Plaintiffs Allege Health Insurer Breached Contract Over Coverage Rescission

In a dramatic reversal, the Court of Appeals of Ohio has overturned a previous decision favoring a major health insurance provider in a case involving allegations of contract breach and bad faith. The appeal was filed by Ajit Tolani and Shruti Tolani against Medical Mutual of Ohio (MMO) on December 18, 2025, at the Cuyahoga County Court of Common Pleas, challenging the insurer’s summary judgment win.

The case revolves around MMO’s rescission of the Tolanis’ health insurance policy shortly after Ajit Tolani purchased it through the Affordable Care Act Exchange in early 2017. Ajit, who had been diagnosed with a severe lung condition while living in India, moved to Ohio for treatment at the Cleveland Clinic. Despite being approved for coverage starting February 1, 2017, MMO rescinded his policy just one month later, citing alleged misrepresentations about his residency intentions. The insurer argued that Ajit’s intent to return to India post-treatment violated eligibility standards for ACA Marketplace plans.

Ajit and Shruti Tolani initially filed their complaint claiming MMO breached its contract by not providing adequate notice before rescinding coverage and acted in bad faith by lacking reasonable justification for their actions. The trial court originally sided with MMO, asserting that there was no breach since Ajit allegedly did not meet residency requirements. However, upon appeal, the appellate court found genuine disputes regarding whether Ajit made any intentional misrepresentation warranting policy rescission.

Key evidence included a social worker’s note from January 2017 suggesting Ajit’s stay in the U.S. might be temporary but also noting no immediate plans to leave. Additionally, Dr. Atul Mehta’s affidavit indicated that Ajit’s medical condition necessitated an extended stay beyond nine months due to recovery needs post-transplantation. These points raised questions about MMO’s basis for determining non-compliance with residency requirements under ACA guidelines.

The appellate court concluded that there were unresolved factual issues concerning both the alleged misrepresentation and whether MMO had reasonable grounds for its actions. Consequently, it reversed the lower court’s ruling and remanded the case for further proceedings consistent with these findings.

Representing the appellants is Brian C. Lee from The Lee Law Firm LLC while Christopher C. Koehler and Gregory R. Farkas from Frantz Ward LLP represent Medical Mutual of Ohio. The case is presided over by Judge Lisa B. Forbes alongside Judges Michelle J. Sheehan and Michael John Ryan under Case No. CV-23-975686.