Posts Tagged ‘Life Insurance Company of Georgia v. Johnson’

Worthless Policy Costs Insurer; Air Ambulance Not Covered

FEBRUARY 19, 1996 VOLUME 3, NUMBER 34

Medicare Won’t Pay For Air Ambulance

After Dr. Francis Keefe (age 82) broke his hip while traveling in Missouri, his wife decided that she wanted him to be closer to their New York home. Dr. Keefe was flown to a hospital near his home by air ambulance.

Mrs. Keefe submitted a bill for $3,456 for the air ambulance to her husband’s Medicare Part B provider. The carrier denied coverage, and an administrative law judge agreed.

Mrs. Keefe had argued that federal regulations require Medicare providers to pay for transportation “to the nearest hospital” and to the recipient’s home from the hospital. She asserted that the hometown hospital was the “nearest available” because family involvement is so important in discharge planning. Furthermore, she argued that the air ambulance flight was actually transportation “home” from the Missouri hospital.

The U.S. Court of Appeals agreed with the Medicare carrier and the administrative law judge. It held that the transportation requirement did not include air ambulance, and that transportation to the nearest acute care facility did not require travel to the family home, notwithstanding the value of family involvement in discharge planning. Keefe v. Shalala, Second Circuit Court of Appeals, Dec. 13, 1995.

Worthless Medigap Policy

Alabama resident Daisey L. Johnson (age 84) was covered by Medicaid for her medical needs. Nonetheless, the Life Insurance Company of Georgia was only too happy to sell her a Medigap policy to supplement her Medicare coverage. Ms. Johnson even presented her Medicaid card to the agent when he signed her up; for the next three years, Ms. Johnson paid over $3,000 in insurance premiums.

When Ms. Johnson figured out that her policy was worthless, she sued the insurance company. An Alabama jury awarded her $250,000 in compensatory damages and $15 million in punitive damages.

After the trial judge reduced the punitive damages award to $12.5 million, the Alabama Supreme Court further reduced it to $5 million. The Court noted that the insurance company had followed a pattern of selling Medigap policies to Medicaid recipients, and that its conduct “was egregious and reprehensible and resulted in a great financial hardship to some of the most vulnerable members of our society.” However, said the judges, the conduct was not “the most odorous this Court has been required to review,” and the award should therefore be reduced.

Furthermore, the Court used this case to change the way Alabama handles punitive damages awards. After payment of court costs and attorneys’ fees, the balance of Ms. Johnson’s award will be split between her and the State’s general fund. Life Insurance Company of Georgia v. Johnson, Alabama Supreme Court, Nov. 17, 1995.

Biggest-Selling Drugs

Industry sources report that the top five selling drugs (and the approximate value of sales) for last year were:



Drug      Purpose      Sales   
Zantac    ulcers      $2 bil   
Procardin heart       $1 bil   
          pain and             
          high                 
          blood                
          pressure             
Mervacor  high        $1 bil   
          cholesterol                             
Vasotec   high       $895 mil  
          blood                
          pressure             
Prozac    depression $875 mil  
©2017 Fleming & Curti, PLC