PA Superior Court Rules That HMOs Are Exempt From Bad Faith - Wilkes-Barre, Scranton Personal Injury Lawyers

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PA Superior Court Rules That HMOs Are Exempt From Bad Faith

In this case, there was a dispute on the proper interpretation of an HMO plan and alleged bad faith. The trial court held that the plan limited certain treatments to calendar days from the start of treatment and not the total amount of treatments and that the HMO was not subject to bad faith under the Pennsylvania bad faith. The insured appealed arguing that the policy was ambiguous and that the HMO was subject to Section 8371 bad faith.

The Superior Court affirmed and held that the policy was not ambiguous. Thus, the coverage was properly denied. Also, the Court held that Section 8371 does not apply to an HMO like Keystone since Section 1560 of the HMO Act specifically says that a law must relate to an HMO in order for it to apply to an HMO. Since section 8371 does not state the law applies to HMOs the HMO is exempt. However, the Court notes that the Highmark non-HMO may be subject to 8371 bad faith if it is an “insurer” under Section 8371 but, in this case it did not act in bad faith so the Court does not analyze that issue.

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