Neb Supreme Court reverses "Patients' bill of rights" $25K verdict from Douglas County District Court; Court finds no "bad faith" where health insurer had "arguable" basis to deny medical necessity of plaintiff's hysterectomy when Plaintiffs demanded treatment certification; Reviewable as matter of lawLeRette v. American Med. Security, 270 Neb. 545 October 28, 2005. No. S-04-724. LeRettes filed a petition against American Medical Security, Inc., and United Wisconsin Life Insurance Company in Douglas County District Court for for breach of an insurance contract, and bad faith. Verdict was for Defendants on the contract and for the Plaintiffs for $25K on the bad faith claim. United Wisconsin filed a motion to set aside the verdict or, in the alternative, for new trial or entry of an altered or amended judgment. The court also denied LeRettes' § 44-359 (Reissue 2004)attorney fee claim. United Wisconsin appeals, and the LeRettes cross-appeal. The Supreme Court reversed the bad faith verdict with directions to dismiss the action. Pl's attorney fees cross appeal mooted. The plaintiffs had exhausted all appeals and even a special appeal panel within the Insurance company; at best some of the doctors requested more tests, so out of cost concerns the Ins co approved the procedure, months later; Plaintiffs did not cross appeal the defense contract verdict Dr. Cameron (insurance doctor) recommended that precertification be granted because further testing followed by an eventual hysterectomy would be more costly. The (insurance) appeal panel considered Dr. Cameron's recommendation with regard to the hysterectomy precertification issue and accepted his recommendation in favor of the insured's position. On September 11, 2001, United Wisconsin reversed its denial and granted Mary's request for precertification. Further, upon completion of the medical history review on September 18, United Wisconsin informed the LeRettes and their medical service providers that it was lifting the hold it had placed on payment of medical bills, and United Wisconsin thereafter paid such bills. Mary had the hysterectomy surgery on October 12, 4 months after her initial request for precertification. ... Braesch v. Union Ins. Co., 237 Neb. 44, 464 N.W.2d 769 (1991), disapproved on other grounds, Wortman v. Unger, 254 Neb. 544, 578 N.W.2d 413 (1998), recognizes the tort of bad faith refusal to "settle" a claim with an insured policyholder...a claim for bad faith, a plaintiff must show an absence of a reasonable basis for denying the benefits of the insurance policy and the insurer's knowledge or reckless disregard of the lack of a reasonable basis for denying the claim. Williams v. Allstate Indemnity Co., 266 Neb. 794, 669 N.W.2d 455 (2003); Radecki v. Mutual of Omaha Ins. Co., 255 Neb. 224, 583 N.W.2d 320 (1998). ...Supreme Court holds that breach of contract cause of action need not precede bad faith tort claim the LeRettes were not required to prevail on their breach of contract cause of action relating to untimely paid and unpaid bills as a prerequisite to prevailing on the bad faith cause of action relating to initial denials in connection with Mary's hysterectomy. ... Ultimate Payment of Benefit Does Not Defeat Bad Faith Claim Best Place, Inc. v. Penn America Ins. Co., 82 Haw. 120, 920 P.2d 334 (1996) (tort of bad faith allows an insured to recover even if insurer performs express covenant to pay claims); Rawlings v. Apodaca, 151 Ariz. 149, 726 P.2d 565 (1986) (insurer's eventual performance of express covenant by paying claim does not release it from liability for bad faith; implied duty of good faith and fair dealing is breached when insurance company's conduct damages very protection or security which insured sought to gain by buying insurance). ... Bad or Good faith test determined at time of the ins co's denial' if an arguable basis exists, as a matter of law there is no bad faith Radecki v. Mutual of Omaha Ins. Co., 255 Neb. 224, 583 N.W.2d 320 (1998)"if a lawful basis for denial actually exists, the insurer, as a matter of law, cannot be held liable in an action based on the tort of bad faith." 255 Neb. at 229, 583 N.W.2d at 325. "(If) at the time of each denial, [the insurer] had an arguable basis on which to deny the claim" bad faith cause of action fails as a matter of law regardless of the manner in which an investigation was or was not conducted." 255 Neb. at 230, 583 N.W.2d at 326. "Whether a claim is fairly debatable is..a matter of law . . . and such a determination is based on the information available to the insurance company at the time the demand is presented." Id. Because United Wisconsin had an arguable basis on which to initially deny precertification at the time of each such denial, the LeRettes' bad faith claim as to Mary's hysterectomy fails as a matter of law.