Facts Are Important

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PPO Health Insurance Policy Refusal to Pay Starts Running of Statute of Limitation

In Christina Terry, individually and on behalf of her minor child, G.T., and on behalf of all others similarly situated v. Health Care Service Corporation, a mutual legal reserve company, d/b/a Blue Cross and Blue Shield of Oklahoma, No. 21-6141, United States Court of Appeals, Tenth Circuit (October 27, 2023) the Tenth Circuit dealt with the Oklahoma Statute of Limitations.


A “preferred provider organization” or PPO health insurance plan consists of “networks” made up of healthcare practitioners, facilities, and affiliates who contract with health insurance companies such as Blue Cross and Blue Shield of Oklahoma (BCBSOK) to provide its insureds medical services. Known as “preferred providers,” these practitioners, facilities, and affiliates offer healthcare services to PPO policyholders at reduced rates. Preferred providers accept a previously negotiated price from the insurer as payment for covered services. The insured is not responsible for the difference if a preferred provider bills more than the allowable charge. The policy informs the insured that where the policy’s allowable charge for a non-contracting provider is less than such provider’s billed charges, the insured is responsible for the difference. And according to the policy, “[t]his difference may be considerable.”


Due to G.T.’s precarious condition, his doctor recommended G.T. be transported via air ambulance to the University of Oklahoma’s Children’s Hospital in Oklahoma City. Rocky Mountain Holdings (RMH) transported G.T. and billed charges of $49,999.00 for the 109-mile trip. Plaintiff filed a putative class action against BCBSOK on April 27, 2018, alleging breach of contract, bad faith, and fraud. She invoked the district court’s diversity jurisdiction by way of her putative class action.

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The court granted BCBSOK’s motion and entered judgment in its favor. The district court held the policy’s limitations provision barred Plaintiff’s breach of contract claim. The Tenth Circuit noted that a reasonable insured, who by definition has performed due diligence, could readily ascertain from the foregoing language that Plaintiff filed her breach of contract claim later than three years after the expiration of the time within which her policy required her to file an insurance claim.

Plaintiff was aware, or certainly should have been aware, of an injury-that is, BCBSOK would not meet her demands-at the time RMH, the emergency air service responsible for transporting her infant, had a garnishment order issued against her in February 2016.  Having established Plaintiff’s knowledge of an injury, the next inquiry is at what point could Plaintiff have become aware of facts establishing her causes of action for fraud and bad faith.

Because Plaintiff’s claim rests in large part on the terms of her PPO policy, once she realized her injury, nothing prohibited her at that point from pursuing her bad faith claim based upon the wording of the policy and BSBSOK alleged representations regarding coverage, both of which she says entitle her to relief.

Plaintiff argued that BCBSOK was exercising bad faith throughout her ordeal and did not stop until just before she filed suit in April 2018. The plaintiff knew of facts that would put a reasonable person on notice that wrongful conduct caused the harm. In this context, a plaintiff must use reasonable diligence in seeking to discover facts giving rise to a claim for relief. Because Plaintiff’s bad faith claim accrued no later than February 2016, the Oklahoma two-year statute of limitations bars such claim.

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Even health insurance policies are contracts and are contracts subject to state statutes of limitation. Regardless of the conduct of the insurer – even if in bad faith – the insured must file her suit within the times allowed by the state’s statutes of limitation. Plaintiff waited too long and it was not enough to claim that the insurer BCBSOK treated her badly by applying its contract as written. (c) 2023 Barry Zalma & ClaimSchool, Inc.

(c) 2023 Barry Zalma & ClaimSchool, Inc.

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About Barry Zalma

An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.