Phoenix and Harel Insurance to Fund Preventive Surgeries for Long-Term Policyholders

Insurance companies Phoenix and Harel have agreed to fund preventive surgeries for policyholders who purchased health insurance before 2016, following a settlement reached at the Supreme Court. This agreement is expected to cover dozens of policyholders annually, expanding coverage beyond what was initially determined by a lower court. The case began in 2018 when Gali Alon-Buber filed a class-action lawsuit against the two companies, alleging they refused to cover preventive surgeries designed to preemptively treat illnesses. The dispute centered on the interpretation of the term "surgery" in policies sold under Phoenix's "Silver Line" program until 2014 and Harel's "Preferred Platinum" program until 2016.

In 2016, the Supervisor of Insurance clarified that health insurance policies should include coverage for preventive surgeries. However, the insurance companies interpreted "surgery" narrowly, defining it as an invasive procedure to treat an existing disease, injury, or defect. The court's interpretation of "surgery" was broader, encompassing invasive procedures like laser treatments, endoscopic examinations, angioplasty, and lithotripsy for kidney or gallstones.

In January 2022, Judge Gila Kenfy-Steinholtz of the Jerusalem District Court (now at the Supreme Court) initially approved the class-action certification. Subsequently, in October of the previous year, Judge Tamar Bazak-Rappoport partially accepted the lawsuit. Judge Bazak-Rappoport distinguished between policyholders who purchased insurance before 2011 (for Harel) and 2012 (for Phoenix) and those who bought policies after these dates but before the 2016 clarification. For policies purchased before these dates, she ruled that the term "surgery" should be interpreted broadly, thus requiring coverage for preventive procedures. For policies purchased after these dates without specific add-ons for preventive surgery, she concluded that policyholders had implicitly opted out of such coverage.

This ruling was described as "not a routine outcome" because identical policy language received different interpretations depending on the purchase date. Judge Bazak-Rappoport explained that policy interpretation aims to ascertain the parties' mutual intent based on the entirety of the agreement, not just individual words. She declared that the insurance companies could not deny claims for preventive surgeries for policies purchased before the specified cut-off dates.

The court also ordered the companies to contact policyholders whose claims were previously denied and inform them of their eligibility for coverage. Judge Bazak-Rappoport awarded NIS 50,000 to Alon-Buber and NIS 500,000 in legal fees to her attorneys. Both sides appealed to the Supreme Court, where they accepted a proposal by President Yitzhak Amit and Justices Daphna Barak-Erez and Ofer Groskopf to withdraw their appeals while preserving their arguments for other proceedings. The settlement also stipulated that the companies would voluntarily fund preventive surgeries for pre-2016 clients, and that proceedings would continue regarding previously rejected claims, with the district court's rulings becoming final except for implementation decisions.