Widow sues insurance company after it denies claims

A federal jury in Billings awarded $1.6 million in punitive damages Thursday to a Laurel woman who sued Wabash Life Insurance Co. for denying $6,383 in claims for her cancer-stricken husband.

Margaret Coddington, widow of Dean Coddington, had paid premiums on the supplemental cancer policy for 17 years when her husband was diagnosed with lung cancer in 1989.

Wabash denied claims for his last three hospitalizations on the grounds that the cancer policy covered only the treatment of the cancer itself and not the various ailments that arose out of the disease.

Coddington's attorneys - Cliff Edwards, Paul Warren and David Paoli - argued that Wabash sells cancer policies preying on its customer's fear of the disease and then relies on vague definitions in the policy to deny claims.

On Wednesday, at the conclusion of a three-day trial, the jury found that Wabash had breached its contract with the couple, misrepresented their coverage under the policy and failed to conduct a reasonable investigation of their claims.

The jurors also agreed that punitive damages were warranted and a separate hearing was held Thursday to determine how much those damages should be.

"We feel just great,'' Warren said after the jury returned its $1.6 million award. "We just hope it says something to Wabash.''

"It's not the money, it really isn't,'' Paoli said. "It's the message that you can't treat people this way.''

In his final argument at the hearing Thursday, Edwards did not give the jury any specific figure on what he thought the damages should be, but urged the jury to send a message to the company not just for Mrs. Coddington, "but for all the other people who are paying premiums.''

Coddington is not likely to see the money immediately. The award will probably be appealed.

The major issues during the trial were what the policy covered and whether Wabash misled customers about it. The adjusters who denied the claims testified through depositions that the policy covered only the "definitive'' treatment of the malignancy itself, not related conditions that resulted from the cancer.

Coddington's attorneys countered that the policy did not define "definitive'' and said that treatment of the related ailments could not be distinguished from the treatment of cancer cells.

New wrinkles were added to the definition problem Thursday when Wabash executives were called to testify. While John Ussery, who was vice president of the claims department in 1989, was on the stand, Warren introduced documents to show that Wabash did have definitions of what constituted definitive treatment of cancer.

In answer to an inquiry from the Missouri's department of insurance, Wabash had defined the treatment covered as treatment for the cure or control of the cancer itself. Specifically excluded were supportive care and terminal care. Warren asked if policy-holders were informed of the narrow nature of the definition. Ussery said they were not. Wabash's attorney, Ward Swanser, maintained that the policies were intended only as supplemental insurance, not a major medical policy. That's what the policy said and that's what the Coddington's received, he said. There was no attempt to mislead.

The company, in fact, had paid $7,300 in benefits on the Coddington's policy. It denied only claims for the last three hospitalizations because the ailments were not covered under the policy, he said.

Swanser argued that from the beginning the lawsuit was really about punitive damages. He said that after the claims were denied, no one contacted the company to object. The first Wabash knew that there was a problem was when the lawsuit was filed. He said the attorneys should have contacted the company about the situation before filing its complaint. He said that if the jury wanted to send a message, it should be that "the federal courts should only be used as a last resort. You shouldn't lie in wait. We should have heard from someone before (the lawsuit developed).'' The harm was minimal, Swanser said, and he suggested the jury award only an amount equal to or twice that of the $6,383 in denied claims.