JANUARY 2015 BAD FAITH CASES: HEALTH INSURER’S CHANGE IN POSITION CONCERNING COVERAGE FOR A MEDICAL TREATMENT NOT BAD FAITH (New Jersey Appellate Division)

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A state-wide podiatrist society asserted that a health insurer violated its duty of good faith and fair dealing in deciding not to cover a medical procedure, for which it previously had provided coverage.  The provider was part of a broader national federation of related insurers, which did not generally provide coverage for this procedure. The court assumed for the sake of argument that this claim was properly pleaded, but found no case was made because a violation of the duty of good faith and fair dealing requires a showing of malice or bad faith.

In this case, the medical organization failed to identify any malice or bad faith reason for the change in insurer’s policy on covering this procedure. The plaintiff did not, “for example, contend that [the insurer] was trying to drive the podiatrists out of business or steer its insureds to other types of medical providers.” The fact that this insurer may have changed its position based upon the position taken by other insurers in the broader organization likewise did not constitute bad faith.  A difference among medical experts about the reliability of a procedure, resulting in a change in position on coverage, does not render the decision to change positions a breach of the duty of good faith and fair dealing.

Date of Decision:  November 17, 2014

New Jersey Podiatric Med. Soc’y, Inc. v. Horizon Blue Cross Blue Shield, DOCKET NO. A-1459-13T1, SUPERIOR COURT OF NEW JERSEY, APPELLATE DIVISION, 2014 N.J. Super. Unpub. LEXIS 2704 (App. Div. Nov. 17, 2014) (Reisner, Koblitz and Haas, JJ.)

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