Two of California’s largest health plans will pay a combined $13 million in fines to resolve investigations by state insurance regulators. Under the agreement, Anthem Blue Cross and Blue Shield will also reinstate coverage for more than 2,000 policyholders whose coverage was wrongly rescinded during the past four years. Neither company admitted any wrongdoing as part of the agreement. Lisa Girion, LA Times 07/18/2008
http://www.latimes.com/business/la-fi-blue18-2008jul18,0,230916.story
July 22 - Amerigroup Corp., a manager of health plans for the government, paid $225 million in settlement of a lawsuit with the US and Illinois alleging Amerigroup intentionally kept pregnant women and others with costly medical conditions off its rolls. Read full story at Bloomberg - http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aTTIDiFByh2I
Challenging Denial Letters
Denial letters, whether from an insurer or health plan, are often viewed by policyholders as the end of the discussion. After all, the insurer knows best what is and isn’t covered by the policy, right? Not so! Some of the reasons given in an initial denial of coverage letter can be downright silly, e.g. “This wasn’t poor workmanship resulting in damage to the property. It’s just that the client didn’t like the appearance of the remodeled kitchen.” In this example, the insurer hadn’t even spoken with the client and so had no reasonable basis for its assertion of client preferences. I call these letters the initial “go away” letter, as in ‘don’t go away mad, just go away.” If your insurer’s response to your claim seems misplaced to you, don’t hesitate to question it.
To avoid a bad faith lawsuit or claim, an insurer only has to be “reasonable” in its assessment of whether your claim is covered under your policy with them. The insurer, under California law, does not have to be correct in its assessment. An insurer has a financial incentive to determine the reasonableness of coverage of your claim in favor of lack of coverage. Thus denial letters are often the beginning of the discussion of what is reasonable, not the last word. Don’t give up too soon.
In the situation of a health care crisis, an expedited review of coverage (an appeal) may be sought through the California Department of Managed Health Care. Other coverage disputes may take awhile as the parties argue over coverage. Applicable statutes of limitations (the time in which to sue) are generous to allow for this discourse, but a good rule of thumb is to seek formal legal recourse if necessary within a year. However, if up to four years has gone by, don’t assume you don’t have a case. The law permits bad faith insurance claims as late as four years after the denial of coverage. Of course, if there is ongoing harm due to the denial of coverage, be sure to inform the insurer of this. The insurer may ultimately be responsible for this additional damage. Putting the insurer on notice of ongoing harm can bolster your claim.
You may write and send the letter contesting the insurer’s denial yourself, or have an attorney do it for you. Be sure to keep copies of all letters to and from your insurer as they create an important paper trail of early events in a claim. The response letter challenging a determination of coverage should include as much information as possible to justify your claim. Providing enough factual information is key. Insurers must consider this information and are bound to make a reasonable decision in light of the new information. A fact you consider inconsequential may be just the thing to trigger coverage. Refer to the entire policy, and highlight some of the policy terms if you think they are particularly relevant. If you still receive a negative response, perhaps it’s time to consult an attorney. An attorney’s signature at the end of the letter is one way of conveying the seriousness of your conviction and intent.