California Insurance Lawyer Blog

An exposé in the Los Angeles Times documented the struggles and tribulations individuals had to endure due to the denial or rescission of life insurance benefits by billion dollar companies like Metropolitan Life (MetLife), American General Life Insurance Company (AIG), and AXA Equitable Life Insurance Company (Equitable). In a growing number of cases, life insurance companies are disputing claims based on assertions of a “material misrepresentation” made in the insurance application. Here in California, the window for making such an assertion is limited by law to two years following the application. While this shortens the potentially limitless contestibility period, it also allows insurance companies to easily focus on a subset of claims to unfairly scrutinize - often discovering and asserting mistakes that were not the fault of the insured.

We have represented claimants in these situations against big insurance companies like Prudential, Liberty Mutual, Unum, and State Farm - both in ERISA and “bad faith” litigation. We have thus seen many of the heavy handed ways in which life insurance companies unreasonably deny benefits.

Read the Los Angeles Times article and you'll get a sense for yourself: “Flaws can cancel life insurance - after death”, http://articles.latimes.com/2010/nov/21/local/la-me-life-insure-20101121.

While people around the country were celebrating the passage of the Mental Health Parity and Addiction Equity Act in 2008, some health plans were quietly planning to drop mental health and addiction coverage before the act became effective in 2011. Groups such as the Screen Actors Guild and the Plumbers Welfare Fund, as well as United Security Life and Health Insurance Co., will no longer provide such benefits to their insureds in an effort to control costs, reports the Wall Street Journal. See “Law Prompts Some Health Plans to Cut Mental Health Benefits,” http://online.wsj.com/article/SB10001424052748703395904576025410628499574.html.

Mental Health Parity legislation requires that plans offering mental health coverage do so under the same terms and conditions as coverage for physical ailments. To circumvent the law, some health plans have dropped the coverage or changed the benefits they offer their members. What this means for SAG members, for example, is that something as simple as a prescription for an antidepressant won’t be covered by insurance. And this itself is depressing news for the entertainment industry, which according to the federal Substance Abuse and Mental Health Services Administration and reported in the WSJ, ranks in the top three business segments in rates of illicit drug and heavy alcohol use.

The outlook, however, may not be so dismal for other industries. According to blogger David E. Williams, the WSJ may not have looked deeply enough into the Kaiser Family Foundation report that prompted the article. “Of firms surveyed by Kaiser Family Foundation, 69 percent were not changing their mental health and substance abuse benefits at all. Of the 31 percent that were changing such benefits, 66 percent were eliminating limits on coverage. Only 5 percent of the 31 percent (or about 1.5 percent of the total) were dropping their mental health coverage,” writes Williams. See “Wall Street Journal Lost Its Way on Mental Health Policy,” http://www.medcitynews.com/2010/12/wall-street-journal-lost-its-way-on-mental-health-policy/.

Although it’s likely too soon to know for sure how most health plans will ultimately respond to mental health parity laws, from our experience most will do whatever they can get away with to increase their profits. And that would be unfortunate.

Both the federal and state mental health parity laws have been lifesaving measures for more than people with substance abuse problems. They have allowed thousands of women with eating disorders to obtain the level of care they need for effective treatment and cure, something that was largely unavailable before such laws were enacted. Thousands more could be denied necessary residential treatment should more health plans choose to drop mental health coverage.
Williams notes that the Congressional Budget Office projected mental health parity would raise premiums a mere 0.4 percent, and pointed to actuarial evidence that that spending on mental health and substance abuse benefits lowers overall healthcare costs.

Those are statistics we urge the health insurance industry to ponder, rather than reacting to fears that mental health costs will impact their coffers.

If you have been denied health benefits for an eating disorder, addiction or other mental health issue, call us at (800) 446-7529. We can help.

The third annual Jackie Bristow Memorial 5k Run/Walk on January 8, 2011 was a reminder that the effects of eating disorders can be deadly. The race memorializes Jackie Bristow who died at the age of 19 from heart failure, brought on by an electrolyte imbalance caused by her eating disorder. The evidence of eating disorders is not always apparent, as Jackie’s mother explained: “This is killing girls that aren't sensationally thin,” Joan Bristow said. “It's very secretive and it can go unnoticed for a long time.”

By the time our clients seek treatment, they have lived with their eating disorders for months, or even years. Awareness is crucial to prevention and early intervention. As we approach Eating Disorder Awareness week in February, find a race in your area and support awareness and prevention of eating disorders:

http://www.sgvtribune.com/rss/ci_17028981?source=rss

Merrick’s Walk in Atlanta, GA on March 27, 2011
http://www.active.com/running/atlanta-ga/merricks-walk-and-5k-fun-run-2011

Third Annual Freedom Run in Lancaster, PA on October 8, 2011
http://www.goracego.com/search/event.aspx?event=28eb7704-4a91-4e22-ad59-4ddba02140ae.aspx

Bust a Move 5k Run/Walk in Troy, NY on April 9, 2011
http://www.active.com/running/troy-ny/bust-a-move-5k-runwalk-2011

National Association of Eating Disorder Walks http://www.nationaleatingdisorders.org/programs-events/nedawareness-week-walk.php

Tampa Bay, FL
February 19, 2011

Orlando, FL
February 20, 2011

Oklahoma City, OK
February 26, 2011

Raleigh, NC
April 3, 2011

Napa, CA
June 11, 2011

Long Beach, CA
July 23, 2011

Anorexia risk may be genetic, reports a new study in Molecular Psychology. The study was the largest ever conducted to look for genetic markers for anorexia and found both variations in gene sequences and in segments of DNA either duplicated or deleted. Study researcher Dr. Hakon Hakonarson, director of the Center for Applied Genomics at The Children’s Hospital of Philadelphia, and his colleagues scanned the genomes of 1,003 people with anorexia (whose average age was 27), and compared them with the genomes of 3,733 children (whose average age was 13) who did not have anorexia. The researchers found a few spots along the genome where the two groups differed and determined these “single-nucleotide polymorphisms (SNPs) could play a role in the genetic underpinnings of anorexia. See “Anorexia Risk May Be Determined by Genetics,” http://www.msnbc.msn.com/id/40325171/ns/health-mental_health/.

California Insurance Commissioner Dave Jones has asked three more health insurers in California to delay rate increases an additional 60 days so his office can review proposed increases to determine if they comply with California law. The DOI sent letters to Aetna, Anthem Blue Cross and Pacificare urging their cooperation.

“The state’s largest health insurers have submitted multiple premium increases for early 2011, and I am very concerned about the impact these increases will have on policyholders, especially since I have not had sufficient time to review these filings,” Commissioner Jones said in a prepared statement.

California law requires health insurers to spend at least 70 percent of premiums on their policyholders’ healthcare claims. Jones is attempting to raise that number to 80 percent, which would make billions more available to cover medical bills.

Jones’ ability to stop rate increases is limited. He can only do so if the company spends less than the 70 percent on health costs state law mandates. The California Legislature has the authority to pass legislation that would give the DOI more power to regulate rate increases. We’re urging our government leaders take all appropriate action to ensure that insurance rates remain fair.

A recently published study in the American Academy of Pediatrics Journal reports an alarming trend of children as young as 10 turning to internet chat rooms to learn weight loss or purging methods that can exacerbate anorexia and bulimia. Rebecka Peebles, who authored the study, is urging parents to gain greater awareness about how such unmonitored, interactive sites could affect the health of their teens and pre-teens. The report also addresses how the medical profession’s emphasis on treating obesity in children and adolescents may have placed an unhealthy emphasis on weight loss and dieting. The report documents an increase in cases of anorexia and bulimia among pre-teens, males and minorities during the past decade. Although a full report is not available online, the AAP has posted a policy statement about Identifying and Treating Eating Disorders at http://aappolicy.aappublications.org/cgi/content/full/pediatrics;111/1/204.

Kantor & Kantor, LLP can help get your insurance claims for eating disorder treatment expenses paid.

Immediately after Blue Shield announced its proposed rate increase on individual insurance policies by as much as 59 percent, newly sworn-in Insurance Commissioner Dave Jones asked the health insurer to delay implementation at least 60 days beyond the March 1 effective date so the Department of Insurance can adequately review the increase. “I find it stunning that Blue Shield would seek to impose such massive premium increases on policyholders during these troubling economic times. These premium increases will impose significant financial burdens on struggling families and, in some cases, will lead to the loss of health care coverage altogether,” Commissioner Jones said. See, http://www.bizjournals.com/losangeles/news/2011/01/07/dave-jones-takes-on-blue-shield-of-calif.html?ed=2011-01-07&s=article_du&ana=e_du_pap.

Blue Shield has declared war in California. No sooner did Insurance Commissioner Dave Jones announce that he wants health insurers to pay 10 percent more of their revenues on health claims, than Blue Shield fires back with a rate increase for individual policyholders – almost 60 percent in some cases. See “Blue Shield of California Seeks Steep Rate Hikes,” http://www.latimes.com/health/healthcare/la-fi-insure-rates-20110106,0,6975599.story.

Just like other insurers that have attempted to raise rates recently, Blue Shield justified its move by citing rising healthcare costs; however, this insurer added a new complaint: expenses resulting from new healthcare laws.

But new healthcare laws, most particularly federal legislation affectionately known as “Obamacare,” were enacted largely to prevent the immoderate rate increases Blue Shield believes is justified.

Will this be the new trend in healthcare: Every time the government passes laws to protect consumers the healthcare industry raises rates to cover the “cost” of compliance? What other industry abuses its customers like the healthcare industry does, then gets away with it because people have few other choices.

It’s past time for the legislature to give the insurance commissioner the power to regulate health insurance rates in the same manner the office regulates auto insurance. If not, this could be a long, messy war.

When Dave Jones was sworn in as California’s seventh Insurance Commissioner this month, he promised to promote consumers’ interests by pushing for health insurance reform. His first act of office was to sign an order forcing insurers doing business in California to spend 80 percent of their revenues on the health care costs of policyholders, rather than on administration or overhead. That would be 10 percent more than they had to spend on policyholders last year. For a $125 billion industry, that’s $12.5 billion more in medical benefits insureds can expect this year. Not a bad first day in office!
See “New Insurance Commissioner Jones Promises to Look Out for Consumers,” http://www.sacbee.com/2011/01/04/3297097/new-insurance-commissioner-jones.html.

Jones developed his reputation as a consumer watchdog while serving in the California Assembly, proposing a number of consumer-friendly bills. Most notable was AB1868, an attempt to ban insurance companies from enforcing clauses in disability policies that allow insurers “discretion” about whether or not to pay claims. When people sue, courts have little authority to second-guess the insurer’s so-called judgment. Needless to say, a profit-minded company’s discretion is almost always influenced by the bottom line. While Jones’ bill passed BOTH HOUSES of the Legislature, Gov. Schwarzenegger inexplicably refused to sign it into law. See “Governor Schwarzenegger Vetoes AB1868 – Insurance Companies Benefit, the Public Suffers,” http://www.californiainsurancelawyerblog.com/2010/09/governor_schwarzenegger_vetos.html.

With the backing of Jones, we will be urging the California Legislature to revive AB1868 to present to the new administration. We believe it’s time for everyone with rulemaking authority to vote in the interests of people with disabilities.