How Insurers Deny Legitimate Health Insurance Claims – McKennon Law Group

the mckennon law group pc regularly publishes articles on its california insurance litigation blog dealing with related topics in a series of articles dealing with bad faith insurance, life insurance, long term disability, and disability insurance a short term, annuities, death insurance accident, erisa, and other areas of law. This is the third in a series of articles on how insurance companies deny claims. To speak with a highly trained Los Angeles long-term disability insurance attorney at Mckennon Law Group PC, call (949)387-9595 for a free consultation or visit our website at www.mckennonlawgroup.com and fill out a form. free consultation.

The United States Department of Labor estimates that about one in seven claims made under the employer health plans it oversees is initially denied: about 200 million claims per year. In our article titled “The Prevalence of Life, Health, and Disability Benefits Claim Denials Is Staggering: It’s Worse Than You Thought,” we referenced a recent column in the Los Angeles Times supporting the proposition that health insurers they frequently deny legitimate claims as a business practice to maximize profits (much like disability insurers and life insurers). the times column stated this about denied health insurance claims:

Reading: Why health insurance companies deny claims

Insurance companies play the odds. . . they have people who don’t have the stamina to challenge every denied claim, even when there is a valid medical reason for a drug or treatment to be covered.

(See the January 17, 2017 article “How to Defend Yourself When an Insurer Denies Your Health Care Claim”). The Times column cites a study by the government accountability office that “found that of the relatively small percentage of denied claims that are contested, about half ended up being reversed.” That means health insurers routinely make the wrong call and hope their policyholders won’t follow through with these claim denials. In fact, former Kansas Insurance Commissioner Sandy Praeger says, “We think some companies are probably denying claims, counting on the hassle factor, [so] people will go ahead and pay out of pocket.” the times agree:

“insurers make money when you pay premiums and copays, and they lose money when they pay,” said chuck idelson, a spokesman for the california nurses association, which supports a medicare-for-all system. “so they go to great lengths to deny the claims.”

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Try not to lose your cool. the system is designed to wear you down and separate the weak from the strong. an insurer has nothing to lose and everything to gain by putting barriers in their way.

Something to keep in mind: Insurers are so unhappy with paying claims that the percentage of premiums received that they have to pay back to policyholders is known as the “medical loss ratio.” really. for them, covering their medical care is considered a financial loss.

health insurance claim denials

How do insurers deny valid health insurance claims, whether governed by federal law, the Employee Retirement Income Security Act (“ERISA”), or state insurance bad faith laws? ? One way they do this is by rigidly denying broad categories or types of claims without taking the time to assess whether the specific claim is covered by your plan or policy. for example, an insurer may automatically deny any claims for laser hair removal as cosmetically and medically unnecessary. But what if the plan participant is suffering from a severe case of recurrent folliculitis, an extremely painful condition in which hair follicles become infected and inflamed and turn into benign cysts? the medically accepted treatment for extreme cases is laser hair removal. when the participant files a claim for such treatment, the insurer can “rubber stamp” the denied claim, wrongly assuming for its benefit that the treatment is purely cosmetic. in short, the insurer “sticks its head in the sand” and avoids learning the facts in the hope that the claim will be dismissed. Without a qualified attorney representing the patient, health insurers have an incentive to deny claims, even when they clearly fall within the coverage of the policy. Upon a denial, many patients will accept the insurer’s decision and pay the bills themselves, increasing their profits.

There are many other tricks health insurers use to deny valid claims. for example, they often claim that a medical procedure is experimental, even when doctors disagree. or they deny you on a technicality simply because your doctor entered the wrong diagnosis or procedure code. Insurers use auditing software often called “denial engines” because their intent is to reduce the amount of money paid to doctors and hospitals. These audit programs work by finding technical errors in the billing codes that all doctors, hospitals, clinics, and others submit for payment.

In addition, health insurers rely on the fact that health insurance contracts are incredibly complex. they know that patients typically won’t take the time to understand them (or can’t even read them), leaving them at a distinct disadvantage when appealing a claim denial. In the words of one commenter, insurance contracts “can also be written in hieroglyphs. they are almost impossible to decipher, [with] one incomprehensible clause after another.” Trying to make sense of insurance contracts in a South Carolina case, the state supreme court concluded that “insurers generally try to convince the customer when they sell the policy that everything is covered and to convince the court when it is presented. a claim that nothing is covered.” South Carolina. in s. co. v. & guar. in s. underwriters, inc., 489 se.2d 200, 206 (s.c. 1997).

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Furthermore, many large health insurers have been accused of illegally retroactively canceling policies of people whose conditions are expensive to treat, leaving them to pay expensive medical bills while dealing with fatal health conditions like cancer. In one of those cases, attorneys for the City of Los Angeles sued Anthem Blue Cross to try to stop the company from following this practice. city ​​attorneys stated that “[t]he company has engaged in an egregious scheme to not only delay or deny payment of thousands of legitimate medical claims, but also endanger the health of more than 6,000 customers by canceling retroactively your health insurance when you needed it most.” anthem blue cross finally settled for 10 million dollars while maintaining his innocence.

In a somewhat similar situation, our client had a health insurance policy that covered his dying son. the medical expenses were so great that the insurer decided to start denying all claims, stating that she could rescind the policy because our client allegedly committed criminal fraud but she refused to say how she committed the fraud. there was no fraud, it was completely made up as an excuse to deny the rest of her claims.

These are some of the other common reasons health insurers deny claims:

  • the procedure is not medically necessary
  • not covered by the policy
  • extemporaneous claim
  • the procedure is experimental
  • lack of prior authorization or referral
  • inaccurate medical coding
  • incomplete or inaccurate insurance information
  • our opinion

    These are just some of the ways health insurers find ways to deny legitimate claims. If you have a health insurance claim that was improperly denied, you need an experienced erisa or bad faith health attorney, like the attorneys at Mckennon Law Group PC, on your side. As we mentioned in our last article, after litigating hundreds of life, health and disability claims, it is our experience that many insurers are not serious about paying these types of claims until they perceive a real threat that their policyholders are represented. by highly effective, experienced attorneys, especially when there is a “tort exposure” (ie, damages beyond the benefits of the policy, such as emotional distress damages, attorneys’ fees, and punitive damages). you cannot count on your insurer to act in good faith or to do the right thing. Bureau of Labor Statistics and other empirical data show that they will often not pay a claim unless an insured credibly threatens them with a highly effective and experienced attorney. Let’s try to get your insurer to listen. we’ve done it successfully for decades.

    the california insurance and life, health, disability blog at www.californiainsurancelitigation.com and at www.mckennonlawgroup.com all rights reserved

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