Autism advocates have filed a lawsuit against the California Department of Managed Health Care to force the department to require insurance companies to pay for physician-ordered services. Insurers argue that physician-ordered behavior-modification therapy for autistic patients is educational and not a valid medical expense, resulting in a denial of coverage. Coverage disputes previously sent by the department to independent medical panels are now being redirected to the department’s coverage-dispute division, which advocates allege is now resulting in loss of services.

A tugboat crew member can pursue a punitive damages claim against his employer for injuries suffered on the job, the Supreme Court ruled on Thursday. In a 5-4 decision, the court found that there was no legal impediment to punitive damages in the case. The lawsuit stemmed from Atlantic Sounding Co.’s refusal to pay for the worker’s medical care and time off. The case is Atlantic Sounding Co. v. Townsend.

A New Jersey county’s insurance company is refusing to pay a multimillion dollar verdict awarded to an accident victim because it says the county mishandled a lawsuit stemming from the accident. State National Insurance Co., the excessive-liability insurance carrier for Camden County, claims that a county attorney did not properly prepare for trial or adequately update the insurer on the case. In 2008, a jury awarded $31 million to the victim after concluding that the county failed to properly maintain the road where the accident occurred

A Florida judge on Tuesday awarded $14.6 million to a truck driver paralyzed in a 2007 accident. According to an attorney for Derry Brown Jr., the suit was filed against National Casualty Co. as an uninsured motorist claim. The accident occurred when the driver swerved to avoid another driver who ran a stop sign. Brown lost use of his arms and legs as a result of the accident and requires ongoing rehabilitation.

In the first civil case to reach a verdict over a wave of insurance rescissions, a judge has ruled that Blue Shield of California did not act improperly in canceling the coverage of a man injured in an auto accident. The ruling by Orange County Superior Court Judge Peter Polos came in a rare mid-trial verdict after the plaintiff couple admitted that they lied about preexisting conditions in order to obtain coverage. It is unclear why the couple chose to reverse their original claims against the insurer.

A California jury is scheduled to hear opening arguments this week in the first case to decide whether an insurer should pay damages for rescinding a policyholder’s coverage. The 4th District Court of Appeal in Santa Ana had previously ruled that the defendant Blue Shield of California could not utilize a ‘wait and see’ strategy in pursuing rescission investigations. In the past several years, California insurance regulators have collected more than $13 million to settle charges of wrongful rescissions by insurers.

The Louisiana Supreme Court has refused to hear an appeal by Louisiana Citizens Property Insurance Corp. challenging a ruling that allowed a Hurricane Katrina-related lawsuit filed after the two-year deadline for claims. The state 4th Circuit Court of Appeals had previously ruled that the clock for filing the lawsuit had been reset once the plaintiff had been excluded from two previously filed class actions. The ruling now opens the possibility for some policyholders to file claims until May 2009 or May 2010.

A Texas company bilked older investors for about $30 million using a fraudulent life insurance securities scheme, state officials said Thursday. The state alleges that executives at National Life Settlements of Houston used the money to finance their personal lifestyles rather than purchasing life insurance policies on the behalf of clients. A Texas State Securities Board official said they are continuing criminal and civil investigations into the matter.

The Woodland Hills, California insurer will pay as much as $14 million to close the books on litigation over the canceling of health policies.

The lawsuits were brought on behalf of 800 former policyholders whose coverage was dropped after they submitted substantial medical bills.

Under the deal, which won preliminary court approval Wednesday, individuals whose health insurance policies were canceled since 2004 are eligible for payments of up to $218,000. The average payment is expected to be $7,836.

The settlement would resolve a class-action lawsuit as well as a suit filed by the Los Angeles City Attorney.

In addition to the payments to customers, it requires Health Net to pay a fine of $2 million to the city and to contribute $500,000 to charities. The law firm that filed the class-action suite will earn $2.1 million.

The settlement follows a two-year crackdown by state regulators on the widespread and controversial practice known as rescission. In deals with regulators, insurance providers Health Net, Anthem Blue Cross and Blue Shield all have agreed to make substantial changes in the way they sell individual coverage in an effort to reduce the number of rescissions.

In all, Health Net has agreed to pay more than $40 million to resolve the regulatory actions and litigation over rescission.

Health Net is the only company that has been forced to defend rescission at trial. Nearly a year ago, an arbitration judge awarded $9 million to a hair salon owner whose coverage Health Net dropped after she was diagnosed with breast cancer. The rescission forced her to suspend her chemotherapy treatments for several months.

That was one of 1,600 rescissions that helped Health Net save $35.5 million over several years, according to trial documents. The trial also revealed that Health Net paid bonuses to an employee based in part on how many rescissions she carried out.

Health Net stopped those bonuses and, under the settlement, agreed not to reinstate them.

An attorney for a Vermont family whose child was sickened after eating tainted peanut butter crackers said Thursday that they will add Kellogg Co. to their lawsuit. The addition of Kellogg as a defendant comes as the Peanut Corporation of America’s sole insurance carrier announced it would seek to limit liability in connection with the recent salmonella outbreak. Kellogg manufactured the crackers that allegedly caused the child’s illness, the family’s lawsuit says.