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# Insurance company loses in small claims
- URL: https://www.smdp.com/insurance-company-loses-in-small-claims/
- Published: 2002-02-23T16:00:00.000Z
- Updated: 2026-10-23T00:03:34.000Z
- Author: Andrew Fixmer
- Tags: Health, Santa Monica, #archive-import

*Company policy states that all claims under $5,000 are denied*

A Santa Monica couple was vindicated this week after a judge ordered that their insurance company must pay medical bills, which were automatically denied as a matter of policy.

Zoreh and Bruce Shaffer presented their case in Santa Monica small claims court this week where Judge Pro Tem Patsy Cobb awarded them $340 for the ultrasound that detected the cyst in Zoreh’s uterus — a claim their insurance company, CalFarm, said was unnecessary.

“This is something I have only heard of in legends,” Cobb said, shaking her head in disbelief. “I have actually never come across something like this before.”

> “This is something I have only heard of in legends. I have actually never come across something like this before.” — — PATSY COBB Santa Monica judge pro tem

Last fall, Zoreh Shaffer spent a week in the hospital after she awoke in the middle of the night with excruciating pain in her abdomen. Her hospital stay cost $6,000 a day, which didn’t include her surgery and doctor bills.

CalFarm refused to pay the medical bills, claiming the hospital stay and most of the testing ordered by her physicians were unnecessary.

When her husband, Bruce Shaffer, tried to appeal the insurance company’s decision, he was routinely denied and none of his letters or phone calls were returned.

It wasn’t until several months later, after the couple hired an attorney to go through binding arbitration, that the company finally paid the hospital bill.

But Shaffer still had to get CalFarm to pay for the doctored-ordered tests to determine his wife’s illness. Multiple blood tests and ultrasounds were needed. The first ultrasound was inconclusive, the second one determined Zoreh had a ruptured cyst in her uterus.

CalFarm still claimed the treatments were medically unnecessary. When the company didn’t pay, the hospital sent the bill directly to the Shaffers. When the Shaffers couldn’t pay, the hospital’s collection agency went after the couple.

“They don’t care,” Bruce Shaffer said. “They keep billing you until you’re in collections and your credit rating is completely ruined.”

Shaffer couldn’t understand how the insurance company could deny legitimate claims until he read CalFarm’s fine print. CalFarm’s insurance policy states all medical claims in California under $5,000 are automatically denied and can only be settled in small claims court.

“Any dispute regarding a claim for damages within the jurisdictional limits of the California Small Claims Court will be resolved in such court,” reads Section F of the general provisions of the CalFarm policy. It also states that any bill more than $5,000 is automatically sent into binding legal arbitration.

But to win, the Shaffers had to name the insurance company in a lawsuit. However, Shaffer learned from his brother, an attorney, that many companies are subsidiaries of larger umbrella companies which are part of even larger corporations.

“If you don’t name the right company, your lawsuit is worthless,” he said. “If I didn’t put down the proper legal name, everything would be worthless. If I tried to collect on a judgment under CalFarm, it would have gone no where.”

After spending an entire day being bounced from one state agency to the next, Shaffer learned CalFarm was purchased by Columbus, Ohio-based Nationwide Insurance in April of 1999\. Nationwide Insurance is part of Nationwide Health Plans, which is owned by Nationwide Life Insurance Company.

Shaffer couldn’t figure out who owned who, so he sued them all.

None of the insurance companies showed up in court.

Because each bill has to be contested, the Shaffers will have to go back to small claims court next month in an attempt to collect another $3,000 for a hospital visit that was denied when Zoreh had further complications last December.

“Even though it took more time than it was probably worth, I wasn’t going to let them steam-roll me,” said Bruce Shaffer. “This is why I pay for health insurance, so if we ever need it, it would be there.”

The Shaffers would leave CalFarm for another health insurance company, but they have been denied everywhere else.

“Once you are with a health insurance plan and you have health problems, you may think you can switch out but you can’t,” Bruce Shaffer said. “Once you have health problems other companies won’t take you, so you’re stuck with the one that keeps denying your bills.”

*Originally published in the Santa Monica Daily Press print edition on February 23, 2002.* [Read the original PDF.](https://s3.us-east-1.amazonaws.com/smdp%5Fbackissues/022302.pdf?ref=smdp.com)