Q: Is there ever a case of insurance bad faith with health insurance?
Yes. For example, there may be an instance when a person has been insured for a short period of time and the doctor finds out the insured has cancer. They start treatment immediately but the insurance company denies the claim to pay for the treatments.
The insurer might claim the insured lied on the application so the insurer can rescind the policy and not be obligated to pay thousands of dollars in medical bills. If the individual answered the questions on the application truthfully and honestly, but the insurance company refuses to reconsider its decision to rescind coverage and deny the claim, the insured should sue the insurance company.
Sometimes these cases go to trial. If the insurance company is found to have been acting in bad faith, the insurance company’s obligations may be to pay the cost of the medical bills as well as interest, damages for the emotional distress the insured suffered on account of the insurer’s bad faith, and punitive damages.