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.

Court of Appeals Clarifies Policy Causation Language In Favor Of The Insured

When language in one part of your ERISA policy says your claim is covered, can the company rely on language elsewhere in the policy to deny your claim?  The Ninth Circuit Court of Appeals recently answered “no.”  In Dowdy v. Metropolitan Life Ins. Co., the court ruled the conflicting language about what caused the insured’s loss did not  preclude coverage.

Mr. Dowdy’s leg was amputated following a car crash.  He made a claim under his ERISA-governed Accidental Death & Dismemberment insurance policy with MetLife, purchased through Mrs. Dowdy’s employer.

MetLife denied coverage, claiming the amputation was excluded because it was complicated by Mr. Dowdy’s diabetes.  MetLife relied on language in the policy requiring the loss to be the “direct result of the accidental injury, independent of other causes,” and excluding injuries for losses related to “illness or infirmity” or “infection occurring in an external accidental wound.”  Under this language, MetLife claimed the right to deny coverage for any amputation “contributed to” or “complicated by” diabetes.

The court ruled the language could be read two ways, but that the Dowdys prevailed under either interpretation.  Under one interpretation, coverage existed if the injury was the “predominate or proximate cause,” while under the more stringent interpretation, coverage was barred as long as the excluded condition (diabetes) “substantially contributed” to the loss.

While agreeing diabetes was “a factor” in the injury leading to the amputation, the court determined there was no evidence diabetes “substantially” contributed to the injury.  The court relied on definitions of “substantial” requiring “a significant magnitude of causation” demonstrating the diabetes was “more than merely related to the injury.”

Since Mr. Dowdy’s medical records established only that diabetes “complicated” Mr. Dowdy’s wound, the court determined diabetes did not “substantially” contribute to the injury. The car crash caused a severe injury that nearly severed Mr. Dowdy’s leg.  The subsequent infection and wound issues were complicated by diabetes, but did not cause Mr. Dowdy’s amputation.

Because this type of language frequently appears in Accidental Death & Dismemberment policies as well as health and disability policies, the Dowdy ruling is helpful for many ERISA participants seeking coverage.


Why Won’t Your Government-Mandated Flood Insurance Pay Your Claims?

CBS’ recent investigation found the federal National Flood Insurance Program (“NFIP”), intended to benefit homeowners caught in flood disasters, actually winds up paying most of its money to help insurers avoid paying claims.

The problem is NFIP doesn’t pay flood victims directly.  Instead, NFIP collects premiums and taxpayer dollars, then turns the money over to private insurers with minimal oversight.  Exacerbating the problem is most homeowners living in federally-designated “flood plains” are legally required to purchase flood coverage (sometimes by the government, sometimes by their mortgage lender).

A 2016 federal oversight report found NFIP often pays insurers more than it pays the homeowners it’s supposed to benefit.  The report called out one example in which NFIP paid an insurer over $87,000 to defend a claim worth a maximum of $25,000.  The report noted some insurance defense attorneys ran up the bill by, for instance, insisting on live, in-person testimony (typically including legal fees, court reporter fees, travel expenses and a conference room) just to verify receipts.  Another problem is NFIP will automatically pay, without scrutiny, any insurer defense “expert” expense as long as it falls below $2,500.

The report emphasized many of these problems plagued the victims of 2012 Superstorm Sandy, which caused extensive flooding in New Jersey and other Mid-Atlantic areas.  One estimate suggested Superstorm Sandy flood claims were underpaid by at least $189 million.

Part of the problem is the NFIP is essentially a risk-free investment for participating insurers, because any shortfalls are backed by taxpayer money.  But after huge losses following Hurricane Katrina, Congress started to investigate the NFIP’s losses and suggested shuttering the program.  That gives insurers in more recent disasters like Superstorm Sandy a huge incentive to lowball claims, keep NFIP’s losses low, and lower the risk Congress acts to reform or deactivate NFIP.