5-YEAR-OLD CEREBRAL PALSY VICTIM WINS LANDMARK TRIAL AGAINST HUMANA
Chipps v. Humana
On January 4, 2000, a jury in West Palm Beach, FL, found that Humana Health Insurance Co. of Florida improperly terminated the special care required by 5-year-old Caitlyn Chipps, who suffers from cerebral palsy, and lied about the way it insures catastrophically ill patients.
The case, which resulted in a $79.5 million verdict - the largest verdict on behalf of an individual claimant in Florida - uncovered how one of the nation's largest HMOs executed deceitful and cruel cost-savings measures at the expense of the families it insures. It showed in human terms the scourge facing every American: the loss of critical health care at a time when it is needed the most, and it supplied the groundwork and insight for other families seeking justice.
Below is a summary of the case and links to the order denying Humana's motion for remittitur and the final judgment.
These are PDF files that require the free Adobe Acrobat Reader software.
For more information, please contact attorneys Edward Ricci or Theodore Leopold.
Mark Chipps, individually and for the use and benefit of Caitlyn Chipps, a minor, Plaintiff, vs. Humana Health Insurance Company of Florida, Inc., a Florida corporation, Defendant. CL 96-00423.
Court
15th Judicial Circuit Court in and for Palm Beach County, Florida, Honorable James T. Carlisle presiding.
Verdict Date
January 4, 2000
Plaintiff's Attorneys
Theodore J. Leopold, Esq., Edward M. Ricci, Esq., Ricci, Leopold, Frankel & Farmer, P.A., 1645 Palm Beach Lakes Boulevard, West Palm Beach, FL 33401, 561-684-6500; and Marjorie Gadarian Graham, P.A., Oakpark - Suite D 129, 11211 Prosperity Farms Road, Palm Beach Gardens, FL 33410, 561-775-1204.
Defendant's Attorneys
Glenn Waldman, Esq., Craig J. Trigoboff, Esq., Waldman, Feluren & Trigoboff, P.A., at One Financial Plaza, Suite 1500, Fort Lauderdale, Florida 33394, 954-467-8600.
Summary
Mark Chipps, a police officer with the Palm Beach County, Florida, Sheriff's Office was a subscriber to his employer's group health insurance policy with Accordia/Anthem. On December 14, 1990, his wife gave birth to daughter Caitlyn, who had cerebral palsy.
Cerebral palsy children require systematic and regular occupational, physical and speech therapy, all of which was provided under the family's group health insurance plan. In 1993, Mr. Chipps' employer was about to switch to Humana Health Insurance Company of Florida as the provider of group health insurance for its 2,500 employees.
The new coverage was represented to be a no-loss, no-gain policy that carried, at no extra charge, the additional benefit of medical case management. Medical case management was touted by Humana as an innovative program for catastrophically and chronically ill patients to improve management of their care. Medical case management (MCM) also waived deductibles and co-pays. In Humana's own internal documents, cerebral palsy was listed as a chronic or catastrophic illness covered under MCM. A qualified subscriber could choose to enter the program and Humana had to provide the service. Once accepted, subscribers, as long as their coverage was in place, could not be dropped from MCM unless they had reached all their medical goals or had passed away. For 23 months, Caitlyn received all of her benefits in the MCM program. However, on December 1, 1995, the family received a letter from Humana that stated:
You have been managed through Humana Medical Case Management/South Florida Market since 2/21/94. It has been determined that you no longer meet the requirements of the Medical Case Management Program, and will be returning to your regular plan benefits effective 12/6/95. Your regular benefits may require co-payments for some services. Check your Humana insurance card.
Caitlyn was denied more therapy
Upon receipt of the letter, Mr. Chipps went to see the on-site Humana representative, who confirmed that Humana not only terminated Caitlyn from the Medical Case Management program, but would also discontinue benefits for speech, occupational and physical therapies.
It is important to note that pursuant to the Medical Case Management Policy and Procedure Manual, the "closure phase" (removing a member from the MCM program) can occur when, and only when, there is a "thorough and systematic examination of the case to ascertain when maximum potential is reached." Therefore, when establishing goals are met, the case manager, in consultation with management and the physician advisor, may recommend MCM closure as follows:
A. Patient has improved to such an extent that the program services are no longer necessary or the patient expires.
B. Patient's coverage under the policy/plan ends.
C. Patient's coverage under the conversion benefit has been reached.
D. Patient's maximum lifetime benefit has been reached.
Managers said Caitlyn needed therapies
Discovery had established many things. First, all of the case managers that oversaw Caitlyn's care for nearly two years testified that the MCM Policy and Procedure manual was to be followed. Second, they testified that Caitlyn's condition had never stabilized, that the program services were extremely important and necessary for Caitlyn, and she should never have been removed from the MCM program. In fact, none of the case managers were able to state why Caitlyn was removed from the MCM program.
Humana terminated 100 or more ill children
Discovery also established that in August 1995, Humana's management, in conjunction with its Utilization Department, made the unilateral decision to terminate not only Caitlyn Chipps but more than 100 other catastrophically ill or injured children from its Medical Case Management program. According to Humana, these other catastrophically ill or injured children were similar to Caitlyn in that they were allegedly "static" and had reached their maximum improvement.
However, just the opposite was true. For example, the family of a legally blind, spastic, quadriplegic, cerebral palsy child who suffers 50 to 100 seizures per day received a letter from Humana indicating that the child's goals had been met and the child had stabilized and therefore no longer needed to be in Medical Case Management with coordination of medical care.
Similarly, Humana sent a letter to a child - not his parent - who has been comatose for 14 years advising that the child had improved to such an extent that he also no longer needed to be in the Medical Case Management program. As a result of being terminated from MCM, the child lost his respiratory and physical therapies, has suffered several bouts of pneumonia necessitating hospitalization and has become fused in several areas of his body due to the absence of physical therapy.
Some get "VIP" treatment
It is important to note that 10 months after suit was filed, Caitlyn was placed back into the MCM program. Susan Jaques, a supervisor of MCM managers, testified that this was done at the lawyers' request. Several other children who were terminated from the MCM program were likewise placed back into the program only after their parents contacted the media or, in some cases, when the parents retained a lawyer and suit was threatened. Many of the children who were eventually placed back into the MCM program were earmarked to be treated by Humana as "VIPs." However, in other cases where the parents did not complain or retain a lawyer, sick children remained out of the MCM program and continue to be denied benefits.
Discovery also showed that the business decision of terminating over 100 catastrophically ill or injured children was a deliberate scheme of aggressive cost cutting activities initiated and implemented in order to produce the greatest possible financial return to Humana. As a result, a case management overhaul shifted its resources from patients with chronic, necessary medical needs to activities that were focused on extracting savings from the sicker members of the plan.
Bonuses to remove patients
Retaining "disease management" companies to lower hospitalizations and increase savings from more manageable patients was the primary way this reorganization manifested itself. Similarly, bonuses and incentives produced decisions that generated the most savings. Paying financial incentives to case managers, nurses and physician advisors to remove patients from hospitals sooner than treating physicians recommended was an example of Humana's aggressive incentive programs to put profits over the care of its members.
Similarly, Coopers & Lybrand, a financial auditing company, was retained to identify ways to make "utilization management" more effective. In the Coopers report, "effective utilization management" equals lower numbers and greater savings - with no concern for the effects of decisions or consequences to members.
In addition to the wholesale termination of more than 100 catastrophically ill and injured children from the MCM program, discovery showed that Humana systematically delayed payment or in many cases refused to pay providers for treatment and care of Humana's members. The evidence introduced at trial was that the turnaround time for Humana to pay bills for treatments to catastrophically ill or injured members was in many cases 90, 120, 180 or more days. The amount of money Humana is making on the delay in claims payment is staggering.
Driven by greed, not need
Caitlyn Chipps became a victim of Humana's financial scheme in that decisions about her care were driven not by her needs but by Humana's desire to reduce costs, increase savings and, in turn, increase profitability. Humana's conduct and management strategy was unethical in that there was no disclosure to the Chipps or any other member about their cost-cutting processes. Humana represented to Mr. Chipps that his daughter would continue the benefits she had with his previous health plan and they summarily terminated those benefits without justification, consultation, evaluation or appropriate procedures.
Humana rationed health care
Humana, as a for-profit corporation, rationed medical care without disclosure and on a financial basis. As a result, it made value decisions about one population of patients ("chronic, static" children, from whom no "savings" could be extracted and who only represented a financial loss to Humana) versus other populations of sick - the chronically acute - patients. Corporate resources were shifted to manage this preferred population because they had medical needs that could be limited, changed or denied in order to produce savings.
Description of injuries
As a result of Humana terminating Caitlyn from its Medical Case Management program and then denying all benefits, Caitlyn lost speech, occupational and physical therapies. As a result, she physically regressed in both her communications and fine motor skills, which led to severe emotional distress.
Claims
Plaintiff filed suit on the therapies of breach of contract; fraud in the inducement; insurance bad faith pursuant to Florida Statute §624.155, promissory estoppel; and, intentional infliction of emotional distress. In March 1999, Judge James T. Carlisle entered a default order against Humana for discovery violations and the case proceeded to trial on the issues of compensatory and punitive damages, if any, that should be awarded. All defenses of the defendant were stricken. However, the defendant defended the case by contesting all issues during the trial. In closing arguments, the defendant concluded that its actions were nothing more than a "mistake."
Primary Experts
For Plaintiff:
Managed Care Expert: Linda Peeno, M.D., 3807 Elmwood Avenue, Louisville, KY 40207
Bad Faith Expert: Stephen Prater, Esq., 5567 Morningside Drive, San Jose, CA 95138
Economic Expert: Dr. Jonathan A. Cunitz, Jonathan A. Cunitz & Company, Seven Lamplight Lane, Westport, CT 06880
For Defendant:
Michael Henderson: Liability Expert
Leroy Koross: Economic Expert
Verdict:
- Compensatory Damages for Breach of Contract, $28,763.
- Compensatory Damages for Promissory Estoppel, $28,763.
- Compensatory Damages for Violation of Section 624.155, Florida Statutes, $28,763.
- Compensatory Damages for Fraud in the Inducement, $28,763.
- Compensatory Damages for Infliction of Emotional Distress, $1 million.
- Punitive Damages assessed against Defendant, Humana, $78.5 million.
To view the order denying Humana's motion for remititur, click here
To view the final judgment, click here
These are PDF files that require the free Adobe Acrobat Reader software.
