Tuesday, December 25, 2007

Hailey v. California Physicians' Service (Cal. Ct. App. - Dec. 24, 2007)

Rust never sleeps. And neither, apparently, does the California Court of Appeal. Which issued no less than seven published opinions on the day before Christmas.

Not bad. And in sharp contrast to yours truly, who has been on the East Coast without internet access for the past week. As well as in sharp contrast to the Ninth Circuit, for whom yesterday was a holiday.

Which got me thinking: Do you think that the Court of Appeal at all considers timing issues in its decision to publish? Take, for example, this case. Which, on the merits, concerns the interesting issue of "postclaims underwriting" -- the practice of health insurers not to worry too much about the accuracy of your application at the outset, and to happily take your premiums, but then, once you make a heavy number of claims, to scrutinize your application in an attempt to find a misrepresentation upon which to rescind your policy. Of course, the problem goes both ways, since I'm sure there's also the dynamic of people deliberately misrepresenting their health status as well, which raises premiums for everyone. So the question then becomes: How should (or does) the law treat this issue? Do you let the insurance company sit back and only start its investigative process once people become sick? Or do you put the burden on the insurer to do more at the outset? Where do you draw the line, and with what consequences?

An interesting intellectual issue. Which, of course, also involves real people. With real problems and issues. As here, in which Blue Shield is trying to rescind a health insurance policy that it issued to Cindy and Steve Hailey. Who, Blue Shield alleges, misrepresented their health status when they applied for insurance. (Steve weighed a hefty 285, and Cindy listed him as 240 -- as well as omitted any of his prior medical problems, most of which seem to have arisen from his weight -- when she applied for the policy.) But the Haileys insist that any misrepresentations were inadvertent, and, in any event, if Blue Shield had rescinded the policy at the outset, Cindy could easily have gotten insurance through her work. Do you allow recission? Does it matter that the bulk of the Hailey's health insurance claims seem to have resulted from a car accident that permanently disabled Steve after the insurance issued? How would you decide the case?

Read the opinion for the full details. I can summarize at least the result by saying that the Court of Appeal reverses the grant of summary judgment to the insurer, holding that there are triable issues of material fact (e.g., whether the misrepresentations were deliberate). But the Court of Appeal also does a fair piece of work on the law as well, and does so in a manner that definitely won't make health insurance plans totally happy.

So here's my Christmas-related query: Would the Court of Appeal have issued this opinion on Christmas Eve even if they had gone the other way? I mean, the Haileys are potentially looking at a lifetime of having no health insurance for a permanently disabled family member. What if the Court of Appeal had gone the other way and said, yep, no insurance for you, tough luck? Do you really publish that opinion on Christmas Eve? On the one hand, human compassion says, no, no one's that harsh. On the other hand, human bureaucracy says, hey, the relevant justices got done with their input into the opinion a fair piece ago, and the precising timing of an opinion may vary due to delays in the various pipeline (when the other justices sign on, circumstances in the Clerk's Office, etc.). And hence that no one individual may be totally in a position to hold up the opinion for a day or two in order to demonstrate compassion. Or, some might argue, such a policy would be inappropriate anyway. After all, there's always someone who loses whenever a decision is rendered. Why protect one of the parties at the expense of another? Unless you're going to hold off on all opinions shortly before the holidays, the argument could go, you might as well just crank them out whenever they're ready.

Mind you, I think this argument is pretty weak as applied to the present case, in which the loser is a large health insurance company. I mean, sure, I bet they're bummed. But it's hardly going to ruin anyone's Christmas. Or at least not ruin it with the impending prospect of a lifetime of pain and penury.

So what do you think? Think there should be a tiny little stamp that says "Don't Release This One Until After Christmas"? Or, more accurately, an informal understanding in chambers that some opinions can be delayed a couple of days in the interests of compassion for the parties? Or should we just let the chips fall where they may?

And, on a related note, what do you think the actual policies are in this regard? I know from my (very long-ago) clerking days that we would have been bright (and sensitive) enough never to issue, say, an affirmance of a death penalty over Christmas. (Not, mind you, that such a thing ever occurred -- or would likely ever occur -- in the particular chambers in which I worked.) But I'm not so sure about other cases. We might not have even thought about it much.

What do you think?