Do I Have To Cooperate With My Insurer After A Loss?

Imagine your house catches fire and you make a claim for coverage under your homeowner’s insurance policy.  After a few weeks, the insurer denies the claim.  They don’t dispute the fire happened.  But they say they don’t have to cover the damage because you didn’t cooperate with their investigation.  They claim you should have sent them information about the loss and allowed them access to the property.

Can they do that?  The short answer is yes – after a loss, you have a duty to cooperate with the insurance company.  But this duty has limits.

Insureds, like insurers, have a general duty of good faith and fair dealing under Washington law that requires the insured to work cooperatively with the insurer.  This duty is made explicit in virtually every insurance policy through provisions specifying what actions the insured must take following a loss.

Typically, the duty to cooperate with the insurer after a loss requires:

  • Promptly notifying the insurer of the loss;
  • Taking steps to prevent ongoing damage (e.g., turning off the water to stop flooding from a burst pipe);
  • Documenting the loss (e.g., collecting photos or repair estimates);
  • Allowing the insurer access to the damaged property;
  • Providing the insurer information about the loss.

This general duty to cooperate is important.  The insurer can deny claims if the insured fails to cooperate as required under the policy and Washington law.  It’s therefore critical to cooperate with the insurer and to document that you’ve cooperated by, for instance, memorializing phone calls with the insurer and keeping copies of all the information you send them.

However, it’s also important to know your rights: the duty to cooperate has limits.  The insurer can’t force you to do things that are unreasonable or onerous.  The insurer still has the responsibility to fully and fairly investigate your claims at the insurer’s expense; they can’t make the insured do all the work.  And, critically, even if you fail to cooperate, the failure must be so egregious that it prevents the insurer from adequately investigating the loss, or otherwise materially prejudices the insurer’s interests.  In other words, the insurer can’t deny your claim for technical failures to cooperate.

In short, following a loss, it’s important to document your cooperation with the insurer’s investigation but also to be mindful of your rights.

Know Your Rights Under Washington’s Patient Bill of Rights

Health insurance policyholders are guaranteed specific rights under Washington State’s Patient Bill of Rights.  The law’s purpose is to guarantee health insurance policyholders have access to quality health care.  If you find yourself in a dispute with your health insurance carrier, knowing these rights may help.

Policyholders Have The Right To Know About Their Coverage.  Health insurers must provide prospective policyholders specific information before the policyholder purchases coverage.  This include:

  • A list of doctors, hospitals and other providers who participate in the insurance plan.
  • An explanation of the policyholder’s premiums and charges;
  • How the policyholder can fight a wrongful claim denial, including through filing grievances;
  • Coverage information, including information about what prescription drugs are covered;
  • Explanations of any exclusions or limitations that apply to your coverage;
  • Information about the insurer’s efforts to protect policyholders’ confidential information;
  • Any applicable copayment, delectable, and/or coinsurance charges.

Policyholders Have The Right To Access Medical Treatment. Health insurers must allow policyholders to choose their own Primary Care Provider, although the insurer is permitted to require the policyholder to choose from a specific list.  The insurer must also allow policyholders to change providers if necessary.  Insurers must also  maintain adequate networks containing every category of licensed medical providers.  If needed to treat the policyholder’s condition, the insurer must provide referrals to specialists.  Finally, health coverage must include women’s health care.

Policyholders Have The Right To Challenge Claim Denials.  Health insurers must respond to complaints about wrongful coverage denials through a formal grievance process that is prompt, fair and impartial.

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.