contracts. Mr. Ehrlich later convinced other appellate courts to adopt the reasoning of Smith, in Imbler v. PacifiCare of California (2002) 103 Cal.App.4th 567, and Zolezzi v. PacifiCare of California (2003) 105 Cal.App.4th 573.
Mr. Ehrlich briefed and argued this case in the U.S. Supreme Court. In a unanimous decision the Supreme Court adopted the position advocated by Mr. Ehrlich, and limited ERISA’s preemptive scope by making ERISA plans subject to state common-law rules of insurance regulation, which generally benefit consumers. The Ward decision benefited more than 80 million people who obtained their health insurance, life insurance, or disability insurance through their employer.