SW Legal studies in Business

Health Insurer Liable for Coverage Cannot Dump Costs on Medicare

Utah high court held that even though Medicare coverage became available for a child with catastrophic medical expenses, previously existing health insurance must cover the expenses it was obligated by the policy to cover until Medicare became effective at a later point in treatment.

Topic Insurance
Key Words

Health Insurance; Coverage; COBRA

C A S E   S U M M A R Y

Hayden Williams’ father, Justin, was covered by his employer’s insurance plan. When Justin left his employer in November 2000, he continued to receive health insurance from the insurer, Wasatch, by paying premiums as allowed under the Consolidated Ominbus Budget Reconciliation Act of 1985 (COBRA). Justin divorced Hayden’s mother, Chris Ann, in March 2001, but continued to pay premiums to Wasatch. In August, Hayden almost drowned and incurred huge medical bills. Justin continued to pay premiums until November 2001. After the near-drowning, Chris Ann applied for Medicaid coverage for Hayden’s medical expenses. Medicaid was approved and backdated to take effect before the near-drowning. Wasatch then asserted that Medicaid would cover all medical expenses related to the accident and collected reimbursements from medical providers for the costs that it had paid before Medicaid became effective. The state of Utah, which provided the Medicaid, entered into a collection agreement with Chris Ann that allowed them to jointly sue Wasatch to force it to cover medical expenses. The district court held that Wasatch did not owe coverage. Chris Ann and the state appealed.


Reversed. Wasatch failed to comply with the statute forbidding employee benefit plans from limiting or excluding coverage or payment for any health care for an individual who would otherwise be covered by the plan. Hence, Wasatch was liable for the health benefits provided for Hayden under the plan. Medicaid may cover certain costs not covered by Wasatch, but Wasatch had no right to impose all costs on Medicaid and must reimburse it for expenses it covered that should have been covered by Wasatch.


Mellor v. Wasatch Crest Mutual Insurance, 201 P.3d 1004 (Sup. Ct., Utah, 2009)

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