California Insurance Lawyer Blog

Anthem Blue Cross submitted new rate increases for as much as 20 percent to the California Department of Insurance less than a week after Aetna Inc. cancelled its plans for an average 19 percent rate increase for individual policyholders because of “miscalculation” errors, reports the Los Angeles Times. See “Anthem Blue Cross Again Seeks Rate Hikes for Californians.” Anthem had previously withdrawn a nearly 40 percent rate increase earlier in the year when independent actuaries discovered errors in its accounting that violated California law. See “Anthem Blue Cross Raises Premiums – and Ire – of Individual Policyholders.”
Anthem’s parent company Wellpoint made $877 million in the first quarter of 2010, a 51 percent increase from the same time last year. Its chief strategy officer Brad Fluegel must have neglected to read the company financials, however. He told the Times, “The rates do not cover our costs and are not going to be sustainable over the long term, but it makes sense to move ahead. Given the environment, it was in the best interest of everyone to get this behind us and move forward.”

Whose best interests is Fluegel contemplating? Certainly not his policyholders’ interests.

“It is clearly time for stricter oversight of the methods health insurance companies use to calculate premium rate increases,” U.S. Sen. Dianne Feinstein said.

We agree, and that’s why we are endorsing Dave Jones for California Insurance Commissioner. As a California Assemblymember Jones introduced legislation designed to help consumers fight insurers who delay and deny benefits or unlawfully rescind coverage. As Insurance Commissioner, Jones will be the advocate policyholders need to keep insurers accountable to their customers. For more information about Dave Jones, log on to www.davejones2010.com.

The California Department of Insurance is doing its job. Insurance regulators announced June 16 that the DOI has ordered independent reviews of proposed rake hikes requested by four of the state’s largest insurers of independent health policyholders. Aetna, Anthem Blue Cross, Blue Shield and Health Net will now have their latest rate proposals scrutinized to ensure the carriers comply with state law, reports the Los Angeles Times, “Health Insurers’ Rate Hike Gets State Scrutiny”

The review is also the second time around for Anthem this year. The company’s earlier attempt at a rate increase – as much as 39 percent for some customers – caused so much controversy that the DOI hired an independent actuary to examine the proposed increase. The actuary found that Anthem’s plan not only failed to meet the state requirement that 70 percent of premiums be spent on medical claims (as opposed to administrative costs) but also that the insurer erred in the way it calculated its rates. Anthem apologized -- and then promptly proposed another, slightly more modest, rate hike.

Spokespeople for the health insurers all told the Times that they’ve learned from Anthem’s mistakes and that they are confident their rates will pass muster. Several even conducted “mock” reviews before submitting their requests to be particularly diligent, they said.

We applaud the DOI for taking rate increases seriously and not merely rubber-stamping proposals, even and especially when the carriers assure the department they’ve complied with state law. The cost of independent review is entirely justified, and consumers have the reassurance the DOI is working in their best interests.

The American Association for Long-Term Care Insurance reported this month the results of a study that analyzed the cost of long-term care insurance for typical purchasers. Most people under age 61 pay from $500 to $1500 a year, much less than what many people think such insurance will cost. That works out to less than $20 a week for most wage-earners, said AALTCI executive director Jesse Slome.

The report also provide tips about how to further reduce the cost of premiums, including trying to qualify for a preferred health discount, selecting a 90-day elimination period, chooses a spousal “share-care” option, and shopping around among carriers for the best coverage at the most affordable rate.

It might be easy to dismiss this study as self-interested, since the AALTCI, according to its web site serves “those who offer long-term care insurance and other planning solutions.” In addition, the timing is suspicious, the report arriving just months after passage of the CLASS Act, the part of the federal government’s healthcare reform package that will create a voluntary government-run long-term care insurance program. Average premiums under that program are estimated to start at $100 to $240 a month ($1200 to $2880 a year) and pay out a mere $50 to $75 a day – too much for too little, some critics have said.

Nevertheless, this report may be an indication that the LTC industry is working swiftly to get ahead of the government program by creating highly competitive long-term care products. And if there is going to be an LTC price war, now might be the time – no matter what your age – to purchase coverage.

As we frequently note in this blog, LTC coverage is about the only option for people who must pay for in-home or assisted living care when they are ill or aged. Work with a reputable agent who can find you the right policy with a well-capitalized carrier. Research what care cost will be by the time you could need it, and plan accordingly. Although in the end you may have to fight with your carrier to receive benefits, it’s better to have that option than none at all.

To examine the report go to http://www.aaltci.org/news/long-term-care-association-news/report-what-people-pay-for-ltc-health-insurance.

Do you, or does someone you know have a Long Term Care Policy from a n insurance company that refused to pay benefits? Was that denial based upon the fact that the agency providing care was not "licensed" or "approved?" We are seeing this more and more, and we are suing these companies on behalf of our clients.

The insurance companies twist the language of these policies so as to argue that care providers must be licensed by the State of California. The fact is, however, California does not require licensing for certain classes of care providers, and they couldn't get licensed by the state even if they wanted to! Most of these policies contain provisions which pay for "Home Health Care Services," or services from a "Home Health Care Agency." Sometimes, the benefits are characterized as "Personal Care Services" or "Instrumental Activities of Daily Living."

Companies we've seen denying benefits on grounds the agency is not licensed include Conseco Senior Health, Senior Health Insurance Company (SHIP), Transport Life, American Travelers Life and others.

Don't let these companies get away with not paying you benefits! Call us. We don't charge for an initial interview, and if we take the case, it will be on a contingency, so you won't have to pay attorneys fees on an hourly basis.

800-446-7529

Last October we blogged about a promising development in the treatment of chronic fatigue syndrome. Researchers believed they had discovered a retrovirus similar to the HIV virus as the culprit behind chronic fatigue and as a result would soon be able to treat the disorder with antiretroviral drugs. See “ XMRV Virus May Be Cause of Chronic Fatigue.” People with chronic fatigue tested for XMRV, and some began taking the toxic drugs used to treat AIDS. Now it appears the optimism was premature.

As many as five research teams attempting to confirm the finding say they have been unable to locate the XMRV virus in people suffering from chronic fatigue, reports the Los Angeles Times, “The Push and Pull Over a Chronic Fatigue Syndrome Study.” http://www.latimes.com/news/health/la-he-chronic-fatigue-20100614,0,6928481.story.

The U.S. Centers for Disease Control and Prevention has estimated that as many as 4 million people in the U.S. – most of them women -- have the disease. Chronic fatigue cannot be diagnosed with any known lab test and no FDA-approved drug has been developed to treat it. That’s why the isolation of a possible cause and treatment caused such high hopes for people with the disorder.

Immunologist Judy Mikovits, lead author of the paper about the XMRV virus published in Science, says the research teams are biased. She calls the XMRV infection possibly “the worst epidemic in U.S history.” She told the Times her finding is “being ignored by a dithering, even hostile scientific world.”

“Even the best scientists can be wrong,” writes reporter Trine Tsouderos. “Findings must be tested and confirmed by other researchers before they can be trusted. And that has yet to happen for XMRV and chronic fatigue syndrome.”

Disability insurers will likely use this debate over the cause of chronic fatigue to delay and deny claims from people with the disorder, some who have been fighting for years to get their physical suffering acknowledged. Still, the fact that so many researchers are now attempting to prove Dr. Mikovits either right or wrong could lead to scientifically tested and approved ways to diagnose and treat chronic fatigue.

If you suffer from chronic fatigue syndrome and have been denied health or disability insurance benefits, call us at (800) 446-7529. We have years of experience helping people with chronic fatigue and similar conditions appeal benefit denials or challenge insurers or health plans in court, particularly when insurers refuse to acknowledge the seriousness of their disease.

In this blog we often comment about medical doctors who derive most if not all of their income testifying for insurance companies and health plans. As a result, it’s never a surprise when their review of a policyholder’s medical file reaches a conclusion in favor of the insurance carrier.

“How a Medical Reviewer Helped Reliance Standard Deny Disability Claims,” The Insurance Forum (June 2010), highlights William S. Hauptman, a Philadelphia gastroenterologist who worked as a medical reviewer for Reliance Standard Life Insurance Company on disability claims. Dr. Hauptman’s support of adverse claims decisions was mentioned in several lawsuits filed against Reliance, including a case our firm successfully appealed, Gunn v. Reliance, No. 04-01852 (U.S. District Court, Central District of California).

Igor Gunn, a UBS/PaineWebber financial advisor, was diagnosed with symptoms of multiple sclerosis, including fainting spells, constant dizziness, fatigue, balance problems, cognitive difficulty and depression. His long-term disability plan administered by Reliance paid Mr. Gunn benefits for two years while the plan investigated his claim. Mr. Gunn submitted medical evaluations from his psychiatrist and three physicians. Two concluded Mr. Gunn was totally disabled; the other two submitted treatment notes. Mr. Gunn’s psychologist concluded he was completely disabled on “both medical and psychological grounds.”

Mr. Gunn’s plan would pay benefits for physical conditions, but not for mental or nervous disorders after two years unless Mr. Gunn was in a hospital or institution. This policy language becomes important because of what happened next.

Although five of Mr. Gunn’s physicians were clearly treating him for physical as well as psychological symptoms, the physician from whom Reliance sought an independent evaluation, Dr. Carl Orfuss, concluded that 99 percent of Mr. Gunn’s disability stemmed from “psychiatric problems.” As a result, Reliance informed Mr. Gunn that he was not physically impaired, benefits would terminate and he must return to work. Mr. Gunn appealed he decision, including in his appeal a doctor’s diagnosis of physical disability from multiple sclerosis.

Reliance asked Dr. Hauptman to review the medical file, and he agreed with Dr. Orfuss that “consistent with the entirety of the medical records” 99 percent of Mr. Gunn’s disability resulted from depression. Reliance denied the appeal and Mr. Gunn sued in federal court.

The District Court, ruling that Mr. Gunn was entitled to benefits, had a very decided opinion about Dr. Hauptman: “Reliance is the only insurance company for which Dr. Hauptman works, and he derived approximately one-third of his income from his work with Reliance. Reliance prohibits Dr. Hauptman from contacting a beneficiary’s treating physicians to discuss those physician’s opinions unless he first receives permission from Reliance.”

Joseph M. Belth,editor of The Insurance Forum, sums up the situation in the June 2010 issue of his newsletter this way:

"I believe that Reliance and other disability insurers use many physicians to help the companies deny claims. Using a physician in that way creates a serious conflict of interest for the physician. The physician knows that the company wants his or her support for adverse claims decisions, that he or she will be paid generously for providing that support, and that failing to provide that support will discourage the company from using the physician.

Ideally, disability insurers should be looking for ways to honor claims rather than looking for ways to deny claims. In the absence of that ideal situation, it is difficult to address the above conflict of interest. One possibility would be to disclose publicly the number and percentage of cases handled by a physician where he or she recommended denial of a claim."

We find it highly unlikely that insurance carriers will choose to address this conflict of interest the way Mr. Belth suggests because that would make it too easy for courts to throw out biased testimony. Rather, they will continue to look for ways to deny claims and make you fight to prove their examining physician has a serious conflict of interest.

If your claim has been denied because your health plan relied on the report of their hired doctor who made an analysis that contradicts your own physician’s diagnosis, please contact us at (800) 446-7529 and let us help you fight for the benefits you deserve.

Medical researchers have developed a new way to diagnose the painful disorder fibromyalgia, according to a recently published study. Using a pain index and a measure of key symptoms and severity, medical doctors may soon be able to diagnose the condition with more accuracy and begin treatment options sooner. See, “A New Way of Diagnosing Fibromyalgia.”

Diagnosing fibromyalgia has long been a problem within the medical community. Fibromyalgia is usually determined by administering “tender point” exams that document pain or tenderness on at least 11of 18 specified points during a three month period. But doctors who are not rheumatologists are uncomfortable with exam, which isn’t fail-safe, said Robert Katz, MD, a rheumatologist and professor of medicine at Rush University Medical Center in Chicago and author of the study. As a result, people with symptoms commonly associated with the fibromyalgia were often told by their doctors that the problem was “all in their heads.”

All that is not lost on disability insurers, who tend to deny claims from people suffering with fibromyalgia, particularly when policyholders cannot get a clear diagnosis of their condition.

The new diagnosing criteria, already approved by American College of Rheumatology, avoid the tender point exams. Instead, a 19-point pain index and severity scale is administered. A patient marks the number of body parts where she has experienced pain during the last week. Typical fibromyalgia symptoms such as unrefreshing sleep, fatigue, and cognition are rated on a scale of severity from 0 to 3. The physician completes the diagnosis based on the number of painful areas and number of symptoms and their severity.

Dr. Katz predicts that once the new diagnosis criteria are in use, the number of recognized cases of fibromyalgia could double or even triple.

All this is good news for people who believe they are suffering from the painful symptoms of fibromyalgia but have never been officially diagnosed with the disease. On the other hand, they may be in for a shock if and when they file disability claims. We predict that carriers won’t readily agree that this new way to diagnose fibromyalgia is superior to previous methods and will still make Firbo sufferers fight to get the benefits they deserve.

The new federal healthcare legislation could bestow broad new powers on California’s next insurance commissioner, already one of the nation’s most powerful jobs of its kind, reports the Los Angeles Times. “Healthcare reform raises the stakes in California insurance commissioner election.” Four candidates are running for their parties’ nominations in the June 8 primary election -- Democrats Dave Jones and Hector De La Torre, and Republicans Brian D. Fitzgerald and Mike Villines – and the winner of the June 8 primary will face four other minor party candidates in November.

In addition to new authority under federal law, the insurance commissioner may gain the regulatory powers currently under the charge of the California Department of Managed Healthcare, which oversees health maintenance organizations, if the Legislature approves and the governor signs a bill that would shift all regulatory power to the commissioner.

This year’s insurance commissioner race is one of the most important in the state’s history.

We support Democrat Dave Jones, who proved a strong consumer advocate while serving as a California Assemblymember. In addition to supporting the regulatory shift from the Department of Managed Healthcare, Jones wants California lawmakers to give the commissioner the power to approve or reject insurer requests for rate increases, subjecting health insurance rates to the same detailed approval process that applies to automobile, home and other types of property and casualty insurance.

“I’ll be working to impose rate regulation on health insurance and healthcare plans to rein in the excessive rate increases that have afflicted California consumers year after year for the past 10 years,” Jones told the Times.

We believe Jones has the experience, leadership skills and ability to protect consumers as insurance commissioner, as well as hold insurance companies accountable when they break the law or deny benefits their customers rightfully deserve. From what we have seen thus far, he is fully capable of fulfilling the challenges facing the state and the insurance industry during the next four years and of building a bureaucracy that works in the consumers’ interests.

Bloomberg’s Businessweek reports that fewer workers are filing disability claims during this down economy, fearing their jobs won’t be available when they are able to return to work. See “Ailing Workers ‘Gut It Out’ on Job, Opt Against Disability.”
Although this trend appears to mainly affect workers with “lower back pain, nervous conditions and ‘more discretionary’ claims,” it’s unclear how many employees might be seriously injuring their long-term health by remaining on the job. Disability insurance typically pays only 60 percent of an employee’s salary.

One thing IS clear, however: This is really good news for disability insurers. For example, Unum has posted increased profits for five straight quarters, boosted its dividend and approved a $500 million share repurchase program.
“You can’t make a windfall on these products,” Unum Group Chief Executive Officer Thomas Watjen told Businesweek. “It’s not like you can go on claim and make an enormous amount of money.”
In one sentence, Mr. Watjen confirms the argument we make every day for our clients suffering from disabling conditions: If they weren’t sick, they’d be at work. It pays better. That is something we’ll be sure to remind Mr. Watjen’s representatives each time they make a policyholder fight for his or her benefits.

A New York Times editorial documents the next health insurance battleground: medical loss ratios, the amount of premiums spent on patient care as opposed to administrative costs and profits. See “The Gaming Begins.”

The federal health reform legislation mandates that by 2011 health insurers must spend 80 to 85 percent of premiums on medical services or activities that improve the quality of care. The legislation, however, doesn’t specifically define what activity will qualify as an improvement in the "quality of care." That leaves plenty of room for carriers to manipulate the process and circumvent the true intent of the legislation.

According to the article, Sen. Jay Rockefeller, a democrat from West Virginia, has found insurers are already classifying many administrative costs as medical expenses. He wants Congress to impose a rigorous standard. The New York Times is advocating sensible boundaries that exclude technologies and programs that merely streamline operations.

For example, insurers want to include the cost of setting up provider networks and programs that deter fraud and overbilling in the patient care ratio. Most people, however, would consider those administrative activities.

It’s clear to us that someone at the federal or state level must monitor carrier decisions to blur the lines between patient care and administrative costs so health care reform can remain the true reform Americans counted on.

Los Angeles Times business columnist Michael Hiltzik recently wrote about retired state employees who purchased a long-term care insurance policy in 1997. Unfortunately, like many others who had purchased long term care insurance years ago, the couple could no longer afford the insurance because premiums had increased 100 percent. See, “Long-Term Care Policies: Pouring Money Down a Hole?” http://www.latimes.com/business/la-fi-hiltzik7-2010apr07,0,7567632.column.
Many people who believed they were responsibly planning for the future by purchasing long-term care insurance in the late 1980’s or early 90’s are encountering this problem: Almost every insurer selling long-term care products at that time underpriced their policies. As a result during the past decade, these carriers have successfully obtained approval from state agencies to raise the premiums for their products. It is not unusual for a premium increase to be 40 percent to 50 percent of the original price. Unfortunately, these increases come at a time when many of the policyholders are now on a fixed income and cannot afford the increased cost.
Policyholders who purchased policies before 1993 may have another critical but less publicized issue in addition to substantial premium increases: outdated protection. If policyholders purchased “nursing home” only policies, their insurance carriers will likely contend the policies do not cover the more popular assisted living facilities.
Additionally, a policyholder may have purchased a “home healthcare” benefit policy, which is intended to pay for services rendered by a home healthcare aide in one’s “home.” Although an insured may have relocated his or her residence to an assisted living facility, a carrier may not pay because it contends that the facility is not the insured’s “home.”
At Kantor & Kantor, we provide assistance to those policyholders who have been unfairly denied benefits under long-term care policies, and we have successfully argued that benefits cover assisted living facilities. If your long-term care insurer has denied benefits based on policy language, we can help.

-CC

Looking for an interesting book to read? How about the book "Nudge." It was co-authored by Cass Sunstein (Harvard Law School) and Richard Thaler (Univ. of Chicago Business School), and presents various ideas about helping consumers improve decisions about health, wealth and happiness.

Among other things, the book has a brief ERISA discussion. While its focus is on retirement more so than disability, the principles the authors raise are virtually the same. The authors write:

“ERISA sets forth three fiduciary principles for retirement-plan investments: the exclusive benefit rule, requiring that plans be managed exclusively for the benefit of participants; the prudence rule, requiring that plan assets be invested according to a ‘prudent investor’ standard; and the diversification rule, requiring that plan assets be diversified so as to minimize the risk of large losses. Most notably, company stock is exempted from the diversification requirement in defined-contribution plans—largely because, at the time ERISA was passed, large employers with profit-sharing plans lobbied Congress to exempt them from the diversification requirements imposed on defined-benefits plans. Employers are still expected to act prudently, however, in determining whether company stock is a suitable investment.”

The authors go on to explain how perverse this is from a workers’ welfare perspective. Diversification is key to a healthy investment portfolio, yet employers have an interest in seeing that their companies’ stock performs well and those profits are shared, even when this may hurt employees’ retirement funds.

Sunstein and Thaler explain: “The primary incentive problems in this context are possible conflicts of interest between the employer and the employee. The issues regarding company stock are a good example. The ERISA laws already require firms to act in the best interest of the employees. These laws should be enforced.”

Similarly, ERISA requires disability and health plan administrators and/or insurance companies to operate in the best interest of employees. However, often there is a conflict between paying claims for disabled or sick employees, and maximizing profits for shareholders of the insurance companies, which will be affected by payouts on insurance claims. This conflicted fiduciary problem continuously arises in the field of ERISA law. Kantor and Kantor works to enforce ERISA laws on behalf of employees/ consumers generally, by holding insurance companies responsible for their fiduciary duties to their insureds.

You can purchase Nudge online and at major booksellers. It has plenty of worthwhile reading!

-ND

The new federal health care legislation helps American consumers generally by equalizing our rights and responsibilities. By requiring insurance coverage for all, it will spread risk and provide a safety net for consumers.

States like Massachusetts and New York, known for their outstanding medical care, and driven by broader social concerns of non-profit advancement of health care and protecting those suffering from wide-spread illnesses like cancer and AIDS (as well as the reality of high costs of medical care), have been trailblazers in taking closer steps toward universal health insurance coverage for their citizens, including those with pre-existing conditions. By doing so, they’ve begun to address the problem of the “death spiral,” where costs of insurance get so high that healthier people opt out of insurance, leaving a smaller pool of sick, more desperate people who must keep their insurance, but are forced to pay ever-increasing, often prohibitive premiums. The healthier people don’t want to pay high premiums to subsidize the sicker people, so they drop their coverage. The insurance companies in turn lose premium revenue from these healthier consumers, and hike up the premiums to those left in the customer pool. See “New York Offers Costly Lessons on Insurance,” http://www.nytimes.com/2010/04/18/nyregion/18insure.html?src=mv.

Recognizing the successes in Massachusetts and New York, the Federal government’s new health law widens the consumer pool and requires everyone to get insurance coverage. If people refuse, they’ll be fined. Though we won’t see this penalty phased in until 2014-16, the threat of a fine (ranging from $695 for an individual to over $2000 for a family), will nudge people into obtaining insurance coverage. The more people who purchase health insurance, the more diverse the pool of insureds, making for a broader, generally healthier pool, with shared risk, lower incidences of sickness, and lower overall costs (per head).

States and the federal government are also considering the need for governmental regulation of premium rates insurers set. This regulation would likely enforce limits on rate increases, based on profits and administrative costs. (For example, any increase must reflect only a 25% profit increase, the other 75% must be due to true health costs). The insurance industry is vehemently opposed to such regulation, which in the end benefits consumers. Even though traditionally insurers may issue refunds to insureds based on larger-than-expected end-of year profits, the likelihood of great surplusage may be nipped in the bud by governmental regulations limiting rates/profits earlier on – a true benefit to consumers. See “Democrats Seek More Control Over Health Insurance Rates,” http://www.ctnow.com/health/sns-health-reform-democrats-premiums,0,60356.story.
-- ND

If you are eligible for benefits through your employer – life, health, disability, etc. – and you make a claim for those benefits that is denied, you have the right to file a lawsuit in federal district court. Of course, not every such lawsuit is successful. If the denial of your benefits is upheld at the district court level, you have the right to appeal that decision to a Circuit Court of Appeals.

In most cases, it is hard to convince a Circuit Court of Appeals that the district court made a mistake. Here in California, the reversal rate of the Ninth Circuit Court of Appeals in civil cases – i.e., the percentage of cases in which the Ninth Circuit finds that a mistake has been made – is only about 15%. Because the odds are stacked against appeals at the outset, it takes the diligence and expertise of experienced attorneys to obtain a reversal.

At Kantor & Kantor, we have extensive experience at the federal appellate level and have won several significant victories. Most recently, in a case we took over from another attorney, we convinced the Ninth Circuit in Ford v. Hartford Life & Acc. Ins. Co. that the district court applied the wrong standard of review to the claim of a man with a serious spinal condition whose disability benefits were terminated after they had been paid for five years. [link to decision]. The Ninth Circuit ruled that the district court used out-of-date cases to support its decision, and should have relied on newer cases such as Montour v. Hartford Life & Acc. Ins. Co. [link to 12/10/09 blog entry].

As a result, our client has a fresh chance to have his claim considered under more modern law, which is more favorable to him and tougher on insurance companies. We hope to demonstrate that the same errors made by Hartford in the Montour case were made in our client’s case as well, resulting in a different verdict the second time around.

If you have been denied insurance benefits, please consider successes like these in deciding who should represent you in your efforts to get your benefits back. Call us at (818) 886-2525 or log on to www.kantorlaw.net.

-PS

Kantor & Kantor lawyers won an important trial court decision recently on behalf of our client whose employer’s self-funded health plan denied medical benefits for her son. The court determined that the plan administrator had abused her discretion and violated our client’s statutory rights in refusing benefits for her son’s medical expenses. The court instructed the plan to process the claims in accordance with plan terms. Martinez v. The Beverly Hills Hotels and Bungalows Employee Benefit Trust Employee Welfare Plan.

Ana Martinez is employed by Beverly Hills Hotel and Bungalows and is a covered participant in Beverly Hills Hotel and Bungalows’ (“BHH”) self-funded employee benefits plan, which refused to cover medical and nursing care for her son in a “persistent vegetative state” from injuries incurred while he was at school. His care averages $13,000 a month. A special needs trust was created following a settlement with the school.

BHH’s employee benefits plan was previously funded through an insurance policy with Blue Cross. Blue Cross paid for medical care for Ana’s son and never sought reimbursement from the special needs trust.

BHH ended its contract with Blue Cross and went self-funded on Jan. 1, 2008. Immediately upon becoming self-funded, the plan requested that Ana sign a “Right to Reimbursement” agreement that would permit the plan to seek reimbursement for any of her son’s care from his special needs trust. BHH refused to even “process” any of Steve’s claims without the reimbursement agreement signed. The court found no basis for the plan’s request that Ana sign the reimbursement agreement before the plan would process medical claims.

In addition, when BHH went self-funded, the plan asserted for the first time subrogation rights. The plan alleged that theAna’s son’s special needs trust must pay for the medical care and only when the trust funds were depleted would the plan agree to provide medical benefits. The court found that the plan’s language was clear: the hotel was not entitled to subrogation rights from special needs trusts.

The court also found that the plan had a conflict of interest in that the administrator responsible for the plan finances was also the responsible for making benefit determinations. At trial, the plan administrator testified that “she put the plans interests ahead of the participants’ interests,” a violation of ERISA law. Plan administrators are charged with a standard of care that mandates discharge of their duties solely in the interests of plan beneficiaries.

This lawsuit is only one example of the ways benefits plans attempt to deny coverage for legitimate claims. As health insurance premiums rise, more and more employers are self-funding plans with provisions that could interrupt your benefits under previous plans or deny ongoing coverage. If you are involved in a disability benefits dispute with your employer’s self-funded plan, we can help.

Although it’s much too soon to tell how the federal healthcare overhaul will affect the way the insurance industry conducts business, the bill may have done a few things right. “Immediate Effects of Health Reform Bill.” A few provisions go into effect in six months; others won’t be enforceable until 2014.

• People whose policies are rescinded through no fault of their own are now protected under federal law. Even though rescission is regulated under the law of most states, carriers tend to ignore the laws and do as they please until they are caught, then pay moderate fines. How the federal government will enforce this provision remains to be seen.
• People with pre-existing conditions can no longer be denied coverage; however, because the bill doesn’t regulate caps and increases, insurers can change as much as they want and increase when they feel like it. The federal plan does provide a government program for people whose health problems make them uninsurable now.
• Insurers can no longer place lifetime caps on benefits and annual limits on coverage.

If insurers don’t find a way to wriggle out of these three reforms, the bill imposes important measures that are necessary to rein in abusive industry practices. But we don’t expect the industry to embrace reform without a fight.

Rather than criticizing the bill for its flaws, which many say include an inability to contain costs, industry and enterprise could turn this into an opportunity to provide products and services both affordable and sustainable for this century.

While President Obama took his health reform to the American people this week, Health and Human Services Secretary Kathleen Sebelius sent an open letter to the CEOs of UnitedHealth Group Inc., WellPoint Inc., Aetna Inc., Health Care Service Corporation and CIGNA HealthCare Inc. asking them to publicly justify proposed health insurance premium increases. “If insurance companies are going to raise rates, the least they can do is tell us why,” she said.

Sebelius referred to a recent Goldman Sachs analyst report that upgraded most insurance company stocks because the industry has so little competition. Even if they raise their rates, existing customers won’t be able to find less-expensive options. And if the plans lose customers, premium increases will more than make up the loss.

“Not only is price competition down from year ago ... but trend or (healthcare) inflation is also up and appears to be rising. The incumbent carriers seem more willing than ever to walk away from existing business resulting in some carrier changes,” Steve Lewis (of the employer benefit consulting firm Willis) stated in the Goldman Sachs report.

Something has to change.

February wasn’t a good month for Anthem Blue Cross. While the health insurer was defending itself in Los Angeles Superior Court for refusing to allow a policyholder to receive a liver transplant at an out-of-state/out-of network hospital because it cost too much, a Los Angeles Times analysis of the company’s regulatory findings revealed that since 2004 Anthem increased it’s parent company’s profitability by $4.2 billion. See Lawsuit Targets Anthem Denial Policy, Los Angeles Times,and “Anthem Profit Shifts Scrutinized,” Los Angeles Times.

Anthem is also being investigated by the California Department of Insurance for more than 700 violations in the past three years for failing to pay medical claims on time and misrepresenting policy provisions to its policyholders. And to top it off, President Obama’s revised healthcare overhaul proposal, which includes federal authority to regulate premium increases, appears to be in response to Anthem’s decision to raise premiums for individual policyholders up to 40 percent. See “Anthem is Accused of Breaking Laws,” Los Angeles Times, http://www.latimes.com/business/la-fi-anthem-claims23-2010feb23,0,186309.storyand “Obama Plan Would Curb Health Insurers on Rate Hikes,” Los Angeles Times.

Hmmmm... if the Department of Insurance proves that Anthem violated state law 700 times, and the insurer were have to pay up to $10,000 per violation. That’s $7,000,000, but when you make a $4.2 billion profit, that merely amounts to part of the cost of doing business, not a punishment for ignoring the law. Toyota is probably wishing it had gone into the health insurance business.

Suppose you are dying from cancer, but instead of putting all your energy into fighting the disease, your biggest battle is with your health insurer for treatment to keep you alive. That’s what Westlake Village resident Bob Iritano is up against, reports Los Angeles Times business columnist David Lazarus.Click- “Fighting Cancer and His Insurer."

After a round of chemotherapy that almost killed him because of an allergic reaction, Iritano’s doctors recommended a procedure called radio frequency ablation that, while it won’t cure his cancer, will temporarily eliminate his tumors and decrease the painful symptoms of his disease. The procedure, which Iritano much undergo every time his tumors grow back, was initially covered by his health insurer Health Net. But when he scheduled treatment again six months later, coverage was denied.

Iritano found out about the denial only minutes before the procedure was scheduled to begin. He was already robed in a surgical gown when he was told Health Net had deemed the procedure “experimental” and would no longer pay for it. Iritano’s physicians scoff at the notion, asserting that the treatment has been proven effective for more than 10 years.

Lazarus contacted Health Net to inform the company he was writing about Iritano’s case. A few days later, Iritano received a letter authorizing the procedure just one more time. But he wasn’t to expect the company had changed its policy about the experimental nature of the treatment.

“My best guess is that they want me dead as soon as possible,” Iritano told Lazarus. “They know that the premiums I pay will never cover how much they’ll spend on me.”

Wow.

Just as Congress applies the brakes to healthcare overhaul, California’s largest for-profit insurer, Anthem Blue Cross, reminds us why the federal government needed to get into the driver’s seat in the first place. The Los Angeles Times reports the health insurer will raise its prices March 1 for its 800,000 individual-coverage policyholders. See “Anthem Blue Cross dramatically raises rates for Californians with individual health policies.”

These premium adjustments, some customers say, amount to as much as a 39 percent increase. A San Rafael family, after doing the math, determined their health premiums will surpass their monthly mortgage payment. And that’s not all. Anthem informed its policyholders they could expect such adjustments at least every 12 months, or “more frequently in accordance with the terms of your health benefit plan.”

Under California law, health insurers can increase premiums whenever they want if they notify the state Department of Insurance and prove they are spending at least 70 percent of the premiums on health care. California Insurance Commission and Republican gubernatorial candidate Steve Poizner is “very concerned” about the rate increases, reports the Times, and is planning an independent investigation to ensure Anthem complies with state law. But as usual, this may be too little and too late.

Insurance brokers say that this increase is the largest they have seen so far. Mark Weiss, a Century City podiatrist and Anthem member for 30 years thinks “it’s just unconscionable.”

We agree.

The CLASS Act, the part of the federal healthcare overhaul that creates a payroll deduction for long-term care similar to Social Security, may survive to make it into the final version of a combined congressional bill and become law, writes James Oliphant in the Los Angeles Times.“Government Insurance for Long-Term Care Likely to Slip Into Final Healthcare Bill,” http://www.latimes.com/news/nation-and-world/la-na-health-longterm31-2009dec31,0,4138098.story.

Members of both the Senate and House of Representatives support the act, which is voluntary and requires payment into the plan for five years before a participant is entitled to receive benefits. The CLASS Act is also controversial.

Proponents, particularly those who lobby for the elderly and disabled, praise the act because it allows people the option to remain in their homes, paying for in-home caregivers without depleting the resources and energy of family members. Opponents believe the act won’t pay for itself and will require a government bailout to remain functional.

We believe the discourse about long-term care insurance – whether through the government plan or private insurance – is a necessary discussion to alert this country about a very important aspect of planning for the future. Whether the CLASS Act is the right solution, and whether it will even survive the House, remains to be seen.

Either way, it's our opinion that for the time being insurers need to reformulate their offerings and claims paying practices in order that people can obtain and afford, and then realize the benefits they need.

Kantor & Kantor, LLP achieved an important victory in the U.S. District Court in Los Angeles for a client suffering from the rare muscular disease Charcot-Marie-Tooth. Our client was denied disability benefits from Standard Insurance Company, which insured the disability plan of Countrywide Home Loans where she worked as a mortgage loan underwriter.

This case is significant because it is the first district court decision decided after the recent Ninth Circuit case of Montour v. Hartford Acc. & Life Ins. Co., 582 F.3d 933 (9th Cir., 2009), wherein the Ninth Circuit clarified how a trial court should review claims decision by an insurer.

In our client’s case, the district court found that Standard’s decision to deny benefits “was tainted by its financial interest” and cited the following as evidence:
• Standard neglected to advise the plaintiff of what type evidence to provide to support her claim. The federal law governing workplace disability plans, the Employee Retirement Income Security Act, mandates that plan administrators tell insureds what specific information they must submit. To request mere “medical evidence” or “information you believe is relevant” does not comply with the letter of the law. The administrator must tell the claimant what information the administrator considers relevant.
• Standard used the wrong occupational criteria. This is significant because our client’s plan language included the “own occupation” criteria rather than the “any sedentary occupation” criteria Standard relied on. In our client’s case, that means she is entitled to benefits because her illness prevented her from performing the requirements of a job she held for nearly a dozen years. Whether she could work at another job was irrelevant under the terms of her plan.
• Standard denied our client’s claim without full investigation, neglecting to wait for complete answers about our client’s disability from its own medical examiners and neglecting to ask its examining physicians the necessary questions to document our client’s illness. In particular, the court found that Dr. Elias Dickerman was not adequately trained by Standard – even though he received more that $200,000 annually from Standard since 2006 for his medical diagnoses – and that he made errors in his reading of our client’s medical records.

The court determined that our client’s policy should be reinstated and awarded her all her unpaid benefits.

If you have been denied insurance benefits for similar reasons or had benefits delayed with excuses that seem in error, contact us right away to find out how we can help you restore your benefits. Call (818) 886-2525 or log on to www.kantorlaw.net.

Photos on Social Media Sites May Give Insurance Adjustors Wrong Impressions

Canadian citizen Nathalie Blanchard was merely following her doctor’s suggestion that she spend time with friends and vacation in a sunny climate as a cure for depression when her sick-leave benefits from her employer-provided insurance were abruptly terminated. Nathalie made the fatal error of posting photos of herself having fun on Facebook. Her insurer discovered the photos, determined she was no longer depressed and told her to return to work. Although the insurer told the Associated Press that it did not solely rely on the Facebook photos in making its decision, it neglected to mention what other sources – such as sound medical evidence -- it did rely on. Nathalie is appealing the denial. See “Canadian Woman Loses Benefits Over Facebook Photo,” http://news.yahoo.com/s/ap/20091122/ap_on_re_ca/cn_canada_facebook_insurance.

This latest news article illustrates the level of scrutiny ill and injured people typically encounter from their insurers when they are unfortunate enough to actually need the benefits they’ve paid for. Their lives become open books where even the most innocent of activities become an insurance inspector’s evidence of suspected fraud.

Here’s our sad but true advice to Americans receiving disability benefits: What you post or print on social media sites will be discovered by your insurer and interpreted in the light most unfavorable to your disability claim – even if you are only following doctor’s orders.

Long-term care advocate and blogger Howard Gleckman weighs in on the CLASS Act, the federal government’s long-term care proposal included in pending health care legislation, for Kaiser Health News. See “Will People Buy Government Long-Term Care Insurance,”
http://www.kaiserhealthnews.org/Columns/2009/November/111609Gleckman.aspx.

Gleckman predicts that significantly more people will purchase government LTC coverage than those who currently purchase private insurance, but it still won’t be enough to solve the nation’s long-term care challenges. To increase purchasers, Gleckman suggests the following:

First, make coverage mandatory and require all major employers to offer it. If employees are allowed to opt out, impose tough penalties on both employers and workers who don’t participate.

Second, do more to encourage young employees to buy coverage. Determine premium amounts by age at enrollment and never increase (or only moderately increase) premiums, while providing more benefits as policyholders age. That way, workers would enroll while they are young and healthy to avoid costly premiums when they need coverage.

Third, the government could give employers financial incentives to match worker contributions.

Let's see what, if anything, the ultimate health care bill will contain on the Long Term Care question.

Federal Healthcare Legislation Could Erode California’s Consumer Protections

Lisa Girion of the Los Angeles Times reports that a provision of federal healthcare legislation under consideration could harm consumer protections in states that have strong laws that both protect policyholders’ rights to insurance coverage for certain health treatments and the ability to appeal coverage denials. “State Health Laws at Risk,” Los Angeles Times, November 16, 2009. http://www.latimes.com/business/la-fi-mandates16-2009nov16,0,2437457.story. Healthcare overhaul bills in both houses allow insurers from other states to sell insurance in California without being subject to the state’s tougher enforcement mechanisms.

“California mandates require insurers to cover home healthcare, bone density screening for osteoporosis, in vitro fertilization and mastectomy. Mandates also cover certain providers, such as chiropractors, and conditions, such as autism. If insurers are allowed to sell under the laws of other states, they might be able to offer policies that do not include those benefits,” Girion writes.

Other California protections potentially at risk include prompt claims payment laws. In California, a policyholder has the right to appeal an insurer’s refusal to pay for a particular treatment. Other states may not offer the same protections.

Proposed federal healthcare legislation remains controversial. While on one hand it offers more competition and lower premiums for California consumers, on the other hand it could undermine gains consumers have achieved in California.

It’s always a good idea to read a policy before purchasing any kind of insurance. If something seems questionable or you don’t understand certain provisions, ask for explanations and help. Don’t sign any policy until you are convinced you will get what you pay for or are afforded the right to appeal when you don’t.

California Law Displays Understanding of Eating Disorders
That Insurers Should Emulate

Insurance companies that routinely misunderstand eating disorders should pay attention to California Health and Safety Code Section 1254.5, which provides a refreshing perspective on the nature and treatment of eating disorders. In its findings under Section 1254.5, the California Legislature states, “[T]he disease of eating disorders is not simply medical or psychiatric but involves biological, sociological, psychological, family, medical, and spiritual components. . . . the treatment of eating disorders is multifaceted, and like the treatment of chemical dependency, does not fall neatly into either the traditional medical or psychiatric milieu.”

This legislative comment reflects what we find in our law practice representing clients suffering from eating disorders whose treatment should be covered by their health insurance. We often explain to insurance companies, mediators, and judges how residential treatment for an eating disorder involves intensive treatment of the psychological mindset that perpetuates the eating disorder. Treatment is not limited to the mental aspects; it also involves frequent monitoring of the disorder’s physical symptoms through blood work and weight gain. Education on nutrition and exercise also gives patients the tools to stay in recovery when discharged from treatment facilities.

Combined with Mental Health Parity Acts, such as California’s codified in Insurance Code Section 10144.5, the Section 1254.5 language supports our arguments that treatment for an eating disorder is truly multi-faceted and often residential treatment is the only means for conquering an eating disorder.

Section 1254.5 will not create coverage where it didn’t exist or force an insurance company to pay a claim. But it can increase awareness and recognition in the legal forum when presented to courts and insurance companies.

-- Elizabeth Green

A new study published last week in Science magazine announced that a retrovirus called XMRV may cause Chronic Fatigue Syndrome (CFS). The virus' actual name is xenotropic murine leukemia virus-related virus,and it was found in nearly 98 percent of about 300 patients with the syndrome. See, NY Times, Virus Is Found in Many With Chronic Fatigue Syndrome by Denise Grady.

This discovery provides hope for researchers because if the retrovirus – part of the same family as the HIV virus that causes AIDS – definitively proves to cause chronic fatigue, the disease might be effectively treated with antiretroviral drugs. Currently, no treatment or cure is available for chronic fatigue syndrome. Researchers also believe that they can create a blood test to determine if a patient is infected with XMRV virus, much the same way a blood test can determine HIV.

Chronic fatigue patients are also hopeful that their symptoms – severe fatigue and body aches – will now be taken seriously by doctors and insurers. Because chronic fatigue can only be diagnosed by ruling out other illnesses, some in the medical community refuse to treat chronic fatigue as a legitimate disease or attribute it to a psychiatric disorder. As a result, most health and disability insurers are skeptical about providing benefits for chronic fatigue sufferers who are too ill to work. Many are accused of “malingering,” that is, lying about or exaggerating their symptoms. Now the medical community may have valid research to back up a diagnosis of chronic fatigue.

The study is considered significant for two other reasons: First, the XMRV virus has been linked to prostate cancer. Second, about 4 percent of healthy people studied were carriers of the XMRV virus. According to the Wall Street Journal, that means that “10 million people in the U.S. and hundreds of million people around the world are infected with a virus that is already strongly associated with two diseases.”

The National Cancer Institute has authorized more research to find out if the virus is linked to any other diseases.

Dr. Judy Mikovits, one of the lead authors of the XMRV paper, told the Wall Street Journal, “Just like you cannot have AIDS without HIV, I believe you won’t be able to find a case of chronic-fatigue syndrome without XMRV.”

We have seen it time and time again… insurers downplaying the symptoms of CFS and even accusing our clients of being untruthful about their inability to function normally, all because there was no “objective evidence” of their Chronic Fatigue. Hopefully, this will all change soon as more is learned about XMRV. Has your insurer refused to consider your diagnosis of chronic fatigue seriously? Kantor & Kantor can help.

"Tort Reform, Tort Reform, Tort Reform," the phrase has almost become a song. Nobody likes to see undeserving people win huge, unjustified damage awards, but the fact is, it doesn't really happen in California, except on maybe on TV. Los Angeles Times business columnist Michael Hiltzik couldn’t be more correct when he writes that one of the biggest fans of so-called tort reform is the insurance industry, “because the less money they pay out to plaintiffs, the more they get to keep.” See “Why Tort Reform Is a Frivolous Diversion.”

While that statement is enough to make sensible people wary of the deep pockets behind tort reform movements, Hiltzik clears the confusion and makes a very good case about why limiting an injured victim’s ability to use the legal system to be made whole is not the great fix for rising medical costs insurers and many politicians claim.

The argument for tort reform, as Hiltzik explains, is that plaintiff lawyers are filing too many “frivolous” lawsuits and claiming millions of undeserved dollars. Doctors are ordering unnecessary tests to ensure they don’t misdiagnose or fail to diagnose something that could end up in court. As a result, medical costs escalate.

“The truth is that medical liability isn’t a big driver of health costs overall,” Hiltzik writes. “[T]he cost of malpractice litigation, in court and through defensive medicine, [is] roughly 2% to 3% of all U.S. healthcare spending.”

In California, since 1975, the Medical Injury Compensation Reform Act (MICRA) has capped recovery for pain and suffering to $250,000. That’s next to nothing when to compared to what plaintiffs can receive in other types of cases. Lawyers’ fees are also limited.

But did MICRA help consumers? According to a 2004 Rand study, the MICRA caps don’t amount to a fair distribution of justice. Victims of medical errors who had small economic losses but suffered major damage to their quality of life are unfairly compensated. Women are disproportionately affected. The MICRA cap isn’t adjusted for inflation. In today’s dollars, the award has the same purchasing power as $62,000 did in 1975. And the most unsettling result of all is that may unjustly injured people won’t even pursue a case because the award may not even cover the litigation cost.

The big MICRA winners are insurers, who last year paid out only 17 cents of every dollar they collected on medical malpractice insurance. And carriers don’t even have the good sense to be humble about it.

“At American Physicians Capital,” writes Hiltzik, “claims were falling so fast in 2007 that its chief executive publicly compared his underemployed claims managers to ‘the Maytag repairman.’ The next time you find yourself nodding in assent while some politician carries on about tort reform, remember that its benefits will go to characters like this.”

Clearly, this only reinforces what we’ve been saying all along: If you want real reform, start with the perpetrators, not the victims.

According to Medical News Today, fibromyalgia is no longer an “invisible” syndrome. Citing a study reporter in the Journal of Nuclear Medicine, the article reports that researchers in France were able to detect functional abnormalities in the brain after performing brain scans on 20 women diagnosed with fibromyalgia. Those scans were then compared with scans from 10 healthy women. See “Fibromyalgia Can No Longer Be Called an Invisible Syndrome.”

The diagnosed brain abnormalities directly correlated with the severity of the disease, as reported by the women on questionnaires they filled out in advance of the scan. The results of the study disprove the widely held belief that fibromyalgia is caused by depression. The study found that the brain abnormalities were “independent of anxiety and depression status.”

The study follows news earlier this year that a Stockton, Calif., surgeon patented a process to objectively determine the presence of chronic pain. See, “Surgeon’s Patent Removes the Subjectivity from Chronic Pain.”

Dr. Robert England uses an MRI image to compare the brain image of a person in chronic pain receiving stimulation such as a finger squeeze or mild electric shot to the brain image of a healthy person undergoing the same stimulation.

For people with fibromyalgia, England said his studies showed 13 areas of pain when the patient's thumb was squeezed. When a pain-free person's thumb was squeezed, only one area of pain appeared in the brain.

When these tests will be widely available – and whether insurance health plans will accept them as valid documentation – is still unknown. But they are encouraging developments for people with fibromyalgia who are often accused of fabricating the severity of their illnesses so that the insurer can deny disability or health benefits.

The Los Angeles Times health section this week ran dueling articles about life with and without health insurance. Both articles exposed a few of the most egregious problems consumers face dealing with their health insurance companies.

In “Uninsured, Unafraid,” health insurance reporter J. Duncan Moore Jr., listed the many reasons he opts to remain uninsured. Moore has written about the insurance industry long enough, he says, to learn “to love the delectable insurance lingo … that makes normal people feel as if they’re stirring concrete with their eyelashes.”

Moore’s most compelling argument about why he’s uninsured, and the one he describes as “the single most terrifying aspect of health insurance,” is the practice of rescission, that is, carriers revoking coverage after the policyholders gets sick and incurs medical expenses.

Moore writes: “The industry’s continued use of rescissions to evade bills that companies don’t wish to honor eviscerates the value of health insurance. To a person like me, who is on the margin, rescissions are the deciding factor between purchasing and not purchasing insurance. … [A]s long as the insurers can use medical underwriting to exclude poor risks and redline preexisting conditions -- sometimes retroactively -- insurance isn’t worth what we’re being asked to pay.”

The second article, “When a Policy is Clear as Mud,” by Harris Meyer, follows the saga of Anthem Blue Cross policyholder Neil Dukas as he attempts to receive treatment for a knee injury. His difficulties arose because he couldn’t get clear, reliable information from his insurer about pre-authorization for procedures and tests and reimbursements for his out-of-pocket costs for an MRI. Eight months after his injury, Anthem Blue Cross approved his MRI, but Dukas is still waiting for reimbursement.

Meyer quotes former health insurance communications executive Wendell Potter: “There are many ways insurers keep their customers in the dark and purposely mislead them,” he said. “Insurers make it nearly impossible to understand -- or even to obtain -- information [consumers] need.”

Some insurers insist they are attempting to “step up” their communications efforts so their customers can better understand insurance jargon, writes Meyer in a companion article “Goodbye, ‘Insurancespeak’ – Hello, Clear Language.” http://www.latimes.com/features/health/la-hew-insurance-jargon-changes21-2009sep21,0,893422.story.

We would not advocate remaining uninsured. A catastrophic injury to you or family member would either bankrupt you, or keep you from getting the medical services you need. On the other hand, paying premiums only to find the coverage rug pulled out from under you could have the very same effect. THESE are the issues Congress should be tackling, instead of the noisy, wholly ineffective debate about whether a “public option” is going to turn our Country into a socialist regime.