Supreme Court to Review Judgment Against Aetna

The Supreme Court agreed Monday to consider blocking a damage award of nearly $5 million against an insurance company for refusing “in bad faith” to pay hospital bills to an Alabama couple.

The court said it will study an appeal by Aetna Life & Casualty in a case that also involves charges of conflict of interest against an Alabama Supreme Court justice.

The dispute stems from a 1982 lawsuit by Roger and Margaret Lavoie of Mobile, who accused Aetna of refusing, for no valid reason, to reimburse the couple for $1,650 in hospital bills. The insurance company did reimburse the Lavoies for about $1,500 in medical bills.

Aetna, based in Hartford, Conn., claimed that Mrs. Lavoie could have been treated as an outpatient at considerably less cost.

Last December, the Alabama Supreme Court upheld by a 5-4 vote a jury verdict ordering Aetna to pay the Lavoies $3.5 million in punitive damages, a $350,000 additional penalty and more than $1 million in interest.

The insurance company challenged the size of the award and also accused Alabama Supreme Court Justice T. Eric Embry of having a personal stake in the case.

Embry, the author of the unsigned Alabama Supreme Court opinion upholding the award to the Lavoies, has filed lawsuits himself against two other insurance companies accusing them of bad faith in refusing to pay insurance claims.

Embry disclosed his authorship of the opinion in the Lavoie case in a sworn statement that he gave last January in his suit against Blue Cross & Blue Shield of Alabama. That suit was filed while Aetna’s appeal to the state court was pending.