Robert Kenavan, et al., v. Empire Blue Cross and Blue Shield

Breach of Contract - Plaintiffs paid premiums of Medigap insurance (i.e., coverage for the
20% difference the patient is liable for when a doctor does not accept assignments from
Medicare). In doing so, they believed that they would be covered for any difference in the
amount paid by Medicare to the doctor and the reasonable amount billed. Defendant
Empire failed to live up to its obligations under the policies and allegedly breached the
insurance contract.

The plaintiffs claim, in short, is that Empire breached its Medigap insurance contracts with
them by failing to increase the benefits to cover the insurance in the coinsurance for which
they were liable as a result of the reduced Medicare payments under Gramm-Rudman.
Plaintiffs allege they were treated by physicians and were told by the Federal Government
thereafter that their Medicare Part B benefits had been reduced by the stated amounts for
the various periods. When they submitted claims to Empire under their Medigap policies
for reimbursement, they did not receive payment for the amounts represented by the
Gramm-Rudmen reductions, although, they contend, they were entitled to 100%
reimbursement under the Medigap policies for the amounts paid by them.

Plaintiffs originally began this action in 1991 in State Court, but defendant successfully
removed it to Federal Court on the ground that the complaint raised a Federal question to
the extent that it asserted claims on behalf of members who were covered under employee
benefit plans subject to the Employee Retirement Income Security Act of 1974. The
Federal District Court dismissed the ERISA claims without prejudice, granted class
certification, denied defendant's motion to dismiss and remand the State-law claims of all
remaining non-ERISA class members to the Supreme Court, New York County.

The court decided that the policies provided coverage, and that the recipients adequately proved over $3,000,000 in damages.

None

None

The decision was affirmed by the Supreme Court, Appellate Division, First Department. See: 677 N.Y.S.2d 560 (A.D.1 Dept. 1998). Note: The date above reflects the date of the appellate decision and not the original trial decision. Reported by EMDH.