McKean Evans

Policyholders Can Sue for Health Insurer’s Refusal to Cover Proton Beam Therapy Cancer Treatment Says Washington Supreme Court

On October 3, 2019, the Washington Supreme Court decided S trauss v. Premera Blue Cross, holding the Strausses could sue Premera Blue Cross for denying coverage for Proton Beam Therapy to treat prostate cancer.

Mr. Strauss had a Premera health insurance policy. The policy promised Premera would pay for “medically necessary” treatment. Mr. Strauss was diagnosed with prostate cancer and his doctor recommended Proton Beam Therapy treatment. Mr. Strauss’ doctor believed Proton Beam Therapy had fewer side effects than traditional radiation therapy because it exposes less of the body to radiation.

Premara refused coverage, claiming Proton Beam Therapy was not “medically necessary.” Premara said there was no proof Proton Beam Therapy had fewer adverse side effects than traditional radiation therapy. The Strausses filed a lawsuit.

Because there were no clinical studies on point, the Strausses supported their case with testimony from two radiation oncologists that Proton Beam Therapy would lead to fewer side effects because it exposed less of the body to radiation. Premera argued the Strausses could never prove Proton Beam Therapy was medically necessary without clinical studies. The trial court agreed with Premera and dismissed the lawsuit.

The Washington Supreme Court reversed, holding the Strausses’ case could move forward. The Supreme Court emphasized the absence of clinical evidence did not bar the Strausses’ claim. The Supreme Court found the Strausses’ expert doctors were qualified and that the trial court was wrong to reject the doctors’ opinions purely because no clinical studies existed. Importantly, the Supreme Court also rejected certain prior cases Premera relied on, holding those cases were wrongly decided.

The Strauss case is an important victory for policyholders and patients. Health insurance disputes can be very difficult, particularly because health insurance policyholders often have fewer consumer protections and are at greater risk of abuse by their insurers. Health insurers often use the words “medically necessary” as magic words that mean you have no right to the healthcare your doctor prescribed. This is especially true with novel treatments for complex diseases like cancer. This ruling will hopefully empower more people to pursue the treatment they need without worrying about insurance coverage.

Washing State’s “homegrown” health insurers credited with keeping rate increases low

Preliminary reports suggest Washington State’s Affordable Care Act (a/k/a Obamacare) plans will see minimal rate increases in 2020. Washington State exchange plans are projected to see a 1% average rate increase, lower than almost half of other states in the U.S.

Washington’s Insurance Commissioner reportedly credited Washington-based health plans with the low increases. Washington-based insurers are tied to the local community. These insurers rely on keeping local business in order to thrive. Local plans also tend to have better relationships with doctors and hospitals. Large, national carriers, on the other hand, can lose Washington customers to cheaper plans.

This is good news for the approximately 250,000 Washington residents who buy insurance through Washington’s ACA/Obamacare exchange.

Can your disability insurer offset your benefits because you are receiving other income?

Let’s say you become ill and can’t work anymore. Fortunately, you have disability insurance coverage through your employer. You apply and get awarded benefits. The policy says your benefits are two thirds of your salary. But the insurance company is paying you less. They say that they can subtract from your benefits any money you are collecting from Social Security Disability.

Can they do that? Like many insurance questions, it depends on the insurance policy fine print.

Most disability insurance policies provide an offset for so-called “other income” or “deducible income” you receive because of your disability. For instance, if your monthly disability insurance benefit would normally be $1,000, and you have $300 in deductible income, the disability insurance benefit is reduced to $700. What counts as deductible income that counts against your benefits depends on the wording of the insurance policy.

Deductible income often includes:

Social security disability payments;
Workers’ compensation payments;
Payments from other insurance policies; or
Payments from the person who inflicted the injuries that made you disabled (if a third party is responsible for your disability).

Moreover, disability insurance policies often require you to apply for potential sources of deductible income. For instance, your disability policy may require you to apply for Social Security Disability benefits.

The key is that the insurance company can’t deduct income that isn’t specifically listed in the policy. If you are receiving benefits under a disability insurance policy and the insurer tries to reduce your benefit because you are receiving other disability income, consult a lawyer to review the policy and make sure you know your rights.

When is it “too late” to make an insurance claim?

Let’s say the insurance company denies your claim. They don’t dispute you had a covered loss, but they say you missed a deadline buried in your insurance policy requiring you to notify them of the claim within a certain time. Can they do that?

The answer, often, is no. But the devil’s in the details.

Virtually all insurance claims involve important deadlines. For instance, there can be deadlines to tell your insurance company about the claim, to provide the insurer with documentation about the claim, to appeal the insurer’s denial of a claim, or to file a lawsuit. Which deadlines apply and the effect of missing them depend on the details like the insurance policy fine print and whether the policy is subject to ERISA.

Because the rules can vary and the consequences of missed deadlines can be draconian, it’s critical to consult an attorney to know your rights and obligations. Here are some general examples:

Deadlines to notify your insurer about the claim. Most insurance policies require you to notify the insurance company of your claim within a certain time period. Sometimes it’s “as soon as possible.” Sometimes’s it’s a specific date, for example, within one year of the loss.

The consequences of missing a claims notice deadline vary, but, often, the insurer cannot deny your claim just because you missed the deadline to give them notice. If you’re in Washington State, most insurers can’t deny claims just because you gave them late notice – the insurer has to prove that your delay in giving notice hurt the insurer’s ability to investigate your claim. If your delay in giving notice doesn’t stop the insurer from investigating your claim, the insurer typically can’t use the late notice as an excuse to deny coverage.

That means if your insurer denies your claim because you gave them late notice, there is a good chance you could challenge the denial. But beware – this rule does not apply to every insurance policy, especially policies subject to ERISA.

Deadlines to provide the insurer with information about the claim. Most insurance policies contain language requiring the policyholder to cooperate with the insurer by providing information about the claim. That could include, for example, allowing the insurer access to your home for a homeowner’s insurance claim, or providing the insurer medical records for a disability insurance claim.

Many insurance policies contain no specific deadline for you to provide this information. However, insurers will sometimes give you an arbitrary deadline to provide information they demand. They may tell you they will deny the claim if they don’t receive certain information by a specific date.

Similar to the claims-notice deadline, insurers typically have to prove that your delay in providing information harmed their investigation in order to deny coverage on this basis. But there are exceptions, and it’s important to bear in mind that policyholders have an obligation to cooperate with their insurers, which generally includes responding to reasonable requests for information. And, as a practical matter, looking obstructionist rarely helped anyone’s court case.

Deadlines to appeal the insurer’s denial of a claim. Many insurance policies provide that, if the company denies a claim, the policyholder can “appeal” the denial internally. An internal appeal means the company takes another look at the claim and any new evidence the policyholder submits.

Policyholders often have deadlines, sometimes just a few weeks, to submit an appeal. In some insurance policies, the appeal is voluntary, so failing to submit an appeal on time is unlikely to affect your rights. Other insurance policies – especially those governed by ERISA – make the appeal mandatory. That means missing the appeal deadline can cause you to permanently give up your right to contest the denial or seek insurance benefits.

Deadlines to file a lawsuit if your claim is denied. If it becomes necessary to go to court to fight an insurance claim denial, it’s critical to know the applicable statute of limitations, i.e., the deadline by which you have to file a lawsuit. Failing to file suit within the statute of limitations can mean you permanently lose the right to go to court. Most statutes of limitations are at least year from the date of loss. But there are important exceptions that depend on the details. For example, many homeowner’s insurance policies require you file suit within one year of the date of loss. Also, ERISA-governed insurance policies typically have far shorter deadlines to file suit – sometimes measured in days.

The upshot is that filing a late claim doesn’t make it a foregone conclusion that you lose your right to insurance benefits. If the insurance company denies your claim because you missed a deadline, there are often steps you can take to contest the denial and, potentially, obtain insurance benefits notwithstanding the missed deadline. But it’s critical to have an attorney review the facts and your insurance policy to make sure you know what deadlines apply and the consequences of missing any deadlines.

Know Your Rights Under Washington’s Insurance Fair Conduct Act

Washington State’s Insurance Fair Conduct Act (a/k/a “IFCA”) provides important legal protections for insurance policyholders. IFCA was passed by the legislature and then ratified by the voters in 2007. IFCA was enacted based on lengthy testimony in legislative hearings from industry experts and consumer advocates about how insurers abused their policyholders despite existing laws.

IFCA prohibits insurers from unreasonably denying coverage or payment of benefits under an insurance policy. There are some important differences between denying “coverage” versus denying “benefits.”

An insurer denies “coverage” when it refuses to pay a claim on the basis the claim isn’t covered under the policy or is excluded from the policy. Denying coverage is pretty straightforward. For example, if your homeowner’s insurer refuses to pay for damage to your home in a fire because you were renting the house on airbnb and they say the policy excludes property used for business purposes, that’s a denial of coverage. Or if your disability insurance company refuses to pay benefits because they claim you don’t meet the definition of disability under the policy, that’s also a denial of coverage.

“Benefits” can be more complicated. The benefits you get under an insurance policy are broader than just whether the loss is covered. For example, you get the benefit of a full and fair investigation of your claim at the insurer’s expense. That means an insurer can violate IFCA even where they agree the loss is covered but refuse to pay all the benefits owed under the policy, for instance, because they refused to investigate all the evidence and thus miss important parts of the claim.

IFCA gives policyholders important remedies where an insurer violates IFCA.

First, the policyholder gets paid for their losses resulting from the insurer’s violation. This typically entails the amount of the claim the insurer refused to cover, or the amount of the benefits the insurer refused to pay.

Second, the policyholder gets paid their attorneys’ fees and litigation costs. That’s important because paying lawyers and expert witnesses can get expensive. If you have to go to court to recover $100,000 in policy benefits but litigation costs you $90,000 in lawyers’ and experts’ fees, the $10,000 you’re left with is a hollow victory. IFCA fixes this problem by requiring the insurer to pay these costs, allowing the policyholder to keep the insurance payment they should have received without having to go to court.

Third, the policyholder can recover triple their damages if the court decides the insurer’s conduct was so bad as to warrant extra relief. This often depends on whether the insurer violated Washington State’s insurance regulations requiring fair claims handling, or could depend on the insurer’s violation of industry standards, or general unfairness.

However, IFCA has two big caveats.

First, IFCA doesn’t apply to health insurance carriers. That’s unfortunate because health insurance is under-regulated and prone to abuse, and health insurance policyholders are uniquely vulnerable to insurer misconduct because the rules are so complex and the stakes often very high. Health insurers are, however, subject to the patient bill of rights.

Second, the policyholder must send the insurance company a notice of the company’s IFCA violations before filing suit, and must send a copy to Washington’s Office of the Insurance Commissioner.

Third, IFCA does not apply to most employer-sponsored insurance, which is often exclusively governed by a federal law called ERISA.

IFCA violations can be complex, so it’s important to consult a lawyer to be sure you know your rights.