Fall 2011 News - Analysis
Federal Health Insurance reform-a race to the Supreme Court:
On April 25th, the Supreme Court rejected a request from Virginia Attorney General Ken Cuccinelli, II in Commonwealth of Virginia v. Sebelius, a case pending before the Fourth Federal Circuit Court of Appeals, to expedite review of the Constitutionality of the individual coverage mandate provisions of the 2010 Patient Protection and Affordable Care Act.( S.Ct. 10-1-14). In the interim, The Sixth Circuit upheld its Constitutionality under a Commerce Clause challenge (Thomas Moore Law Cntr. v. Obama, No. 0-2388, June 29, 2011) and the Eleventh Circuit on August 12 , 2011 in State of Florida v. HHS, No. 11-11021; 11-11067, found to contrary, holding that the individual insurance mandate is an unconstitutional Congressional extension of the Commerce Clause. Decisions are expected shortly from the Fourth Circuit in the two pending Virginia cases. An appeal has already been filed in the Sixth Circuit decision and many expect the challenges to appear on the fall, 2012 docket of the Supreme Court.
Michigan Supreme Court rejects experimental stem cell transplant procedure under Michigan Auto No-Fault standard for "reasonably necessary" medical coverage:
In a 4-3 decision, the Supreme Court rejected a paraplegic's claim for an unapproved stem cell procedure to treat his spinal injury suffered in a motorcycle accident in Michigan. The procedure, which implants nasal stem cells into the spine in an effort to regenerate spinal never cells, is not approved by the FDA, although available in Portugal. The plaintiff purchased the medical service abroad and sought reimbursement from his no-fault carrier as well as his health plan. Both insurers rejected the claim, one under an experimental service exclusion and the other, as not reasonably necessary. Despite testimony from the procedure's chief investigator from Portugal, the court found that Plaintiff failed to produce objective evidence that this particular medical procedure would have some beneficial effect on a person's care, recovery or rehabilitation. Kevin Krohn's counsel argued that this experimental procedure offered his only hope of getting better. Homeowners Insurance Co. defended its denial of the claim based on the lack of accepted clinical evidence of efficacy and the fact that no American doctor ordered the transplant as a medically necessary and reasonable form of treatment for Mr. Krohn's paraplegia.
AIG, the bailed out insurer, sues Bank of America Corporation for $10B:
American International Group, Inc, the New York insurance behemoth sued Bank of America in New York in August, 2011, over a $10,000,000,000.00 loss on mortgage-bond investments. AIG alleges fraud on the part of Bank of America linked to its acquisitions of Countrywide Financial Corp and Merrill Lynch & Co. AIG was the recipient of US government bailouts beginning in 2008 to avert collapse after it sustained losses tied to subprime home loans and the insuring of mortgage bonds. The original bailout was revised four times resulting in government (taxpayer) payments of $182.3billion. AIG repaid the all monies to the Federal Reserve Bank and the government reduced its holding in the insurer's common stock to 77% earlier this year.
Bank of America challenges AIG's claims and fired back with a statement by spokesman Larry DiRita, that AIG "recklessly chased high yields and profits throughout the mortgage and structured finance markets" and that AIG " is the very definition of an informed, seasoned investor, with losses solely attributable to its own excesses and errors." The filing had an immediate effect on the stock price of both companies.