Tenet Healthsystem Desert, Inc. v. Blue Cross of California

Plaintiff hospital adequately stated fraud and misrepresentation claims against defendant insurance company, after hospital sought and received assurances that a patient was insured, only to have insurance company retroactively deny coverage after more than $1 million worth of treatment had been administered.  Plaintiff hospital adequately alleged claims for intentional and negligent misrepresentation as well as for nondisclosure of facts needed to make affirmative statements not misleading in its suit against Blue Cross.  Over the course of several months, hospital gave patient X medical treatment costing over $1 million, each time checking with and obtaining authorization from Blue Cross, only to have Blue Cross ultimately deny coverage and refuse to pay hospital because patient X had a blood alcohol level over the legal limit at the time of the accident (an exclusion from coverage under Blue Cross’ policy).  Blue Cross had known about the patient’s blood alcohol level since his admission to the hospital and yet had never indicated to hospital that it might deny coverage on that ground.  Hospital’s complaint adequately alleged the specifics of the fraud.

California Court of Appeal, Fourth District, Division 1 (Aaron, J.); March 17, 2016; 2016 WL 1056521

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