While segregating health insurance from employment may indeed free those employees stuck at their job only because of the need for health coverage, McCain’s plan simply makes all citizens as vulnerable as the self-employed are now.   Thinking of working for yourself?  One big costly obstacle is health insurance.  [NYTimes Finding Health Insurance If You Are Self-Employed] Hmm, while U.S. brokerage firms are fully bailed out in a style akin to French capitalism, under McCain’s plan American workers are poised to lose one more piece of their already worn thin security net.

1.)    Participate in rate hearings.  These hearings are typically held in the Fall to address rate changes going into effect the following January.   The California Insurance Commissioner must hold public hearings to permit industry and individual challenges to proposed recommended pure premium rates, including any changes to rates set for individual classifications applicable to specific job categories (i.e.  rates are highest for roofers and lowest for office workers based on the statistical risk of injury).   To challenge such changes in rates, employers and industry representatives appear to make statements for the Insurance Commissioner to consider in addition to the statistical information provided by the WCIRB.   If you want to make a public comment, here are some suggestions: a.) do the math- the most influential comments are backed up with statistical evidence; b.) consider hiring an attorney or representative to pitch your case both in writing and orally at the hearing; and c.) coordinate with other interested parties.

2.)    File a complaint with the WCIRB and/or your insurer; if your complaint is denied file an appeal with the Department of Insurance Administrative Hearing Bureau (DOI AHB) regarding issues with the calculation of your premium.   Although the AHB does not handle disputes over pure premium rates, it does handle disputes regarding the proper classification of employees, or other factors going into actual premium calculations.   If going this route, consider hiring counsel.   Technical issues of jurisdiction and timeliness derail too many of these appeals.  Although the hearings are informal and counsel is not required, insurers are almost always represented by counsel and they typically win, perhaps because of their use of counsel.   Whether you hire counsel or not, be sure to come prepared with witnesses and statistics to back up your claim. 

http://www.latimes.com/business/la-fi-blue18-2008jul18,0,230916.story

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.

Why are insurance policies so long and wordy?

It would be nice if insurance policies were written in clear concise easy to understand language.  Unfortunately policies are often lengthy and as interesting to read as an automobile mechanics manual (sorry to the auto enthusiasts out there), even when you have a personal interest at stake.   Some policies go on for a hundred pages or more, with the specific terms you care about may be scattered far and wide across this verbose expanse.   This occurs because insurance policies develop over time and new clauses are added on to fit changing circumstances, like new branches on an existing tree.   The key to understanding a policy is to follow the particular branch of coverage that applies to you all the way out to the end of the branch.   Far too many people stop short of that final answer,  sometimes falling off the branch too soon, as when the insurer gives them a strategic push with an initial denial of coverage letter that may or may not be correct.   Under the law, insurance companies don’t have to be correct when they say “no”: they only have to be reasonable.   Thus the initial denial letter may be thorough, or not.   It pays to keep the dialogue going, and make sure your claim receives a full and complete coverage analysis.

Following the path to coverage:  Scope of coverage - exclusions of coverage - exceptions to exclusions - definitions of specific terms.

 As you read your policy, keep in mind that all policies have some characteristics in common.  Look for the scope of coverage, the basic reason you bought the insurance in the first place.   The “insuring agreement” often starts with words such as “we will pay…”  Don’t get too excited about such payment, however, for soon thereafter come multiple exclusions.   Check to see if the exclusions apply to your situation.  But even if the exclusions seem to apply, be persistent and go all the way out to the end of the analysis.  Look for exceptions to the exclusions.   And double check the legal meaning of any terms that are particularly important to your claim. 

A real life example of a winding coverage path:  CGL coverage under the subcontractor’s exception to the defective work exclusion for materials provided by a construction supplier. 

Here’s an interesting example of a coverage analysis I dealt with recently.   A small business engaged in remodeling projects was brought in as a party defendant in a lawsuit alleging that the remodeling was defective and not up to advertised standards.   In this instance the purchaser alleged that cabinets were negligently designed and installed.   The small business owner responsible for installing the cabinets would then turn to his or her comprehensive general liability (”CGL”) policy to defend it against the lawsuit and to pay any damages awarded.  The CGL insurance policy provides broad protection for claims arising out of construction defects.  But the policy also included a “defective work exclusion” which excluded coverage for lawsuits challenging the insured’s workmanship.   This would seemingly bar coverage and the insured would be left to defend itself in such a lawsuit.

But the policy contains further applicable language.  Many GLC policies include a “subcontractor exception” to the “defective work exclusion”, which was the case here.   Thus, if a subcontractor to the insured was responsible for the allegedly poor workmanship, the CGL insurer will defend and indemnify its insured, the remodeling contractor.  In this instance there was no subcontractor who actually worked on building and installing the cabinets, but there was a supplier that supplied the wood for the cabinets.  The purchaser/homeowner was unhappy that the wood used for the cabinets was soft and easily damaged.   Courts have held that suppliers of materials may also be subcontractors under CGL policies.  For more on this twist see  http://www.irmi.com/expert/Articles/2001/Wielinski05.aspx.   Hence the GCL insurer had a duty to defend and indemnify this small business contractor for the workmanship of the supplier. 

Handling Your Claim

How should you deal with your insurance claim?  Like a physician dealing with a medical issue over the phone, I can’t give you legal advice without seeing the policy and reviewing the specific facts of the claim.  In general, though, it is a good idea to carefully read your policy and try to understand it.   Go ahead and file a claim with the insurer and see if the insurer accepts or denies the claim, or deals with it in some other manner, such as under a reservation of rights.   If the insurer denies your claim, or worse cancels your coverage, then seek further legal advice without delay.   Remember that an initial denial of the claim is not a final decision and may not be fully reasoned.  It may be in your best interest to challenge the insurer’s unfavorable decision, or at least to keep the dialogue going until you obtain a fully reasoned decision.   If the decision makes no sense to you, or you believe it to be faulty, that’s a good time to seek the legal advice of an attorney who specializes in insurance. 

This blog has been prepared by Barbara Gallios, Attorney at Law, to provide information and commentary on recent legal developments of interest to the public. It is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. 

Study released during “Cover the Uninsured Week” shows cost of covering families takes bigger piece of household budget.

Americans who get health insurance for their families through their jobs have seen their premiums increase 10 times faster than their income in recent years, according to a new analysis of government data. The study, released today by the Robert Wood Johnson Foundation, shows that a growing share of workers’ earnings is being absorbed by the increasing cost of health insurance.

Nationwide, the amount employees pay for family coverage increased 30 percent from 2001 to 2005, while family policyholders’ income increased just 3 percent over the same period.

The analysis was conducted by researchers at the University of Minnesota. It shows that the proportion of insurance premiums that workers pay for family coverage has remained constant over the years, but the dollar amount that workers contribute has substantially increased.

Nationally, the average cost of family coverage increased nearly $2,500—from $8,281 in 2001 to $10,728 in 2005. The percentage of family premiums that employees pay held steady at about 24 percent. The amount that workers pay for family premiums, on average, increased $664, from $1,921 in 2001 to $2,585 in 2005. Meanwhile, the median income of people who hold family health insurance policies increased just $1,250 during the same period, from $40,818 in 2001 to $42,068 in 2005. The average cost that employers pay for their share of family coverage increased from $6,360 to $8,143, or 28 percent, during the period.

“This study makes plain what every working parent knows—that providing insurance coverage takes a bigger bite from the family budget every year,” said Risa Lavizzo-Mourey, M.D., M.B.A., president and CEO of the Robert Wood Johnson Foundation. “There is a clear connection between the rising cost of health care and the increasing number of uninsured Americans. As costs continue to go up, fewer people can pay their portion of the premium, and fewer employers are able to offer insurance benefits. This research shows that an ever-increasing number of people will join America’s uninsured unless our nation’s leaders act to reform our health care system.”

The findings show:

Fewer employees are working in private-sector jobs that offer insurance.
Nationally, 4.1 million fewer people worked in private-sector jobs that offered health insurance in 2005 than in 2001.
Fewer private-sector businesses offer coverage.
The number of private-sector employers nationwide who offered health insurance benefits to their employees fell by 30,000 from 2001 to 2005.
Fewer people have private health insurance coverage.
Americans with private health insurance fell nearly 2.4 million, or 6 percent, from 2001 to 2005.
More people are uninsured.
According to the latest Census figures, 47 million Americans do not have any health insurance.
The analysis was compiled by researchers at the State Health Access Data Assistance Center, located at the University of Minnesota. It uses the most recent data from the U.S. Census Bureau (two-year averages for 2001–2002 and 2006–2007) and the Medical Expenditure Panel Survey, conducted by the Agency for Healthcare Research and Quality (2000, 2001, 2005).

“Public opinion polls show that health care reform is a top concern among Americans, and policy-makers are responding with ideas,” said Lavizzo-Mourey. “As these discussions continue, our leaders need to pledge to work together to find common ground policies to provide coverage to all Americans. This will require every interest being willing to give a little to find a solution that everyone can support. Real action involves tough choices, trade-offs and compromise—but we need action.”

The report is being released during Cover the Uninsured Week, a nonpartisan campaign organized by RWJF to advocate for health coverage for all Americans. Now in its sixth year, Cover the Uninsured Week (April 27–May 3) has become the largest, nonpartisan mobilization in history seeking solutions for the 47 million Americans who are uninsured. Thousands of people will participate in hundreds of Cover the Uninsured Week community service and education events held across the nation.

“Throughout this week, working moms and dads who are struggling to make ends meet will add their voices to demand solutions for our health care system,” said Lavizzo-Mourey. “With our economy sputtering, more than 47 million people already uninsured and millions more worried about losing their coverage, the plight of the uninsured cannot continue to be ignored. These are Americans who are worried about their future. When millions of Americans lack stable, affordable coverage, it affects all of us. We all need a solution.”

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The Robert Wood Johnson Foundation focuses on the pressing health and health care issues facing our country. As the nation’s largest philanthropy devoted exclusively to improving the health and health care of all Americans, the Foundation works with a diverse group of organizations and individuals to identify solutions and achieve comprehensive, meaningful and timely change. For more than 35 years the Foundation has brought experience, commitment, and a rigorous, balanced approach to the problems that affect the health and health care of those it serves. When it comes to helping Americans lead healthier lives and get the care they need, the Foundation expects to make a difference in your lifetime.

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Squeezed: How Costs for Insuring Families are Outpacing Income