A class action against insurance giant Progressive, alleging that the company sold automobile policies to Medicaid and Medicare beneficiaries who were not eligible to purchase those products, has been reinstated by a New Jersey appeals court. The ruling, handed down on Monday, March 6, 2017, vacated the prior dismissal of the class action. The case was sent back to the trial court.
The original lawsuit was filed by Elizabeth Lopez-Negron after Progressive rejected her efforts to recover the costs of medical treatment after a motor vehicle accident in Philadelphia in 2010. Lopez-Negron alleged that Progressive had sold her what is known as a “health-first” automobile policy, which allows a motorist to designate a health insurance provider as the primary payer for any personal injury, including injuries sustained in a car accident. According to Lopez-Negron’s lawsuit, she and many others to whom Progressive sold the “health-first” policies were not eligible for that type of coverage because their primary health insurance was through Medicaid or Medicare—federal law requires that private insurers have primary responsibility, if the injured person has private insurance coverage.
Lopez-Negron filed two separate lawsuits—one in federal court alleging violation of federal statute, and the other in state court in New Jersey. The New Jersey state court dismissed the claim before trial, finding that Progressive’s online application for insurance provided adequate information to allow an applicant to determine if they qualified for “health-first” coverage. The federal court, however, denied the motion to dismiss, finding that Progressive had at least three different opportunities to avoid selling health-first policies to unqualified buyers.
Following the precedent set by the federal court, the state court vacated the dismissal and ordered that the case be returned to trial, where issues of fraud, unjust enrichment and breach of contract can be addressed.
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