Appeals court reverses ruling for Anthem in claim denial

Indianapolis-based Anthem Insurance has lost a ruling in its favor after the Indiana Court of Appeals reversed Thursday and determined the insurer should have covered a doctor’s medical expenses incurred during his grace period for late premium payments.

In John Pelliccia, M.D. v. Anthem Insurance Companies, Inc., 49A02-1705-PL-1080, Dr. John Pelliccia purchased an Anthem health insurance policy for coverage in 2014. Anthem’s policies provided that coverage would terminate if a member failed to pay their premium within a specific grace period.

Due to an apparent issue with Pelliccia’s banking institutions, only 11 payments were made for his policy, rather than the required 12. Meanwhile, Anthem preapproved Pelliccia for a December 2014 surgery, provided that his premium payments were up to date.

Pelliccia then received a letter on Dec. 3 notifying him that his premium due Dec. 1 was late. The letter also informed him that he could make the necessary payments through Jan. 3, 2015, though no claims would be paid during that grace period.

Pelliccia did not send any payments to Anthem in response to the letter, but instead underwent his planned surgery in December 2014. He then received a letter on Jan. 9 informing him that his coverage had been cancelled on Dec. 1 due to nonpayment, so his surgery expenses would not be covered.

The doctor filed a complaint alleging Anthem had improperly retroactively cancelled his policy. He moved for partial summary judgment, while Anthem moved for full summary judgment, and the Marion Superior Court ruled in favor of the insurer. But the Indiana Court of Appeals reversed that decision Thursday, finding that the language of Pelliccia’s insurance policy did not permit Anthem to terminate the policy.

Specifically, Judge Michael Barnes pointed to Indiana Code Section 27-8-5-3(a)(3), which allows for insurance payment grace periods and holds that “during which grace period the policy shall continue in force.” Further, Anthem’s policy held that coverage would be cancelled for non-payment “on the last day of the grace period,” which here was Jan. 3, 2015. That language is unambiguous, the court held.

“Additionally, the policy expressly requires an insured to reimburse Anthem for claims payments for services incurred after the grace period and is silent with respect to claims payments for services incurred during the grace period,” Barnes wrote. “The reasonable inference to be made is that an insured does not have to reimburse Anthem for any claims payments made for services incurred during the grace period.”

Thus, Anthem should have paid Pelliccia’s surgery claims incurred during his grace period that ended on Jan. 3, 2015, when his coverage also ended, Barnes wrote. The court reversed summary judgment for Anthem on those grounds, and remanded for entry of partial summary judgment in favor of Pelliccia. However, pursuant to I.C. 27-8-5-3(b)(7), the court also permitted Anthem to deduct its owed unpaid premium from Pelliccia’s claim payment.