Okla.-based Insurer Ordered to Pay $10.8M to Policyholder’s Mother

A federal jury has ordered an Oklahoma City-based insurance company to pay $10.8 million for improperly reducing the benefit owed to the mother of a policyholder who died.

American Fidelity Assurance Co. said it was “astonished” by the verdict and plans to seek its reversal.

“We are astonished in this case and believe the outcome is unjust and unwarranted,” the company said in a statement. “Without question, the $10.8 million jury award in this case is not only outlandish, but it also is completely out of line when you consider this case was over a benefit dispute of $1,110.13.

“Our first response will be to seek a judicial review and ask the judge to set this verdict aside.”

Dolores Metzger claimed the company improperly changed its policy for paying “actual charges” for limited benefit health insurance policies, such as the cancer policy purchased by Metzger’s son. Before 1994, American Fidelity paid whatever the patient was billed. In 1994, American Fidelity began paying only the often-discounted amount that health care providers charged insurance companies.

The company, in court documents, admitted that it changed its definition of “actual charges” in 1994. But American Fidelity denied that it violated Oklahoma law or public policy or that it acted in bad faith.

Metzger’s son, Michael, bought a cancer policy from American Fidelity in 1992 and named his mother beneficiary. The University of Central Oklahoma economist was diagnosed with cancer in November 2004 and died Jan. 4, 2005. Dolores Metzger filed her lawsuit Oct. 11, 2005.

Metzger declined to comment on the verdict.

Oklahoma City Attorney Tony Gould, who represented Metzger, said the company heavily marketed cancer policies to Oklahoma teachers.

“This was never about the money to her,” Gould said. “She just wanted justice for Oklahoma educators.”

Jurors deliberated about an hour before returning their verdict and then deliberated another hour before ordering American Fidelity to pay more than $10 million in punitive damages.

Information from: The Oklahoman, www.newsok.com