Group Health first to drop loophole, will pay for client's liver transplant

Group Health Cooperative on Thursday said it is changing its policies and will pay for a Spokane man's life-saving liver transplant, a procedure that had been initially denied on a technicality because he was in the midst of a waiting period for organ-transplant coverage.

The decision not only clears the way for Fred Watley to get a new liver as soon as one is found. It also marks the first time a health-insurance company in Washington has officially revoked the controversial loophole.

Critics have long charged that the waiting period allows insurers to unfairly get out of expensive transplants for new members who had been covered under previous plans.

Insurers commonly impose waiting periods of up to nine months on certain medical conditions to prevent customers from buying policies only after a pregnancy or a cancer diagnosis. But in Watley's case, he was denied coverage even though he had previous coverage through his employer; he was caught in a probationary period that applies only to transplants regardless of previous coverage.

Watley, 59, a substance-abuse counselor for The Healing Lodges of Seven Nations, had transplant coverage with the Asuris Northwest Health plan and has been waiting for a liver since 2005. But his employer switched to Group Health in January, and Watley learned two weeks later that his new policy would not pay for any transplant for six months.

Group Health originally notified Watley in February that he wasn't eligible for transplant coverage until July.

But Watley's health turned critical this month. Last Friday, doctors said he would live for just days without a transplant, said his wife, LiAnne Watley. The Spokesman-Review newspaper in Spokane published the family's story Wednesday.

On Thursday, Group Health president and chief executive Scott Armstrong announced the organization had approved the transplant to give Watley's doctors "all the flexibility they need to provide the right care and return him to better health."

Armstrong said Group Health also will support state legislation to eliminate transplant wait periods and called on other insurers in the state to join in.

Washington Insurance Commissioner Mike Kreidler said he intends to tackle the issue in next year's Legislative session. Kreidler's spokeswoman said he was "pleased that Group Health is doing the right thing and expects the other carriers to do the same."

Sean Corry, a veteran Seattle insurance executive and a consumer advocate, said the change would benefit unwary patients, particularly those who get snagged by their employers' decision to switch plans.

"It's grossly unfair to make a person wait and perhaps to die," Corry said.

LiAnne Watley said she was so overcome when she heard of Group Health's reversal from her attorney Thursday that she had to hang up the phone. She was traveling to Seattle to join her husband at the University of Washington Medical Center today.

Meanwhile, Fred Watley's condition has stabilized since a seizure earlier this week. His doctors are hoping to transfer him out of intensive care soon.

LiAnne Watley said the couple are hoping that with the insurance ordeal over, doctors will locate a matching liver any day.

"He's excited," she said.

Kyung Song: 206-464-2423 or ksong@seattletimes.com