On May 28, a much-watched case against Blue Shield of California–for revoking medical coverage of an injured policyholder–ended abruptly when the plaintiffs, Cindy and Steve Hailey of Cypress, admitted that they “willfully” made crucial errors and omissions on their insurance application to obtain health coverage. They obtained the policy by deceiving the insurer with intentionally and willfully false representations.

The verdict came after years of reports in newspapers, radio and television claiming that insurers engaged in improper “post-loss underwriting” and deprived honest and ill people of their “right” to insurance. The pleas of the wronged were taken up by the mavens of the plaintiffs' bar, the state Dept. of Insurance, legislators and others who refused to accept that an insurance policy is a contract in which both parties owe the utmost good faith to the other. In this case, the Haileys filed suit claiming their health insurance was improperly rescinded and the insurer did them wrong sufficient to require their insurance to be reinstated and for the insurer to pay excessive exemplary damages.

By admitting that the insurer was correct when it rescinded their policy because the Haileys had willfully lied on the application gave the insurer a Pyrrhic victory. Blue Shield and all Blue Shield policyholders' premiums will rise to pay for the medical bills of frauds like the Haileys and hundreds of thousands of dollars to the lawyers representing the insurers to defend similar spurious actions because of news stories planted by the plaintiffs' bar claiming that the insurer acted wrongfully.