California Insurance Lawyer Blog

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.