Tag: McKean Evans

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.

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.

Can The Insurance Company Cancel My Policy For Late Premiums?

It’s fairly easy to miss an insurance premium payment.  You buy your policy online, set up monthly auto pay through your debit card, and forget about it.  But then you have to replace your card, or get a new card number or bank, or the account is overdrawn, or something else happens.  Or, maybe you’re paying manually each month and just plain get behind on your mail.  You get a notice from the insurer that your policy’s been canceled for premium nonpayment.  You call them and explain the problem and offer to pay, but they won’t let you do it.

Can they do that?  Like most insurance questions, the answer is “it depends.”

The general rule is that insurers are free to cancel policy coverage without notice when the insured fails to timely pay premiums.  Courts are traditionally unforgiving when policyholders miss premium payments.  They emphasize that the basic insurance exchange is the insurer provides coverage in exchange for premium payments; since this is the heart of the bargain, insurers are within their rights to insist on timely premium payments and cancel coverage without notice if premiums aren’t paid on time.

There are exceptions to this rule, but they depend on the specific factual details and the language of the insurance policy:

  • Grace Periods: Sometimes the policy explicitly provides a grace period or lets the insured reinstate coverage after missing a payment.  This is a common feature of life insurance policies in particular.    Or, sometimes the policy doesn’t have a grace period but some applicable law requires the insurer to give you a grace period for missed premium payments.  One prominent example is the federal Affordable Care Act (a/k/a “Obamacare”).  The ACA provides for a grace period for certain covered health insurance plans, with the length of the grace period depending on whether the insured is receiving subsidies.
  • Insurer Misrepresentations.  Courts may be receptive to insurer’s rights to collect premiums, but they don’t like it when insurers lie.  Where the insurer misled the insured about whether premiums were outstanding, or lied about the availability of a grace period before coverage would be canceled, courts often allow the insured to reinstate coverage.
  • Insurer Errors.  Even where the insurance company doesn’t lie, if the insurer’s own conduct prevents you from paying premiums on time then courts often bar the insurer from canceling coverage.  For instance, sometimes insurers misapply or lose a payment, or don’t allow the insurer to make a payment because the company’s website or telephone is down.
  • Past Practices. Sometimes the insurer routinely accepts late payments, leading the insured to conclude that the premium deadline isn’t a big deal.  In those cases, courts sometimes determine the insurer waived its right to cancel coverage for late payments.
  • Insurer Promises.  In cases where the insurer’s agents promise the insured that they will “let it slide” and not cancel coverage for a missed premium payment, courts sometimes hold the insurer to its agent’s promise and deny the insured the right to cancel coverage.

It’s important to remember that, if the insurer cancels coverage improperly, the insured typically has recourse, including a claim for additional damages and attorneys’ fees, under Washington’s Insurance Fair Conduct Act and/or Consumer Protection Act.

Lawsuit Documents Allegations of Discriminatory Claims Handling By Insurer Who Kept A So-Called “Jewish Lawyer List”

Anyone who’s suspected their insurance company gave their claim closer scrutiny because of their race will likely find the allegations in this lawsuit alarming.  In short, the insurance company was sued alleging it discriminated against insureds represented by attorneys identified on the insurance company’s secret “Jewish Lawyer List.”  The insurer settled that lawsuit, but then turned around and sued the plaintiffs and their lawyers for defamation.  The ensuing litigation provides a fascinating glimpse into some appalling racist insurance practices.

The case goes all the way back to 1987.  Four drivers were involved in a car crash and sustained damages their insurer refused to cover, claiming the drivers’ claims were fraudulent.  The drivers hired attorney Erwin Sobel to sue the insurer to obtain coverage.

In the course of litigating, attorney Sobel discovered documents suggesting his clients’ claims had been flagged as fraudulent because Sobel was Jewish.  Sobel uncovered a 1983 insurer memo containing a list of about 160 Los Angeles lawyers, including Sobel – the majority of whom were Jewish.  Insureds with lawyers on the so-called “Jewish Lawyer List” had their claims automatically sent to the insurer’s special fraud unit with instructions not to pay any claims.  The memo directed the insurer’s agents to destroy the memo after forwarding all the lawyers’ clients to the fraud unit, and to keep the entire system secret from the insureds and their lawyers.

The insurer denied the allegations, but ultimately paid Sobel, his co-counsel and their clients $30 million to settle their allegations of discriminatory claims handling.  Among other things, Sobol presented testimony from an economist showing the list contained wildly disproportionately Jewish attorneys.

The case is an unfortunate reminder that insurance practices aren’t immune from racism and discrimination.