An Alexandria woman was awarded $800,000 yesterday by a federal court jury that found Blue Cross & Blue Shield of the National Capital Area acted in bad faith when it refused to pay $12,000 in hospital and doctor bills.
Richard Ben Veniste, one of the attorneys for Loretta Washington, 54, said it was the first time that an individual had won a bad-faith insurance case in the District.
Washington, a sanitation inspector for the City of Alexandria, was hospitalized at Arlington Hospital in July 1981 for control of diabetes and again in August for a hysterectomy, shortly after she had changed her insurance coverage from a local health maintenance organization to Group Hospitalization Inc. and Medical Service of D.C., known as Blue Cross.
Blue Cross refused to pay the hospital and doctor bills, saying Washington had to meet a waiting period because she had the conditions when she changed coverage.
Washington notified Blue Cross that no physician had previously diagnosed the fibroid tumors that precipitated the hysterectomy, but the company said its experts found that the condition would have been present earlier.
Arlington Hospital then sued Washington for payment of her $8,000 bill. She took a part-time job cleaning office buildings to help pay the bills, but the hospital threatened to put a lien on her house to assure payment.
Ben Veniste argued in court that Washington should not have been subject to a waiting period because she had transferred from an HMO and that federal law prohibits imposition of a waiting period in such cases.
But Blue Cross said that when Washington completed an her Blue Cross enrollment card she did not fill in the portion concerning prior hospitalization coverage and that in such instances the company assumes there was none.
Ben Veniste said that the company showed bad faith by failing to make a follow-up inquiry about prior coverage, and showed that 70,000 -- or about half of those who enrolled with Blue Cross in 1981 -- failed to complete that portion of the enrollment card.
Dean Swartz, another of Washington's attorneys, said that he could not estimate how many others insured by Blue Cross might have had claims denied for similar reasons.
"I just thank God for the blessing," Washington said yesterday.
Blue Cross officials could not be reached for comment.