Los Angeles Times

      May 29, 2009

An Orange County Superior Court Judge  ruled in a rarely granted decree known as

a directed verdict, which is typically sought by a defendant after the plaintiffs

present all their evidence, that Blue Shield of California had acted properly in

canceling the health insurance policy of a former Cypress resident

after he was seriously injured in a car accident. The ruling was in response to a

motion by Blue Shield that included an agreement it had reached with plaintiffs

Steve and  Cindy Hailey, who stipulated they had lied about his preexisting

conditions to obtain coverage.  A directed verdict is a judge's decision that,

as a matter of law, the plaintiffs' evidence is so inadequate that no reasonable

jury could rule in their favor.

The Hailey case was only the second rescission suit to go to trial. The first

case, against Health Net Inc., went to arbitration, where a judge awarded $9

million to a Gardena hair salon owner and found that Health Net rescinded her

coverage in bad faith after she was diagnosed with breast cancer.