Category: Insurance

Insured California Wildfire Losses May Exceed $6 Billion

California’s increasingly-destructive wildfires are estimated to trigger billions of dollars in insurance claims.  As of November 2018, estimates show 15 wildfires in California destroying nearly 7,000 homes and business; 31 people have been killed and nearly 300,000 evacuated.  Beyond the loss of life and property damage implications for typical homeowner’s insurance coverage, the fires and attendant evacuations also potentially implicate business interruption or other commercial insurance provisions. Furthermore, the approximately 300,000 evacuated people will have significant additional living-expense claims under their homeowner’s coverage due to being forced to pay for temporary shelter and relocation costs.

Total losses are estimated at approximately $6.8 billion so far.   The price tag to rebuild will be particularly high because construction demand is already up from the 2017 wildfires and the strong housing market, leading to increased demand for construction labor and materials.  This high price tag translates to greater losses for homeowners and their insurance carriers.

California’s current wildfires are now the most destructive and deadliest on record.  From an insurance perspective, the destruction is particularly acute in high-property-value areas like Malibu.

The California wildfires serve as a reminder to policyholders to make sure they’re adequately covered for disaster losses, and to always act proactively to protect their rights after a loss.

Health Insurer Ordered to Pay $25.5 Million For Wrongful Cancer Treatment Denial

In a timely followup to last week’s discussion of how to fight health insurance denials, this week an Oklahoma jury ordered health insurer Aetna to pay $25.5 million for denying coverage for insured’s Orrana Cunningham’s cancer treatment bills.   Aetna had denied coverage for Orrana’s treatment in 2014 on the basis it was “experimental;” after being denied coverage for this treatment, Orranna passed away the next year.

The case illustrates one of the classic issues in a health insurance or disability insurance coverage dispute.  In typical cases, the insured’s family doctor or specialist prescribes treatment or time off work after examining the insured, diagnosing an illness or injury, and identifying appropriate treatment.  The insurer typically denies coverage based on the opinions of a physician on the insurer’s payroll; these “file review” physicians usually don’t practice medicine in the conventional sense, but work for the insurer reviewing medical records of insureds to advise the company whether to cover the treatment or disability.

As you could imagine, the doctor on the company’s payroll has a powerful incentive to tell the insurer what it wants to hear, which is typically that there is no coverage and the insurer need not pay for costly treatment.   Moreover, the insurer’s physician has no history of treating the patient, virtually never examines the patient, and limits their analysis to a cursory review of the patient’s medical records.  In many cases, the physician is so overworked they give little or no attention to the patient’s medical history or treatment needs before denying coverage.

That’s what happened to Orrana Cunningham.  In the course of the lawsuit, it came out that Aetna’s doctor reviewing Orrana’s medical records was pressured to review more than 80 patients’ cases a day.  The plaintiffs also told the jury Aetna’s file reviewers were unqualified, and were compensated based on Aetna’s profit – not based on getting claims right.

The plaintiffs’ attorney reported a juror approached him after the trial and emphasized the jury “wanted to send a message to Aetna” to fix a broken health insurance system.

How to Fight A Health Insurance Denial

Many Americans increasingly find themselves dealing with huge medical bills after medical procedures their health insurers should have covered.  All too often, the insurance company says “it’s not our problem, talk to the hospital;” the hospital says “it’s not our problem, talk to your insurer;” and the insured is left holding the bag, often at a time they’re already dealing with the stress of major surgery or illness.

The good news is Washington insureds have specific rights they can enforce to hold their health insurer accountable.  Insurers must follow the specific terms of the policy contract and cannot deny coverage for medical bills without a reasonable basis.  If insurers fail to live up to their obligations, the insurer has legal rights under Washington’s Consumer Protection Act and Insurance Fair Conduct Act, or the federal Employee Retirement Income Security Act, to seek a court order requiring coverage and requiring the insurer to pay the insured’s attorney’s fees.

Unfortunately, fighting a health insurance denial takes significant time and effort, which can be hard when you’re already recovering from surgery or illness.  This is why many health carriers have been criticized for making the process difficult and confusing in the hope that insureds will simply give up without fighting the denial.

There are three common reasons why health insurance claims are denied:

  1. The insurer determines the procedure, treatment or medicine was not “medically necessary.”  The definition of “medically necessary” depends on the specific policy, but, generally, when the insurer says the procedure wasn’t medically necessary they basically mean “we don’t believe you really needed it.”  Sometimes the insurer uses the same rationale to deny coverage on the basis the treatment is supposedly “experimental.”
  2. The hospital or doctor who provided the treatment was out-of-network, meaning the provider didn’t have a contract with the insurance company.  Most health insurance severely limits or eliminates coverage for out-of-network providers.
  3. The doctor or hospital who provided the care used improper billing and coding, causing the insurer to reject coverage because the hospital didn’t properly detail what care was performed.

The good news is many people successfully fight their health insurer’s denial of coverage.  Each of the three common reasons health claims are denied can be subject to attack:

  1. Denials on the basis treatment was not medically necessary can often be fought with the support of the doctors who prescribed the treatment or care at issue.  Too often, health insurers misread, gloss over, or outright ignore a physician’s rationale for prescribing treatment.  Especially where treatment is expensive or time consuming, insurers have a powerful temptation to “miss” the medical records demonstrating the patient needs the treatment in order to justify denying coverage for treatments that will cost the insurer a lot of money.
  2. Denials for out-of-network treatment can be fought by insisting the insurer follow the policy contract and the federal Affordable Care Act (a/k/a Obamacare).  Often, the policy contract requires the insurer to provide at least some degree of coverage even where the treatment is out-of-network.  Furthermore, if the insured was treated by an out-of-network provider for emergency care, the Affordable Care Act requires the insurer to treat the care as though it was provided in-network.
  3. Improper billing and coding by the hospital can often be challenged by a thorough review of the medical records, procedure codes and billing codes.

Importantly, your insurer cannot deny health care coverage without a reasonable explanation.  This means you have the right to know specifically why coverage was denied and to get the information you need in order to fight the denial.  Most health insurers are required to allow you to “appeal” the denial before filing a lawsuit.

Lastly, in fighting a health insurance denial, be mindful of the applicable deadlines.  All health insurance disputes are subject to deadlines that will cause the insured to lose their right to challenge the health coverage denial if the insured fails to act within a certain time period.  The specific deadline varies, so it is critical to be diligent and stay aware of any applicable deadlines when fighting a health coverage denial.

Washington State Insurance Commissioner Fines United Healthcare for Denying Women’s Health Claims

On September 13, 2018, Washington’s Insurance Commissioner entered into a Consent Order with United Healthcare regarding violations of Washington insurance law governing women’s health claims.  United Healthcare is a health care service contractor that sells individual and family health insurance coverage.

The Insurance Commissioner’s investigation was prompted by a consumer complaint that United Healthcare improperly denied coverage.  According to the complaint, United Healthcare told the consumer her claim was denied because she needed a referral for the women’s health services she received.

That violated Washington’s Direct Access law, which gives women the right to access women’s healthcare from the provider of their choice without having to obtain a referral.

In the course of the investigation, United Healthcare admitted it improperly denied similar claims for 276 insureds.  As a result, many women were improperly told they needed a referral in order to obtain coverage for medical treatment.

The investigation is a reminder to insureds to know their rights under Washington law, and to carefully scrutinize coverage denials to make sure the insurer followed the law.

Update Your Insurance Coverage – Cautionary Tales

Many people purchase insurance and forget about it until there’s a loss.  It’s easy to buy a policy online and set up automatic payments.  Then, you get an email from the insurer once every six months that your policy will renew automatically, and let it occur without giving it a second thought.  Setting your insurance coverage on “autopilot” can have benefits, like reducing the chance the policy lapses.

But there can be an important downside to allowing your insurance coverage to renew automatically.  Often, important changes need to be reflected in your insurance coverage.  This might include:

  • Moving to a new home;
  • Renting out space to tenants;
  • Buying a new car;
  • Getting married or divorced;
  • Having children;
  • or other life changes.

When you allow your old policy to renew, you’re not accounting for any changed circumstances since you purchased the policy.  And since you’ve already set the policy to “autopilot,” and renewals might occur months after the big change, you might never give it a second thought.

The important thing to remember is that you only have the coverage you buy.  If a change in circumstances makes your existing coverage inadequate, or gives the insurer a new basis to deny claims, the insurer will typically jump on the fact you never asked them to amend the policy or told them about the change.

This happens more often than you might think, and once there’s been a loss, it’s often too late to go back and make the change.  I’ve encountered many, many people who did the responsible thing, maintained insurance coverage, thought they did everything right, and wound up without coverage for a destroyed home or totaled car because they relied on obsolete coverage from a policy they purchased years ago.  Dealing with insurance claims is tough enough without giving the insurer additional reasons to limit coverage.

The next time your insurer sends you an email saying “your policy is renewing, you don’t need to do anything,” take sixty seconds to glance at your coverage and consider whether it’s up to date.  If not, consider updating your coverage, and remember to notify your insurer of any changes in writing: if it’s not on paper, it never happened.