Kate Margolis Quoted in Law360 on 5th Circuit Review of Claims in Healthcare Settlement

Bradley attorney Kate Margolis was quoted in Law360 regarding the Fifth Circuit’s review of a more than $200,000 settlement where a healthcare company mistakenly approved out-of-state treatment for a Florida Medicaid patient. The case may hinge on whether a letter threatening litigation against another party constitutes a claim.

eQHealth AdviseWell Inc., formerly known as eQHealth Solutions, contends that it notified its insurer of its dispute with Brookhaven Hospital in Tulsa, Oklahoma, and received a denial of coverage before settling the hospital's claims independently. eQHealth says in court filings that it accidentally sent a Florida Medicaid patient for non-covered, out-of-state treatment at Brookhaven, causing a non-payment dispute with the facility. Homeland Insurance Co. of New York says it never received a valid claim from eQHealth. The insurer contends eQHealth made a "unilateral" decision to pay the hospital and admit liability, though there was no written demand for them to do so.

The Fifth Circuit will be deciding whether a Louisiana federal court was correct to find that eQHealth never made a valid claim under its managed care errors and omissions insurance policy with Homeland. Margolis said the panel might home in on the idea of what constitutes a claim. The health company asked the panel to determine whether the trial court's refusal to consider a demand letter to eQHealth's additional insured, Florida's Agency for Health Care Administration, unfairly prevented coverage.

eQHealth's policy defined a claim as a written demand, Margolis said, causing her to wonder: "what's the difference between a demand and a mere threat," and, "what evidence might constitute a written demand"? She also asked whether the insurer's categorization of the policyholder's notifications as only a potential claim might constitute a denial, entitling the policyholder to settle without consulting the insurer.

"If the panel were to say that the evidence submitted was enough for a claim under Louisiana law — that it was more than just a potential claim, that's going to stir up the industry for sure," she explained. eQHealth has asked the panel whether its insurer's argument that it never reported a claim, or the insurer's subsequent denial of coverage, constitutes bad faith under Louisiana law.

The full article, “5^th Circ. May Ponder If Threats Are Claims In Healthcare Suit,” was published by Law360 on April 25, 2024. (login required)