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Health Reform 101

with Lisa Zamosky

WebMD helps readers understand their health insurance and the new health care reform law. The Affordable Care Act is bringing sweeping changes to American health care. Lisa Zamosky is here to help you navigate the health care maze and understand how these changes affect you.

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Tuesday, March 8, 2011

Before You Sue Your Health Insurance Company

A reader of this blog wrote to us with the following question about the insurance bad faith law:

“We are going to bring a civil suit against a subsidiary of our health insurance company that was supposed to cover our child’s bipolar disorder hospitalization last year but has been negligent. Any words of wisdom?”

Bad faith on the part of insurance companies includes failure to respond in a timely manner to a claim or request for service, investigate a claim appropriately, low ball a settlement offer, deny a claim (in spite of the policy stating a service is covered) or refuse to settle a conflict. Any of these scenarios can be the basis for bad faith claim, says Bryan A. Liang, MD, PhD, JD, executive director of the Institute of Health Law Studies at the California Western School of Law.

The Challenge of a Lawsuit

The good news for consumers is that in a case of bad faith, the burden of proof rests with the insurance company to show that it has acted appropriately.

“Usually the plaintiff has the burden of proof, but we have, in the insurance bad faith world, a doctrine that we construe the contract against the person who wrote it,” Liang says. “We’ll always interpret as much as we can in favor of the person.”

Still, Liang warns, fighting and winning a bad faith claim is a significant uphill battle.

What to Consider

To avoid denials of care and ensure you have a strong case if, as in the case of the WebMD reader who submitted this question, you end up bringing forth a claim of bad faith, Liang advises the following:

  • Know your contract and your policy. Everything stems from your policy. The details may be difficult to understand, but it’s critical that you take the time to learn what your insurance policy states you must do in order to get treatment. Do you need to see a primary care physician for a referral before going to see a specialist? If so, and you fail to get that referral, your care can legally be denied, even if the outcome would have ended identically.
  • Keep your paper work. Make sure you have all documents showing that you’ve requested the services you wanted and copies of all the denials sent to you by your insurer. “You would think this is straight forward but often people don’t have copies and the case is thrown out,” Liang says.
  • Complete all appeals procedures. You have the right to an internal appeals process whereby you file with your insurer asking for a reconsideration of its decision. If that fails, you may be eligible to file for an external appeal. Contact your state’s department of insurance for more details.
  • Choosing a lawyer. If all appeals procedures fail, you may wish to pursue a lawsuit. “Choose an attorney with experience with bad faith law because it’s tough to navigate,” Liang advises. There are a few good ways to find an experienced lawyer, Liang says:
    • Google. Type in bad faith lawsuits in the state in which you live. You’ll find announcements of verdicts, settlements, and who the attorneys were for the case.
    • Check with your state bar association. Usually state bar associations will have listings of attorneys who specialize in bad faith insurance cases.
    • Check a lawyer’s bar status. Once you’ve narrowed your choices, check your state’s bar web site to ensure the attorneys are in good standing and not subject to any disciplinary activities.

Don’t sign anything. Do not accept or sign any checks from your insurer once you’ve initiated a lawsuit. This is one tricky way insurance companies get out of paying for unlawful behavior. “Insurers will write you a check for all your premiums back and if you sign it it’s a complete settlement of your claim [under the law]. Any communications you receive from your insurance company should be reviewed with your attorney.  

Join the discussion: Have you been a victim of insurance bad faith?

Got a health insurance question? Post it below. I’ll respond in this blog each Thursday to as many of your questions as I can.
 
The opinions expressed in the WebMD Blogs are of the author and the author alone. They do not reflect the opinions of WebMD and they have not been reviewed by a WebMD physician or any member of the WebMD editorial staff for accuracy, balance or objectivity. WebMD Blogs are not a substitute for professional medical advice, diagnosis, or treatment. Never delay or disregard seeking professional medical advice from your physician or other qualified health provider because of something you have read on WebMD. WebMD does not endorse any specific product, service or treatment. If you think you have a medical emergency, call your doctor or dial 911 immediately.  

Source: Bryan A. Liang, MD, PhD, JD, executive director of the Institute of Health Law Studies, California Western School of Law.

Posted by: Lisa Zamosky at 8:12 am

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