🔒Yale New Haven Health sues insurer over denied $4.1M claim

Yale New Haven Health Services Corp. has filed a federal lawsuit against Ironshore Indemnity Inc., accusing the specialty insurer of wrongly refusing to reimburse more than $4 million in medical costs tied to a bone marrow transplant for one of the hospital system’s employees. The lawsuit, filed Feb. 4 in U.S. District Court in Connecticut, states that Boston-based Ironshore, a subsidiary of Liberty Mutual Insurance, breached a stop-loss insurance policy by denying coverage for expenses that exceeded a $1.1 million deductible under YNHH’s self-insured employee health plan. Stop-loss insurance is coverage employers buy to protect themselves from unusually large medical claims. It reimburses the employer when costs for an individual employee or the overall plan exceed a set threshold. According to the lawsuit, YNHH, the state’s largest health system, purchased stop-loss coverage from Ironshore for 2024 to limit its financial exposure to catastrophic claims. The policy required Ironshore to reimburse 100% of eligible expenses above the deductible for any covered person. The complaint also notes that Cigna Health and Life Insurance Co. was the third-party administrator for the policy. The case centers on treatment for an employee who underwent a bone marrow transplant at a foreign medical facility beginning in early 2023, and had multiple inpatient hospital stays through early 2024, the lawsuit states, adding that Cigna authorized the procedures. YNHH states that the total medical costs for the care have reached about $5.2 million, far exceeding the deductible. The health system says it submitted a claim in June 2024 seeking reimbursement of roughly $4.1 million. Ironshore denied the claim the following month, stating the patient had not been properly disclosed during the underwriting process for the policy renewal. YNHH disputes that claim. The lawsuit says Ironshore accepted the hospital system’s disclosures during underwriting, waived any additional information requirements and issued the policy. The insurer was aware of the limits of the claims data provided by the health system’s third-party administrator, the complaint states. Despite denying coverage, Ironshore continued to bill and collect monthly premiums for the policy through the end of 2024, the lawsuit adds. The health system argues that Ironshore waived any right to contest, modify or terminate the policy and failed to follow required steps to rescind coverage. It accuses the insurer of breaching the contract and violating the implied covenant of good faith and fair dealing by denying the claim without a fair investigation and forcing the hospital system to sue to recover the money. YNHH is seeking compensatory and consequential damages, attorneys’ fees, interest and costs. The case requests a jury trial. Speaking on behalf of Ironshore, a spokesperson for Liberty Mutual said the company does not comment on pending litigation.