Every day Ohioans join the ranks of the uninsured and are denied health insurance benefits because carriers allege they misrepresented their health histories on insurance applications. Indeed, many insurance companies devote entire departments to investigating misrepresentations to determine their “liability” for claims submitted under a policy. In the individual health insurance market, i.e., insurance procured by individuals and families other than through an employer, insurance companies underwrite policies pursuant to health history information disclosed in an application. Many insurers will seek to avoid paying claims or will cancel coverage when that information is not accurate. Ohio law, however, provides substantial protections to Ohioans in these situations.
Unlike some states, Ohio requires clear and convincing proof that an insured knowingly made fraudulent misrepresentations before claims may be denied or coverage rescinded. In this regard, Ohio is considered an “intent” state because some states allow claim denial and rescission predicated upon unintentional misrepresentations of health history. Moreover, at least one court in Ohio has held that Ohio law requires a relationship between the alleged misrepresentation and the claim being considered before an insurer may deny the claim or cancel coverage.
Ohioans are fortunate to have these heightened protections under Ohio law. Unfortunately, however, insurers often fail to investigate alleged misrepresentations in accordance with Ohio’s requirements and thus, deny claims and cancel coverage in violation of Ohioans rights under the law. That is, insurers often fail to investigate alleged misrepresentations to determine, by clear and convincing evidence, whether an alleged misrepresentation was knowingly and fraudulently made. Indeed, given the expansive breadth of inquiry on most insurance applications, it is not uncommon for an applicant to omit or inaccurately describe one’s health history.
Claim denial and cancellation of coverage without clear and convincing evidence of knowingly fraudulent misrepresentation is impermissible under Ohio law and violative of Ohioans’ rights. Insurance carriers who violate Ohio’s requirements governing misrepresentations are liable to their insureds for compensatory, and potentially, punitive damages.