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__________________________________________________________________
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION

JIMMY PETTERSON, an Individual, a Citizen )

of California, )
)
)
PLAINTIFF, )
v. ) CAUSE NUMBER: 1:13-cv-01595
)
)
INTERNATIONAL MEDICAL GROUP, INC., )
an Indiana Corporation; SIRIUS )
INTERNATIONAL INSURANCE )
CORPORATION, a foreign Corporation, )
)
)
DEFENDANTS. )

COMPLAINT FOR BREACH OF CONTRACT, DECLARATORY RELIEF AND

BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING AND
DEMAND FOR JURY TRIAL

For their Complaint in this matter, Plaintiff alleges:

I. INTRODUCTION

1. This action arises as a result of a far-reaching scheme engineered by Defendants

International Medical Group, Inc. (IMG) and Sirius International Insurance Corporation (Sirius)

to deny valid health insurance claims under insurance coverage submitted on behalf of its

insured.

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2. Defendants have engaged in this unlawful scheme by exploiting unlawful

provisions hidden deep within their insurance policies, in fine print, which is hardly readable,

and by conducting biased and superficial claim investigations. Indeed, Defendants’ policies are

drafted in language that is so one-sided and unreasonable, it renders them unconscionable, and

the coverage illusory.

3. Plaintiff Jimmy Petterson is a victim of this scheme. Plaintiff purchased a health

insurance policy from Defendants. While the policy was in effect, he was diagnosed with and

sought treatment for renal cell carcinoma.

4. Rather than provide benefits under his policy, Defendants denied his medical

claims by enforcing these unlawful limitations and exclusions. These result in purported non-

coverage for pre-existing conditions even if they are undiagnosed and completely undetected

prior to the effective date of coverage. This was the case with Plaintiffs’ claim, as alleged

herein.

5. As a result, Plaintiff has been saddled with unpaid medical bills, and has suffered

considerable emotional distress as a result of Defendants’ denial of his claim and failure to pay

what is owed pursuant to the health insurance coverage Defendants provided to him.

II. PARTIES

6. Plaintiff Jimmy Petterson (“Plaintiff”) was born, raised and at all times relevant to

this dispute has owned property in the City of Los Angeles, State of California. Thus, for

purposes of this lawsuit he is a Citizen of the State of California.

7. At all times relevant to this dispute, International Medical Group, Inc. (“IMG”)

was and is a corporation that is headquartered in and has its principal place of business in

Indianapolis, Indiana, and, thus, is a Citizen of Indiana.

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8. At all relevant times mentioned herein, Sirius International Insurance Corporation

(“Sirius”) was and is a corporation that is licensed to underwrite policies in California. It is

headquartered in and has its principal place of business in Stockholm, Sweden.

9. Plaintiff is informed that at all times mentioned herein, Defendants, and each of

them, were the agents, servants, employees, joint ventures and/or alter egos of each other, and

were, as such, acting within the course, scope and authority of said agency, employment, venture

and/or alter ego relationship, and that each and every Defendant, as aforesaid, when acting as a

principal, was negligent in the selection, hiring, acquiring, and/or creating of each and every

other Defendant as an agent, employee, joint venture, and/or alter ego.

III. JURISDICTION AND VENUE

10. This is a civil action over which this District Court has jurisdiction pursuant to 28

U.S.C. §1332. Complete diversity exists between Plaintiff and Defendants since Plaintiff is a

citizen of the State of California, and Defendant IMG is a citizen of the State of Indiana, while

Defendant Sirius is a foreign citizen. The amount in controversy exceeds the sum of $75,000.00.

11. Venue is appropriate in the Southern District of Indiana since the Defendant

IMG’s principal place of business is in this District, and the obligations of Defendant were to be

performed here. The breaches of those obligations occurred in this District. Venue is also

proper pursuant to 28 U.S.C. §1391(b) because a substantial part of the events or omissions

giving rise to Plaintiffs claim occurred within this District. Indeed, in its coverage documents

Defendants have provided for this lawsuit to be filed in this Court, and thus have consented to

jurisdiction being here.

IV. FACTS

12. Plaintiff is a sixty-three year old travel writer, photographer and musician.

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13. Plaintiff was issued health insurance coverage with Blue Shield for twenty-five

years dating back to 1986. He filed few claims under that policy. He is and has been, at all times

relevant to this dispute, an unsophisticated insurance consumer.

14. On November 3, 2011, Plaintiff allowed his Blue Shield coverage to lapse and

purchased, in its place, a health insurance plan (“Health Coverage”) issued by IMG and Sirius.

Plaintiff purchased the Health Coverage so that he could maintain health insurance while he

spent time with his son, who lived with his mother in Sweden. A true and correct copy of the

Certificate evidencing this Health Coverage is attached to this Complaint as EXHIBIT A, and

incorporated herein, in haec verba.

15. Plaintiff has performed all of his obligations and conditions precedent under the

Certificate and Health Coverage provided therein.

16. In April 2012, Plaintiff was severely injured in a ski accident in the State of

Washington, which resulted in fractures of his spine. He was hospitalized, underwent surgery

and otherwise was treated by physicians and health care professionals as a result of this injury.

17. During his hospital stay, he underwent a CT scan to rule out additional bone

trauma. The CT scan revealed a kidney mass.

18. The mass was two centimeters in length. At the time, Plaintiff had not

experienced any symptoms of this condition, or any illness relating to his kidneys resulting from

such. None of his treating physicians had discovered this mass at any prior point in time.

19. On or about April 21, 2012, Plaintiff was diagnosed with Stage I renal cell

carcinoma.

20. Afterward, Plaintiff was flown to Sweden where he received additional treatment

for his injury. In July 2012, he underwent surgery to remove the kidney mass.

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21. In accordance with Defendants’ guidelines, the hospital that treated Plaintiff

sought pre-certification for the kidney surgery and other treatments it provided to him.

22. Defendants denied pre-certification.

23. In a letter to Plaintiff dated June 12, 2012, Defendants stated that the denials were

based on an exclusion in the Certificate for coverage for pre-existing conditions whether or not

such had been previously diagnosed, become manifest, was symptomatic, been treated or

discovered before the inception of Health Coverage. The exclusion states:

Any Illness, Injury or Mental or Nervous Disorder that, with reasonable medical
certainty, existed on or at any time prior to the Initial Effective Date of this insurance,
whether or not previously manifested or symptomatic, diagnosed, treated or disclosed on
the Application or on any Claim Form or otherwise, including any chronic, subsequent or
recurring complications or consequences associated therewith or arising or resulting
therefrom.

24. This exclusion violates Indiana Insurance Code Sections 27-8-5-2.5(b)-(c). In

summary, these provisions state that to exclude a preexisting condition, it must be a condition for

which medical advice, diagnosis, care of treatment was recommended by or received from a

licensed health practitioner twelve (12) months preceding the effective date of coverage or a

condition for which there exists symptoms that would cause an ordinary prudent person to seek

diagnosis, care, or treatment in the twelve (12) months preceding the effective date of coverage.

None of these applied to Plaintiff’s claim.

25. This exclusion also violates common law in Indiana and throughout the United

States, which defines preexisting condition as one that is objectively manifest, symptomatic or

acute, rather than at the time of its medical origin. Again, none of these would preclude the

payment of Plaintiff’s claim as described herein.

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26. The exclusion violates sound public policy in that it denies health benefits to

innocent premium-paying policyholders for preexisting conditions of which they – and their

doctors – have no knowledge.

27. The exclusion is unenforceable because it violates Indiana law and is so one-sided

toward the interests of the insurance company. It is so overly harsh toward consumers that the

provision is unconscionable. It results in illusory coverage for medical expenses in that a

purchaser of such would not reasonably expect to be excluded. Further, the provisions relied on

by Defendants to deny Plaintiff’s claims were buried in fine print in the policy. Exclusions must

be plain, clear and conspicuous. These provisions were and are not such.

28. Plaintiff never sought any medical treatment for his cancer at any time prior to the

time Defendants’ issued coverage. No doctor diagnosed such, and he experienced no symptoms

of such, especially any that would lead a reasonable person to seek medical help. In fact, no one

knew, or suspected, he had cancer until it was discovered during the CT scan.

29. Defendants’ investigation of Plaintiff’s claim was unreasonable in that

Defendants never contacted Plaintiff nor any of his medical providers to inquire as to when his

kidney mass manifested. Instead, they paid peer reviewers to reference biased medical studies

that examined “the mean tumor doubling time of renal cell carcinoma,” and determined, based

on these studies, when Plaintiff’s mass likely existed.

30. Further, Defendants conducted a cursory paper review of Plaintiff’s medical

records.

31. Had Defendants conducted a thorough, objective review of Plaintiff’s medical

records, and spoken to his medical care providers, they would have confirmed his cancer did not

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pre-exist before his Health Coverage was effective under Indiana law, and that such was not

excluded from such Health Coverage.

32. Indeed, Plaintiff received an annual check-up from his general practitioner on

October 27, 2011, one week before Defendants issued him his health insurance. This physician,

Dr. Jacob Wennberg, determined that Plaintiff was in good health both physically and mentally.

No symptoms of a kidney tumor were recorded, nor was this condition suspected at this time.

33. By letter dated June 14, 2012, Dr. Wennberg stated and confirmed that he had

discovered nothing medically wrong with Plaintiff during the examination and that there was no

reason to suspect that Plaintiff had a kidney mass.

34. Nevertheless, to date, Defendants have unreasonably withheld benefits for

covered medical expenses under the Certificate and Health Coverage outlined therein. Payment

for these services from Defendants has been sought repeatedly but Defendants have steadfastly

and continuously and unreasonably refused to pay such.

35. The denial of Plaintiffs’ claims by Defendants has been and is wrongful, in breach

of their contractual and extra-contractual obligations, unreasonably and in bad faith breach of

such. This conduct of Defendants has caused Plaintiff to suffer, and to continue to suffer worry,

anxiety, stress, fear, anger and frustration in an amount that will be proved at trial.

V. FIRST CLAIM FOR RELIEF – BREACH OF CONTRACT

36. Plaintiff incorporates the allegations of Paragraphs 1 through 35 as if fully set

forth herein.

37. As a result of the above, a contract for health insurance coverage has existed

between Plaintiff and Defendants. Further as a result of the allegations herein, Defendants

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became obligated to pay those sums that they are obligated to pay under said insurance coverage

as alleged herein.

38. Defendants have failed to pay said sums to Plaintiff and have thus breached their

contractual obligations to him.

39. As a proximate result of their failure to pay said sums, Plaintiff has been damaged

in the amounts of the unpaid claims which are to be proven at trial.

WHEREFORE, Plaintiff claims the relief as set forth in their Prayer.

VI. SECOND CLAIM FOR RELIEF – DECLARATORY RELIEF

40. Plaintiff incorporates the allegations of paragraphs 1 through 39 as if fully set

forth herein.

41. Because of Defendants failure to pay what is owed, as alleged herein, there is an

actual controversy between Plaintiff and Defendants relating to the latters’ obligations to fulfill

their duty to pay. Plaintiff claims that said sums are owed. Defendants have failed to pay said

sums, thus taking the position, wrongfully and in bad faith, that they do not owe and have no

duty to pay these legitimate claims.

42. Plaintiff seeks a declaration from this Court that said sums are owed and due to

Plaintiff from Defendants.

WHEREFORE, Plaintiff claims the relief as set forth in their Prayer.

VII. THIRD CLAIM FOR RELIEF – BREACH OF COVENTANT OF

GOOD FAITH AND FAIR DEALING
(“BAD FAITH” AS A TORT)

43. Plaintiff incorporates the allegations of paragraphs 1 through 42 as if fully set

forth herein.

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44. Under Indiana Law, given the sui generis nature of insurance contracts, it is in

society’s interest that there be fair play between insurer and insured. As a result there exists

between an insured, here Plaintiff, and Defendants a duty of good faith and fair dealing which

requires Defendants to thoroughly investigate any claim by an insured, not subordinate the

insured’s interest to that of Defendants, and to objectively evaluate any claim presented to it.

The obligation of good faith and fair dealing with respect to the discharge of the insurer’s

obligation to its insured includes, inter alia, the obligation to refrain from (1) making an

unfounded 1 refusal to pay policy proceeds; (2) causing an unfounded delay in making payment;

(3) deceiving the insured; and (4) exercising any unfair advantage to pressure an insured into a

settlement of his claim. That is, an insurer that denies liability knowing that there is no rational,

principled basis for doing so has breached its duty of good faith and fair dealing to that insured.

That is what has occurred in this matter as a result of Defendants’ conduct as described herein.

45. In addition as part of Defendants’ duty of good faith and fair dealing, the Indiana

Claims Settlement Practices Act provides:

IC 27-4-1-4.5 Enumeration of unfair claim settlement practices.

Sec. 4.5. The following are unfair claim settlement practices:

* * *

(2) Failing to acknowledge and act reasonably promptly upon communications

with respect to claims arising under insurance policies.

1
“Unfounded [ʌnˈfaʊndɪd] adj

1. (of ideas, allegations, etc.) baseless; groundless

2. not yet founded or established
unfoundedly adv
unfoundedness n
Collins English Dictionary – Complete and Unabridged © HarperCollins Publishers 1991, 1994, 1998, 2000, 2003

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(3) Failing to adopt and implement reasonable standards for the prompt

investigation of claims arising under insurance policies.

(4) Refusing to pay claims without conducting a reasonable investigation based

upon all available information.

(5) Failing to affirm or deny coverage of claims within a reasonable time after

proof of loss statements have been completed.

(6) Not attempting in good faith to effectuate prompt, fair, and equitable

settlements of claims in which liability has become reasonably clear.

(Emphasis Added.)

These provisions also set the standard for an insurer complying with the principles of good faith

and fair dealing that an insurer must follow in order to comply with the law of the State of

Indiana.

46. Any insurer that violates any of the principles or statutory provisions as set forth

herein violates the covenant of good faith and fair dealing which governs the conduct of insurers

in administering, investigating, evaluating and handling of any claim of an insured.

47. Defendants, and each of them, have breached their good faith claims handling

obligations to their insured, Plaintiff, by a) failing to properly and thoroughly investigate the

claims, b) violating each of the provisions of IC 27-4-1-4.5 set forth above by the conduct

described therein, c) making an unfounded refusal to pay what is owed, d) causing an unfounded

delay in payment, e) deceiving its insured from believing that they would pay what is owed

under Certificate and Health Coverage provided for in such, f) exercising an unfair advantage by

refusing to pay what is owed in order to obtain a settlement for less.

48. The conduct of Defendants, as described herein, is and has been intentional,

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malicious, fraudulent, deceitful, wanton, oppressive, grossly negligent, and motivated by self-

interest, violated the statutory provisions set forth herein, and was tortious in nature; Defendants’

conduct was not the result of a mistake of law or fact, honest error of judgment, over-

zealousness, mere negligence or other such noniniquitous conduct, thus entitling Plaintiff to

recover punitive damages from Defendants.

49. As a proximate result of their failure to abide and fulfill their obligations of good

faith and fair dealing Plaintiff has suffered the loss of the protection and benefits of the Health

Coverage that is owed to him. Plaintiff is also entitled to recover the reasonable value of

attorneys’ fees for the pursuit of the unpaid contract sums that are owed by Defendants. By

virtue of the assignment described herein, Plaintiff is entitled to enforce and pursue these

obligations and to recover the amounts set forth herein.

WHEREFORE, Plaintiff claims the relief as set forth in their Prayer.

PRAYER FOR RELIEF

Plaintiff has suffered damages in these amounts:

1. For the sums due pursuant to the Health Coverage;

2. For the prejudgment and post-judgment interest according to the proof;

3. For general damages for emotional distress, anxiety, worry, and fret from Defendants’

failure to pay medical expenses that were owed, and the financial distress caused

Plaintiff as a result of Defendants’ wrongful conduct as alleged herein;

4. For reasonable attorneys fees for the collection of those sums which Defendants have

refused to pay and which they are obligated to pay under Health Coverage;

5. For bad faith damages according to proof; and

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6. For such other relief as the Court deems just and proper.

Dated: October 1, 2013 Respectfully submitted,

GUY KORNBLUM & ASSOCIATES

McNAMAR & ASSOCIATES

By: s/ Guy O. Kornblum

GUY O. KORNBLUM

By: s/ David F. McNamar

DAVID F. MCNAMAR

GUY O. KORNBLUM, (12863-98)

GUY KORNBLUM & ASSOCIATES
1388 Sutter St., Suite 820
San Francisco, CA 94109
Telephone: (415) 440-7800
Facsimile: (415) 440-7898
gkornblum@kornblumlaw.com

DAVID F. MCNAMAR, (9539-49)

McNAMAR & ASSOCIATES, P.C.
P.O. Box 53106
Indianapolis, IN 46253-3106
Telephone: (317) 299-0160
Facsimile: (317) 299-0299
dfmcnamar@mcnamarlaw.com

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DEMAND FOR JURY TRIAL

Plaintiff hereby demands a jury trial on all issues in this matter.

Dated: October 1, 2013 Respectfully submitted,

GUY KORNBLUM & ASSOCIATES

McNAMAR & ASSOCIATES

By: s/ Guy O. Kornblum

GUY O. KORNBLUM

By: s/ David F. McNamar

DAVID F. MCNAMAR

GUY O. KORNBLUM, (12863-98)

GUY KORNBLUM & ASSOCIATES
1388 Sutter St., Suite 820
San Francisco, CA 94109
Telephone: (415) 440-7800
Facsimile: (415) 440-7898
gkornblum@kornblumlaw.com

DAVID F. MCNAMAR, (9539-49)

McNAMAR & ASSOCIATES, P.C.
P.O. Box 53106
Indianapolis, IN 46253-3106
Telephone: (317) 299-0160
Facsimile: (317) 299-0299
dfmcnamar@mcnamarlaw.com

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EXHIBIT A
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