Nevada OKs $300K settlement with insurer in patient dumping case

CARSON CITY — A state panel on Tuesday approved a $300,000 settlement with an insurance provider that had not paid a claim on behalf of Nevada to settle allegations of patient dumping with the city of San Francisco.

The settlement with the Insurance Company of the State of Pennsylvania, an American International Group subsidiary, was approved by the Nevada Board of Examiners. The company admitted no wrongdoing.

The attorney general’s office in July had sued the company, alleging breach of contract and bad faith for failing to defend Nevada and pay its $400,000 settlement with San Francisco.

Attorney General Adam Laxalt alleged the carrier failed to investigate San Francisco’s claims against Nevada and invoked “inapplicable coverage exclusions” to escape its duty to defend and indemnify Nevada from San Francisco’s lawsuit.

“The AG’s office reached a thoughtful and mutually favorable resolution of this matter through an amicable settlement with AIG without being embroiled in costly and time-consuming litigation,” Laxalt said in a statement on the settlement.

Laxalt said in July that Nevada had paid the carrier more than $5.4 million in premiums over the past 13 years, but that AIG never paid a claim on the state’s policy.

San Francisco sued Nevada in 2013 after an investigation by the Sacramento Bee into patients at Rawson-Neal Psychiatric Hospital in Las Vegas being provided bus tickets. The lawsuit alleged about 500 patients arrived in California and about two dozen were bused to San Francisco, many needing medical treatment and shelter. The city sought reimbursement for their care.

Nevada settled the lawsuit with the city in 2015.

Contact Sean Whaley at swhaley@reviewjournal.com or 775-461-3820. Follow @seanw801 on Twitter.