More on Post Loss Underwriting – 2
The beneficiary of a health plan, under Hailey, has nothing to lose and everything to gain by concealing material facts and claiming the concealment was innocent. Hailey deprives the Health Plan of the right to rely upon him who would be covered for such information as the Health Plan desires so that it can make a wise discrimination in selecting its risks. Rather, it expects the insurer to assume the falsity of the statements made by the prospective beneficiary and thoroughly investigate the risk presented to it, or take all risks presented. It turns the covenant of good faith and fair dealing on its head and makes it a one way.
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