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CASE TYPE: Insurance, breach of contract, bad faith, fraudulent inducement CASE: Chipps v. Humana Health Insurance Co. of Florida Inc., CL 96-00423 (Palm Beach Co., Fla., Cir. Ct.) PLAINTIFFS’ ATTORNEYS: Theodore J. Leopold and Edward M. Ricci of West Palm Beach, Fla.’s Ricci, Hubbard, Leopold, Frankel, Farmer & McAfee; and Marjorie Gadarian Graham of Palm Beach Gardens, Fla. DEFENSE ATTORNEYS: Glenn J. Waldman and Craig J. Trigoboff of Fort Lauderdale, Fla.’s Waldman Feluren & Trigoboff JURY AWARD: $79.62 million For the defendant in this insurance bad-faith action, removing the daughter of police officer Mark Chipps from coverage in its medical case management (MCM) program brought on a jury verdict of $79.62 million. The discovery process for this lawsuit led directly to the current national managed care class action against Humana Health Insurance Co. over Humana’s treatment of the chronically and catastrophically ill. Chipps was covered by Humana Health Insurance Co. of Florida through his employer, the Palm Beach County, Fla., Sheriff’s Office. The health plan had been switched to Humana in 1993, noted plaintiffs’ attorney Theodore J. Leopold. “The new coverage was represented to be a no-loss, no-gain policy, which carried at no extra charge the additional benefit of medical case management,” he said. Chipps’ daughter, Caitlyn, was born with cerebral palsy in December, 1990. She qualified for the MCM program and for 23 months received all her benefits through this program, including speech and physical therapies. But on Dec. 1, 1995, the family received a letter that Caitlyn was being dropped from the MCM program. Mr. Chipps contacted his Humana representative, who was informed by Humana’s corporate offices that “Humana would no longer be providing Caitlyn with any benefits for speech, occupational and physical therapies,” Leopold said. Chipps sued. Initially, the lawsuit seemed a straightforward denial of coverage for one plaintiff, Leopold said. “We were not expecting a pattern. But what we learned in discovery was that this had happened to over 100 other children. And Humana did it just to save money.” The plaintiffs’ attorneys filed motions with the court seeking information on “any and all adults or children terminated from the medical management program,” he said. Through this discovery, Leopold said, the plaintiffs learned that “in August of 1995, Humana’s management made the unilateral decision to terminate not only Caitlyn Chipps but over 100 other catastrophically ill or injured children.” Children with cerebral palsy were a particular target, Leopold said. The Humana chief medical director, Dr. J.R. Jones, had ordered nurses in case management to “close all CPs out of case management,” according to testimony at the trial. When parents complained to one of these nurses about the termination of their children from the MCM program, she informed Jones, according to Leopold. Jones’ reply was, Leopold quoted: “If you give a dog steak, and then you take it away and you give it hamburger, it’s not going to be happy.” This reply became a central part of the case against Humana. When Humana called Jones to the stand, “he became my best witness,” Leopold said. But the plaintiffs’ team did not lose sight of Caitlyn’s condition, Leopold said. After the termination of her benefits, “she was able to get care, but not at the level she needed. Her parents couldn’t afford it.” Caitlyn’s language skills regressed, her hand-eye coordination and fine motor skills began to deteriorate, he said. Humana denied any bad faith and contended that the dispute was at most a small breach-of-contract claim, Leopold said. But on Jan. 4, a West Palm Beach, Fla., jury awarded the plaintiffs $79.62 million, including $78.5 million in punitives. Humana filed post-trial motions for a new trial and remittitur. These were denied on March 7, with Circuit Court Judge James T. Carlisle excoriating the behavior of the company in his opinion. Judge Carlisle said the punitive award was not excessive, “considering the reprehensibility of Humana’s conduct to the actual and threatened harm to Caitlyn and the other catastrophically ill children who were wrongfully denied their lawful medical benefits.” Humana has appealed.

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