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Trial Lawyers Group Sues for Renewed Benefits

San Francisco Daily Journal
By Tyler Cunningham
August 28, 2003

The San Francisco Trial Lawyers Association has sued one of the state's largest health maintenance organizations, claiming it breached a contract to insure some 200 local lawyers, their staff and families.

Filed Monday in San Francisco Superior Court, the suit claims Health Net of California breached its contract with SFTLA by refusing to renew coverage for members. San Francisco Trial Lawyers Association v. Health Net of California, 423782.

As a result, a total of about 350 people could lose their health insurance by Nov. 30.

The maneuver is part of a broad strategy by health insurers to rid themselves of such contracts in favor of employer-sponsored policies, said Terrence J. Coleman, a lawyer with Pillsbury & Coleman who represents the association.

Insurance companies prefer employer-sponsored plans because they are governed by federal law, the Employment Retirement Income Security Act of 1974, which precludes jury trials and limits damages, Coleman said. In contrast, plans sponsored by groups and associations such as the SFTLA are governed by state law, which exposes companies to increased liability.

The suit claims that Health Net dropped the SFTLA to save money. Coleman, who is an SFTLA director, said it was ironic that Health Net would choose to push its agenda on a group of trial lawyers.

"That the insurance company has taken such an aggressive approach with a group of plaintiffs lawyers is incredible in itself," he said. "But it begs the question: What are they doing to mom and pop down the street?"

Health Net claims that the SFTLA doesn't meet the statutory requirements to qualify for this type of insurance and that a recent decision by the California Department of Managed Health Care backs its position.

"Plaintiffs are seeking a type of coverage not legally available to them," said Brad Kieffer, a spokesman for the HMO. "Health Net takes precautions to make sure its customers meet the legal requirements."

A lawyer representing Health Net declined to comment Wednesday.

The SFTLA is a nonprofit organization of some 600 local lawyers. For years, it purchased health insurance and provided coverage to attorneys for a premium. For many lawyers, Coleman said, the policy is the only health insurance they have.

According to the suit, Health Net assured SFTLA that it had the option to renew each year, and the agreement provided limited circumstances under which Health Net could decline to renew. None of those circumstances occurred, Coleman said, but the HMO alerted the SFTLA in May that it would no longer offer the coverage. The company extended the deadline to Nov. 30, according to the suit.

The association has informed affected attorneys of the situation and the lawsuit. Coleman said the SFTLA has tried to buy insurance from other carriers, but can't find any.

The group seeks damages and an order forcing Health Net to renew the policy. A hearing is scheduled for Sept. 18.

Member lawyers generally support the suit, Coleman said. "Most people find it overwhelming dealing with insurance companies," he said. "That's true of lawyers, too."