Category: Insurance

Out of Network Billing for Emergency Room Visit: New Legislation Aims To Fix Loophole In Existing Law

In a medical emergency, patients are typically concerned with getting to the emergency room as fast as possible.  They often don’t stop to check whether the closest emergency room is at a hospital that is “in-network” with their health insurance plan; or, even if they do, the nearest in-network emergency room may be too far away.

Most health insurance plans exclude coverage for treatment with out-of-network hospitals, so this can cause insureds who seek treatment in an emergency without carefully checking whether their hospital is in-network with their insurer to pay astronomical out of pocket costs for treatment.

The federal Affordable Care Act (a/k/a “Obamacare”) imposed new rules on insurers that partially fix the problem of coverage for out-of-network emergency healthcare.  The ACA requires covering emergency care without limiting coverage on the basis care was rendered by an out-of-network provider.  The statute provides:

If a group health plan, or a health insurance issuer offering group or individual health insurance issuer [sic], provides or covers any benefits with respect to services in an emergency department of a hospital, the plan or issuer shall cover emergency services … in a manner so that, if such services are provided to a participant, beneficiary or enrollee … such services will be provided without imposing any requirement under the plan for prior authorization of services or any limitation on coverage where the provider of services does not have a contractual relationship with the plan for the providing of services that is more restrictive than the requirements or limitations that apply to emergency department services received from providers who do have such a contractual relationship with the plan….

42 U.S.C. § 300gg-19a(b)(1) (emphasis added).

Courts have summarized this rule as requiring insurers “to cover out-of-network emergency services in a way ‘that is [no] more restrictive than the requirements or limitations’ applicable to emergency department services received from in-network providers.”  Northside Hosp., Inc. v. Ambetter of Peach State, Inc., 2017 WL 8948348, at *1 (N.D. Ga. Dec. 1, 2017) (quoting 42 U.S.C. § 300gg-19a(b)(1)(ii)).

Washington State’s Patient Bill of Rights similarly precludes insurers from limiting coverage for emergency care on the basis the provider was out-of-network.  Washington law provides:

A health carrier shall cover emergency services necessary to screen and stabilize a covered person if a prudent layperson acting reasonably would have believed that an emergency medical condition existed…With respect to care obtained from a nonparticipating hospital emergency department, a health carrier shall cover emergency services necessary to screen and stabilize a covered person if a prudent layperson would have reasonably believed that use of a participating hospital emergency department would result in a delay that would worsen the emergency.

RCW 48.43.093 (emphasis added).

But there’s an important loophole in this rule.  Health insurers have to cover out-of-network emergency care under the rule, but the rule never states how much of the bill an insurer must pay.  This is a critical omission.  Most health plans limit the amount the insurer pays to special discount rates the insurer negotiated with its in-network providers.  But out-of-network providers haven’t agreed to accept this rate, which is often a tiny fraction of the out-of-network provider’s charge for an emergency room visit.

Thus, even where the insurer nominally covers emergency treatment at an out-of-network hospital, the insurer is only required to pay the amount it negotiated with its in-network providers.  Since the out-of-network emergency room hasn’t agreed to accept those rates, the insurer’s coverage will be inadequate – often by hundreds of thousands of dollars.  The patient then receives a bill for the difference despite having “coverage” for the emergency room visit.

This leads to the unfair situation where a person goes to an out-of-network emergency room and supposedly has coverage under the ACA and Washington Patient Bill of Rights, yet still winds up on the hook for medical bills that would have been paid had the provider been in-network.  As a practical matter, this renders the intent of the ACA and Washington Patient Bill of Rights – protecting insureds from crippling medical bills for visiting an out-of-network emergency room – completely ineffective.

Unfortunately, until a legislative solution emerges, insureds must still check the in-network status of their providers with agonizing precision – even in the event of a life-threatening medical emergency – despite the ACA and Washington Patient Bill of Rights.  Washington State’s legislature has proposed such a solution: HB 2114 – 2017-18 (“Protecting consumers from charges for out-of-network health services”).  That bill remains in legislative committee and faces harsh opposition from industry groups.

Court of Appeals Reiterates Insurer’s Obligation to Protect Policyholder From Lawsuit

When a driver crashes into another vehicle and is sued for damages, the driver’s insurer typically has an obligation to  defend the lawsuit and act in good faith to protect its insured’s interests.  When the insurer fails to do so, the driver likely has legal recourse under Washington law.

Washington’s Court of Appeals recently reiterated this principle in Singh v. Zurich American Insurance Company.  In Singh, the Court of Appeals ruled Singh’s insurer, Zurich American, was liable for failing to settle and defend claims against Singh in good faith.

On July 20, 2011, one of Singh’s employees, driving Singh’s semitruck, allegedly caused a 16-vehicle crash by failing to slow down for congested traffic.  Persons injured in the crash, and the families of those killed in the crash, sued Sing for damages.  Because of the dramatic injuries and deaths allegedly caused by Sing’s employee, the plaintiffs quickly advised Singh that they saw their damages recoverable from Singh as exceeding the limits of Sing’s insurance policy.  In other words, Singh knew that, if he lost the court case, he would have to pay significantly more money than his Zurich American insurance policy would cover.

Singh’s insurance policy with Zurich American obligated Zurich American to defend Singh in the lawsuit.  Zurich hired a lawyer to defend Singh.  Zurich’s lawyer recognized it was in Singh’s best interests to pay the entire insurance policy limit to settle the large monetary demands of the persons injured and killed in the crash.  But the attorney also recognized that disbursing the entire policy limit to the first plaintiffs to sue Singh would leave Singh without insurance coverage should later claimants seek damages from Singh.

Accordingly, Zurich’s lawyer proposed to reserve some of Singh’s policy limits to protect Singh from future claims arising from the crash.  However, Zurich ignored its lawyer’s advice and ordered the lawyer to settle the existing claims with the full policy limits.  Zurich’s lawyer did so.

Later, another person sued Sing claiming injuries in the crash.  Zurich refused to defend the lawsuit because Singh’s policy limits were exhausted from the prior settlement. Singh paid for his own counsel and ultimately paid $250,000.00 to settle the new claims.

Singh then filed suit against Zurich alleging Zurich acted in bad faith and violated Washington’s Insurance Fair Conduct Act (“IFCA”) and Consumer Protection Act (“CPA”).  The jury found in Singh’s favor, agreeing Zurich breached Singh’s insurance policy and acted in bad faith.

The Court of Appeals upheld the jury’s verdict.  The court observed the insurer’s duty to defend the insured “is one of the main benefits of the insurance contract.”  Thus, the court determined Zurich could not permissibly exhaust the policy limits then use its exhaustion of the policy limits as an excuse to continue defending Singh.  Doing so put Zurich’s interests over Singh’s in violation of the insurance policy and Washington law.  Notably, Zurich ignored its own lawyer’s suggestion it keep some policy limits in reserve to protect Singh from future claims.

Think Twice About Your Health Plan’s “Wellness” Review

It’s currently trendy for health plans to try to get their insureds to undergo a “wellness” screening in which the insurer collects personal health and lifestyle data from the insured.  These are often pitched as a benefit to the insured with the health plan saying, basically, “let us give you this great free screening!”   Sometimes the insurer even offers gift cards or other goodies to insureds who participate.

But as is typical for anything the company is incentivizing insureds to do, “wellness” screenings are often in the insurer’s interest – not the individual’s.

Health insurers have begun routinely collecting insured’s personal health and lifestyle data to justify premium increases based on the minutia of an individual’s daily life.   Just like tech companies can use the minutia of your personal data for marketing purposes, health insurers can use insured’s lifestyle and biometric data to raise premiums.

A recent NPR report details how “the health insurance industry has joined forces with data brokers to vacuum up personal details.”  Besides mundane details like race or education, insurers also reportedly track what TV you watch, your social media habits, and your online shopping, among other things.   One company boasts it collected health data on 150 million Americans going back to 1993.  Another filed a patent application to gather health-related information from social media.

Insurers use this data to price health care plans.  For instance, insurers reportedly consider women purchasing plus-size clothing to be at risk of depression; minority insureds to be more likely to live in dangerous neighborhoods; and recently-married insureds to be more likely to need childbirth care.

Insurers’ use of this data raises broader questions about the use of the data we readily share in the digital age, but it also emphasizes that the health insurer’s “wellness” exam might not be the altruistic offer it’s pitched as.

Health Insurer Fined For Violating Independent Review Rules

Washington’s insurance commissioner recently announced a $100,000 fine in response to a consumer complaint that Kaiser Foundation Health Plan, an HMO, ignored consumers’ rights in the health claims appeal process.  The commissioner found that Kaiser failed to follow several rules related to appeals of health insurance claims to an Independent Review Organization (“IRO”).

At issue are rules contained in Washington’s statutes and administrative codes protecting insurance policyholders.  Among other things, Washington law required Kaiser to provide the IRO with any records, documents, or information relevant to the claim within three business days; ensure that expedited reviews are adjudicated within 72 hours of the policyholder’s request; and provide the policyholder the IRO’s name and contact information within one business day.

In Kaiser’s case, the insureds had the right to provide evidence supporting the insured’s claims to the IRO within five days.  However, Kaiser failed to notify most consumers they had the right to do this.  The commissioner also found Kaiser dragged its feet in the IRO process.  Kaiser was found to have failed to timely send claims files to the IRO; failed to process expedited claims on time; and failed to timely give consumers the IRO’s name and contact information.

The commissioner found these violations occurred during the period from January 2016 through March 2017.

Kaiser signed a Consent Order regarding the above violations, pursuant to which Kaiser acknowledged its duty to comply with the law and consented to imposition of the fine.

The Fine Print Matters In Insurance Coverage Disputes

Many insurance disputes revolve around the fine print of the policy.  Unfortunately, the policy’s specific language may define important terms differently from what the insured understood or was led to believe.  This was the case in the Seventh Circuit Court of Appeals’ recent decision in Fiorentini v. Paul Revere Life Insurance Company.

In Fiorentini, the plaintiff became disabled during aggressive cancer treatment.  The insurer affirmed coverage and paid disability benefits while the plaintiff remained unable to work.  But a dispute arose after the plaintiff went back to work.  The insurer argued the plaintiff was no longer disabled since he had returned to work, but the plaintiff argued he remained disabled because, despite being back at work, he still could not perform all of his job duties.  Specifically, the plaintiff argued that while he could perform most job duties, aftereffects of his cancer treatment left him unable to meet face-to-face with potential clients.

The plaintiff relied on the policy’s definition of “total disability” which provided the plaintiff was disabled if he was “unable to perform the important duties” of his job.  The plaintiff argued that meeting in person with potential client was an important duty.  Hence, the plaintiff claimed that being unable to meet in person with potential clients rendered him disabled even admitting he could do all the other functions of his job.

The court read the policy differently.  The court interpreted the definition of disability to cover only the “inability” to do important job duties, not merely a “diminished” ability to perform.  The court concluded that even assuming the plaintiff’s ability to meet face-to-face with potential clients was diminished by the aftereffects of his cancer treatment, the client was not totally unable to perform his job duties.  Since the court decided that meeting in person with new clients was not essential to the plaintiff’s job, being unable to meet with new clients only diminished the plaintiff’s ability to perform his duties – it did not render the plaintiff unable to perform his duties.

In short, the court parsed the policy fine print in a way that undercut the insured’s expectations about what would be covered.  The Fiorentini decision illustrates the importance that policyholders carefully scrutinize policy language to learn their rights.