California Insurance Lawyer Blog

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.

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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

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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.

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"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.

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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.

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“Most Americans do have insurance and have never had less security and stability than they do right now because they’re subject to the whims of health insurance companies,” President Obama told a group of nurses, speaking from the White House the morning after his Sept. 10 address to a joint session of Congress about his plan to overhaul the nation’s healthcare system. “Obama Keeps Up Health Care Push, Citing Uninsured,” New York Times.

As part of his Wednesday night speech, the president said the legislation he seeks would guarantee insurance to consumers, regardless of pre-existing medical conditions, as well as other protections. “As soon as I sign this bill, it will be against the law for insurance companies to drop your coverage when you get sick or water it down when you need it most," he added. Obama: Time for Bickering Is Over,” Associated Press.

Even though the bulk of the healthcare debate tends to focus on the issue of whether our country could support both private and public health insurance options – we believe it can – the real truth about the way the insurance industry does business cannot be over-emphasized.

The president has it right when he says health insurers must be held accountable. At the very least, any federal health care legislation should mandate that sick people get the coverage they pay for without delays or denials, time-consuming procedures, and claims adjusters forced to be more concerned with limiting benefits than caring for their customers.

Although legislators are showing concern that the debate has become “uncivil,” real progress toward insurance reform necessarily requires a vigorous airing of the issues. We applaud those lawmakers who refuse to bend to the insurance industry’s “whims.”

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Just when the California Legislature shows some backbone and passes legislation to end the insurance industry practice of canceling some policyholders’ coverage after they get sick and incur medical expenses, the measure could reach a dead end in the governor’s office. Gov. Arnold Schwarzenegger has threatened not to sign any bills until the Legislature makes progress on the state’s water crisis issues, prison overcrowding or confirmation of the governor’s key appointees. See “Health Bill Heads to Governor,” Los Angeles Times.

Last year, the governor vetoed a similar bill, but that was before reporting, led by the LA Times, documented how widespread the practice, known as rescission, really is. The Department of Insurance, responding with outrage over the unethical practice, is proposing its own solution to the problem.

In any event, we think it is unsavory to use sick people as political bargaining chips. Our state needs lots of work and another stalemate in Sacramento won’t help consumers. The insurance industry is likely out celebrating once again.

[090909]

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California Attorney General Jerry Brown announced he will begin scrutinizing how health plans in California pay insurance claims, reports the Los Angeles Times. This move was based in part on a recent analysis published by the California Nurses Association that found six of the state’s largest plans rejected one in five claims during the past seven years - “State to Probe Insurer Denials.”

“These high denial rates suggest a system that is dysfunctional, and the public is entitled to know whether wrongful business practices are involved,” Brown told reporter Lisa Girion.

Brown joins other state regulators, most notably the California Department of Managed Health Care, responsible for policing the health plans. The DMHC, however, reacted defensively to the nursing association’s analysis, claiming it has “been very active in ensuring that providers of care should be paid fairly and on time.”

The insurance industry asserts that the analysis “mischaracterizes” claims data and “does not accurately reflect denials of care for insurers,” even though the numbers the association used to compile its report came directly from the companies own filings with the DMHC.

Although we and many others have frequently accused health plans of improperly denying claims, the Nurses’ Association analysis is the first-of-its-kind report to provide such concrete evidence.

We urge Attorney General Brown to use the powers of his office to conduct more than a cursory examination of this issue, perhaps resulting in something more than the usual slap on the wrist and innocuous fines typically imposed on the industry. Now is the time to institute structural reforms that could revolutionize health care in California, particularly since federal attempts to hold the insurance industry accountable have been compromised by the industry’s unprecedented lobbying. (090904)

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According to the California Nurses Association, California HMOs rejected one out of every five claims for medical care between 2002 and June 2009, reports Lisa Girion of the Los Angeles Times. That’s 31.2 million claims, or 21 percent of all claims during that period.

For the first half of this year, Aetna had the lowest denial rate -- 6.5 percent; PacifiCare the highest -- 39.6 percent. Anthem Blue Cross and Kaiser each rejected 28 percent of claims, and Cigna denied 33 percent.

Although such high denial rates aren’t news to us, it’s rewarding to see empirical data that supports our assertions that health insurers tend to delay and deny claims until policyholders are forced to sue them to receive the coverage they pay for. Sure many denials are justified due to actual misunderstandings about coverage, but far too many denials are improper, and even oppressive.

The nurses association used public data from the health plans’ financial reports posted on the California Department of Managed Care’s website to conduct its analysis. “Every claim that is denied represents a real patient enduring pain and suffering,” Deborah Burger, co-president of the California Nurses Association, told the Times.

Typically, the health plans denied the association’s analysis of their reports, stating that “claim rejections reported to regulators do not always reflect actual denials of treatment to patients.” Maybe not always…but often!

DMHC spokeswoman Lynn Randolph told the Times, “It’s important to point out that a denied claim means that the patient received the medically necessary services, but the doctor or hospital was not paid for that care.”

But what’s the difference? Doctors and hospitals are going to bill someone. If the health plan won’t pay claims, policyholders are then forced to pay out of their own pockets. People don’t buy health insurance for the benefit of hospitals and doctors; they purchase coverage so that in the unfortunate event they face catastrophic health challenges, they can get the medical care they need without going bankrupt!

Both the insurance industry and the California Department of Managed Healthcare fail to appreciate the pain and suffering endured by those whose claims are denied. Try being seriously ill, enduring the stress and indignity of life-saving treatment, then finding out your insurer won’t cover your bills. Now that’s real suffering.

For a copy of the California Nurses Association analysis, go to http://www.calnurses.org/media-center/press-releases/2009/september/california-s-real-death-panels-insurers-deny-21-of-claims.html.

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No matter which of the half-dozen healthcare overhaul proposals Congress is considering passing, the big winner will be the insurance industry, which is guaranteed millions of new customers, many subsidized by the federal government, reports the Los Angeles Times, “Healthcare Insurers Get Upper Hand,” Aug. 24. What began as a plan to create a public option to compete with insurers, thus driving down the cost of health insurance and the cost of care, has resulted in a windfall for the insurance industry.

But is anyone really surprised at the industry’s success in defeating potential competition?

“In the first half of 2009, the health services and HMO sector spent nearly $35 million lobbying Congress, the White House and federal healthcare offices,” reported writers Tom Hamburger and Kim Geiger, relying on information from the Center for Responsive Politics. In all, that sector employed more than 900 lobbyists.

Health insurance executive Robert Laszewski expressed the industry’s reaction: “Hallelujah!”

Shouldn’t alarm bells be going off all across the country? Is Congress really going to get back to work in the fall and pass “health reform” that has the insurance industry cheering? It is unconscionable that the industry that caused the country’s health crisis in the first place is likely going to be the only one profiting from the solution.

“They have beaten us six ways to Sunday,” Gerald Shea of the AFL-CIO told the Times. “Any time we want to make a small change to provide cost relief, they find a way to make it more profitable.”

If federal health “reform” does become law, we urge stage governments to do what the federal government can’t find the resolve to accomplish: Hold the insurance industry accountable to its millions of present policyholders – and all its potential new customers – to ensure they are getting the coverage they (and their federal subsidies) are paying for.

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The Long Island Business News reports that many people think they have enough insurance until they need the policy. Then they learn its limitations, find they have insufficient coverage, or discover “loopholes big enough to drive a truck through.” Laura Glasser, “With Insurance, the Fine Print Matters,” June 30, 2009. This is particularly true, the article reports, for health and long-term care policyholders because they aren’t reading their policies to understand coverage limitations.

“One reason many people get surprises is they don’t know much about their coverage to begin with. If you’ve read your policy lately, you’re in the minority. Most health policies, for instance, cover up to $1 million in lifetime benefits. But most people don’t know that,” writes Glasser. Here’s what two insurance industry executives had to say about the situation:
“The information’s there,” said Ian Laird, director of strategy, sales and programs for Empire Blue Cross Blue Shield. “It’s just in a document that I don’t think the average person bothers to read.”

“You expect people to read their benefits,” said William Golden, chief executive of UnitedHealthcare’s health plan for New York, of the source of many surprises. “I’m not sure that really happens all the time. It’s important to read the small print.”
Here are two insurance executives admitting in black and white that they are selling policies that people don’t read, filled with fine print that limits coverage, and they appear just fine with the situation. In fact, one wonders if they might be taking advantage of this information by filling policies with fine print loopholes that end up surprising many people.

We say it everyday…and we’ll say it again here: READ YOUR POLICY BEFORE YOU NEED IT. If you don’t understand something, ask someone who can help.

[090701]

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Is anyone surprised by Los Angeles Times reporter Lisa Girion’s article “Insurers Refuse to Limit Policy Cancellations"?

Executives from three of the nations largest insurers were “courteous and matter-of-fact” in their testimony before Congress about carriers’ practice of canceling coverage for sick policyholders known as rescission. When asked it the industry planned to stop the practice, all three executives said, “No.”

Members of the House Subcommittee on Oversight and Investigations must have been dumbfounded by the response, particularly those members who have taken up the industry’s cause in opposing government-sponsored health insurance.

“When insurance companies go under oath and admit they are cancelling innocent patients when they get sick, it makes it very difficult for lawmakers to pass a law that requires every American to buy a policy or face a tax fine,” said Consumer Watchdog advocate Jerry Flanagan. “It opens the way for a public option to hold the companies in check.”

It appears to us the health insurers must not be too worried about the possibility of a public plan or simply confident that they can influence Congress against it the same way they have for the last 30 years.

Will it take a public option to convince insurers to treat policyholders fairly? We wish we could say yes, but in all likelihood rescission practices, as well as denials and delaying tactics, may be so firmly entrenched in the way the industry does business, nothing but a complete overhaul by state and federal regulators – or fines that amount to more than just a slap on the wrist -- would make a difference.

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A couple of weeks ago we wrote about United Healthcare’s benefit denial for a young woman who's life is being threatened by her Anorexia.

Sacramento Bee healthcare writer Carrie Peyton Dalhberg reported June 14 about our client and her stuggle (Shepard v. United Healthcare) - “Woman Struggles to Escape Anorexia’s Grip.”

Because of the health plan’s delaying tactics in providing benefits, Ms. Shepard’s family exhausted its financial resources paying for her inpatient care. Our appeal to the California Department of Insurance was successful – United Healthcare was held responsible for Ms. Shepard’s medical expenses. The ruling came a few hours too late, however. Ms. Shepard had been discharged that morning. Ms. Shepard participated in outpatient care after her return, which proved unsuccessful. The article details the tragic result.

Litigation in this case is ongoing. We continue to fight for benefit payments on behalf of people suffering from disabling illnesses and conditions against insurance companies whose delay and deny tactics toward their own policyholders cause hardship and despair.

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You’d think that the insurance industry, faced with the prospect of competition from a proposed national health plan, would do everything it could right now to keep its customers happy. So why did Blue Shield raise its rates this month – as much as 54% for one policyholder – Los Angeles Times columnist David Lazarus questioned. “Blue Shield Hits Health Insurance Policyholder With 54% Rate Hike.”

Blue Shield policyholder Ruta Miller, who pays for an individual policy, received a letter from her insurer alerting her that her “rates are changing due to rising costs across the healthcare industry. Major drivers include hospital upgrades, new technologies and expensive new drugs.”

“Blue Shield could have made these claims at any point over the last 50 years,” writes Lazarus. So why now?

Company spokesman Aron Ezra blamed hospitals and said, “We agree that insurance premiums are rising far too fast -- and this is symptomatic of our broken healthcare system. Our system needs an overhaul.”

But if that’s the case, why is the industry working so hard to prevent an overhaul and keep the status quo?

Miller’s increase was higher than most policyholders experienced, said insurance brokers, who said the rate increases this year run from 8% to 28%. Miller’s increase was so high because she is on the high end (even though she is healthy), apparently because she turns 45 this year, an age at which Blue Shield arbitrarily decides to increase rates for all policyholders.

People with private policies get hit hardest by insurers, explains Lazarus, because they don’t have the bargaining power of large employers to keep rates down. That’s what a government-provided healthcare would solve by creating a pool for everyone without employer-provided insurance, spreading the risk and controlling costs. But it would also allow people like Miller – millions of people, in fact – to flee big insurance rate-increase abuse for a more affordable government option.

But that hasn’t seemed to deter Blue Shield. It also begs the question: Where is the California Department of Insurance when you need them?

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Will the nation see healthcare reform by the end of summer? Although President Obama is confident he has a workable plan in place, most industry observers believe this latest attempt won’t fare any better than past attempts. “Obama Takes His Health Care Case to the Public,” New York Times.

The stalemate surrounds two issues. The first is the insurance industry’s refusal to consider the creation of a public insurance plan that would compete with the private sector. The industry has agreed to a compromise, which would mean more regulation of insurance premiums and insurer conduct. But we tend to think the industry will continue to fight any government intervention in how it does business.

The other issue involves eliminating the tax break on employer-provided plans. The compromise here might be a limited, less disruptive tax break, which Los Angeles Times columnist Ronald Brownstein says may be the trade off Americans are willing to make if it means slowing down the rise in healthcare costs. “In effect,” writes Brownstein, “limiting the tax exclusion would mean that those with coverage would be purchasing insurance for their insurance.” “Will Americans Buy a Healthcare Trade-Off?”

And then there’s Sen. Edward Kennedy’s bill that includes a long-term care provision that would make long-term care government-provided insurance available for $65 a month. The insurance would provide for modestly priced in-home care, not the more expensive nursing home care, and policyholders would have to pay into the system for five years before receiving benefits. “Senator Edward Kennedy Releases Health Care Bill; Includes Long-Term Care Provision.”
The likelihood of Kennedy’s bill making its way through Congress is negligible, since affordable long-term care insurance will be vigorously opposed the an industry that reaps considerable profits from sales of much more expensive policies. And that’s really the bottom line about why insurers will never support any substantial healthcare reform but will continue to oppose any meaningful legislation.

Insurers are in the business of making money, not providing healthcare. That’s why many companies delay and deny benefits or won’t even insure people who are ill. And they are doing so with little regulation and no competition. Why should they support change? The federal government wants to ensure that everyone in America has access to healthcare by creating affordable policies, while keeping down medical costs. Those two interests are counter to one another, and as long as the insurance industry has a dominate seat at the healthcare reform table, little will be accomplished.

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Will the nation see healthcare reform by the end of summer? Although President Obama is confident he has a workable plan in place, most industry observers believe this latest attempt won’t fare any better than past attempts. “Obama Takes His Health Care Case to the Public,” New York Times.

The stalemate surrounds two issues. The first is the insurance industry’s refusal to consider the creation of a public insurance plan that would compete with the private sector. The industry has agreed to a compromise, which would mean more regulation of insurance premiums and insurer conduct. But we tend to think the industry will continue to fight any government intervention in how it does business.

The other issue involves eliminating the tax break on employer-provided plans. The compromise here might be a limited, less disruptive tax break, which Los Angeles Times columnist Ronald Brownstein says may be the trade off Americans are willing to make if it means slowing down the rise in healthcare costs. “In effect,” writes Brownstein, “limiting the tax exclusion would mean that those with coverage would be purchasing insurance for their insurance.” “Will Americans Buy a Healthcare Trade-Off?”

And then there’s Sen. Edward Kennedy’s bill that includes a long-term care provision that would make long-term care government-provided insurance available for $65 a month. The insurance would provide for modestly priced in-home care, not the more expensive nursing home care, and policyholders would have to pay into the system for five years before receiving benefits. “Senator Edward Kennedy Releases Health Care Bill; Includes Long-Term Care Provision.”
The likelihood of Kennedy’s bill making its way through Congress is negligible, since affordable long-term care insurance will be vigorously opposed the an industry that reaps considerable profits from sales of much more expensive policies. And that’s really the bottom line about why insurers will never support any substantial healthcare reform but will continue to oppose any meaningful legislation.

Insurers are in the business of making money, not providing healthcare. That’s why many companies delay and deny benefits or won’t even insure people who are ill. And they are doing so with little regulation and no competition. Why should they support change? The federal government wants to ensure that everyone in America has access to healthcare by creating affordable policies, while keeping down medical costs. Those two interests are counter to one another, and as long as the insurance industry has a dominate seat at the healthcare reform table, little will be accomplished.

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In U.S.A Today this week, elder-care author Howard Gleckman illuminates one of the most important but least discussed issues in the national debate about health care reform: What are we doing to help the elderly and disabled who don’t need acute hospital care but rather personal assistance in their homes. See, “What About Long-Term Care,” May 26, 2009,

Gleckman says Congress is ignoring its chance to change the way our country delivers long-term care ("LTC"), now mostly through Medicare that pays for nursing home treatment which costs thousands more a year than in-home care. Nursing home care could amount to as much as $75,000 a year; a home health aide is paid $20 an hour.

“Congress and President Obama could create a system of universal long-term care insurance, built on a combination of public and private coverage,” writes Gleckman. “They could end the reliance of millions on the welfare-like Medicaid system while reducing the tremendous pressure that program is putting on both state and federal budgets. And, they could further shift the focus of long-term assistance to community care instead of nursing facilities.”

But, concludes Gleckman, long-term care reform is unlikely to happen even though Sen. Edward Kennedy and Rep. Frank Pallone have proposed government-provided LTC insurance that could cost as little as $100 a month.

So where does that leave us? If you are among the seven million Americans who can afford private LTC coverage, you are in good shape to preserve your assets and savings as you age or become disabled. For the rest, this is another wake-up call. Any health reform the federal government is likely to approve won’t be much help for the elderly and disabled. Medicare won’t pay for home health aid, and Medicaid only covers some costs after the patient is impoverished.

Why isn’t the federal government creating a more comprehensive plan? Most likely because it is not getting much help from the most important stakeholder when it comes to the economics of health care, the insurance industry. That industry doesn’t want to take care of the sick, the elderly and the disabled. Rather, insurers are in the business of making money for shareholders. By issuing policies to healthy people then trying to find ways to deny coverage when they get ill, profits can be enhanced. And because they have been getting away with these practices for years means they have no incentive to devise a revolutionary public-private partnership that would provide affordable health care to Americans from the cradle to the grave.

Gleckman calls it a tragedy. What do you think?

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Los Angeles Times business columnist David Lazarus is about as skeptical as we are about the insurance industry’s pronouncement that it is ready to work with the Obama administration to overhaul the nation’s healthcare system. “Insurers Return to the Table Again,” (May 17, 2009). Lazarus asks the question, “Does anybody trust them?” He couldn’t find anyone who said “yes.”

Lazarus compares this round of the industry’s enthusiasm to “serve the national best interests” to the 1970s when the Carter administration attempted to craft a national healthcare policy. “Nothing came of it,” said Alain Enthoven, who was a Carter consultant. “The whole thing was just a joke.” It happened in the 1990s during the Clinton administration. “They said they wanted to be at the table and wanted to deal,” former Clinton health official Karen Pollitz told Lazarus. “Then they all left. They saw that they could kill it.”

Insurance industry lobby America’s Health Insurance Plans’ Robert Zirkelbach told Lazarus “everything’s different this time.” But no one is buying it.

Here’s the industry’s compromise: If the government forces everyone to buy health insurance, the industry will quit denying sick people coverage and equalize premiums for men and women. And that’s if the Obama administration scuttles its plan for public insurance that would compete with the private sector.

And Lazarus’s point is this: This time, it’s not about what’s “politically feasible and financially palatable.” No, he says, this time it’s about the people who can’t afford health insurance but can’t afford not to have it. That, he concludes, is all of us.

We hope the Obama administration reaches the same conclusion and forces the insurance industry to keep their promises. But we’re still skeptical.

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Posted In: ERISA , Health Insurance , Insurance Bad Faith

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America’s Health Care Plan Agrees the Practice Should Be Eliminated

U.S. Senator John Kerry introduced a bill this week that would end the insurance company practice of charging women as much as 50 percent higher premiums then men, reports UPI - “Health Insurers Agree to End Gender Bias.” The move could affect as many as 5.7 million women who are not covered by employer-sponsored plans but purchase individual coverage.

“The disparity between women and men in the individual marketplace is just plain wrong, and it has to change,” said Sen. Kerry. Testifying for the industry, Karen Ignagni of America’s Health Insurance Plan agreed that the industry should eliminate the practice.

The Associated Press took a more cynical view of insurer acquiescence. “Health Insurers Offer to Lower Rates for Women,” http://www.latimes.com/features/health/la-fi-insure-women6-2009may06,0,1110808.story?track=rss/. “The industry is trying to head off creation of a government health plan,” the article reported, “that would compete with companies to enroll middle class workers and their families.” Insurers fear of a government plan would ruin their business, and the industry is doing everything it can to prevent a public system.

That means that insurers are doing an “about-face” on financial positions they have insisted for years are necessary to keep them solvent. Such positions include charging women age 19 to 55 higher premiums because they are “more likely then men to have higher healthcare costs due to childbearing, a proclivity toward certain chronic illnesses and more routine healthcare habits.” In March, the industry agreed to stop charging sick people higher rates if the federal government required all citizens to have health insurance.

Whether or not the federal government is able to pass a public healthcare agenda, healthcare reforms that benefit women and the disabled are long overdue. Insurers subject illnesses that predominately affect women, such as multiple sclerosis, fibromyalgia, chronic fatigue, lupus, anorexia nervosa and bulimia (to name a few) to a double standard: If you are a woman who might suffer from one of these diseases, you get charged more on the front end in premium costs. But if and when you are diagnosed with one of these conditions, insurers routinely deny benefits when they are needed, or worse, cancel the insurance.

To quote Sen. Kerry, that is “just plain wrong.”

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Late last month a New Jersey federal court approved a class action settlement requiring Horizon Blue Cross of New Jersey to expand benefits for its 1.5 million policyholders with eating disorders, reports the New Jersey Law Journal.

As a result, Horizon can no longer limit treatment it covers to 20 outpatient visits each year and only one month of hospitalization, and 556 patients will split a $1.2 million award. Horizon agreed that in the future it would treat eating disorders the same it would other biologically based mental illnesses.

The article points out that the settlement provides insureds substantially the same benefits they were set to receive in January when the U.S. Mental Health Parity Statute becomes effective.

Although in California, state law provides a much broader mental health parity statute, people with eating disorders often must run a procedural gauntlet to get carriers to pay for residential treatment. In a recent Kantor & Kantor case, the plaintiff paid for her own treatment while a federal judge required an appeal to the California Department of Managed Healthcare which punted the case to the California Department of Insurance, which then sent the case to an outside reviewer for independent analysis. While the review resulted in a ruling favorable to the plaintiff, the time spent obtaining it was detrimental to the patient’s recovery.

Class actions such as the New Jersey case against Horizon draw attention to the disparate treatment people with eating disorders – mainly women – receive from their health insurers. We hope California takes note and revises its procedural quagmire, which proves to be simply another stalling tactic and roadblock carriers can take advantage of to intimidate their customers.

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83-pound Sacramento-Area Woman Denied Life-Saving Treatment

Kantor & Kantor, LLP, is appealing to the California Department of Insurance on behalf of Kimberly Shepard, a young wife and mother in danger of losing her life from the debilitating effects of Anorexia Nervosa because her health insurer United HealthCare Insurance Company declined her claim for benefits to pay for residential treatment.

The appeal requests that the Department of Insurance order United Healthcare to reverse their denial of benefits. Earlier this month, the U.S. District Court for the Northern District of California denied Shepard’s temporary restraining order to enjoin United HealthCare from continuing to withhold benefits.

Shepard sought treatment in February at Monte Nido residential treatment center in Malibu, CA a preferred provider under Shepard’s health policy. Although Shepard’s condition more than met the policy’s conditions for residential treatment, United HealthCare denied her claim. As a result, Shepard exhausted her family’s financial resources to pay for treatment. By April 1, Shepard could not longer afford treatment, even though her doctors agreed she had not recovered enough to make appropriate life-sustaining decisions regarding food. Presently, Shepard’s prognosis for recovery is poor if she is not able to continue residential treatment.

“United Healthcare is obligated to pay benefits that will save Ms. Shepard’s life,” said Shepard’s lawyer Lisa Kantor. “The family is out of money. Her husband, an Elk Grove firefighter, and her 3-year-old son, are desperate to ensure that this loving wife and mother recover and return to her home. We are urging United HealthCare to do the right thing and pay for her treatment.”

Under her policy, Shepard must meet only one of the following three requirements to qualify for residential treatment at an eating disorder facility: severe impairment in psychosocial function due to a behavioral health condition; signs of a behavior health condition that clearly demonstrate a need for 24-hour supervision; or a deteriorating health condition likely to require inpatient care. Shepard’s psychiatrist Dr. Cindy Murrer and the attending physician at Monte Nido, Dr. Gary Schneider, both testified that she met all three requirements.

United HealthCare’s “peer review” report by a company doctor who never examined Shepard, conflicted with her treating physicians’ diagnosis, opined that even though Shepard weighed less than 85 pounds and was unable to care for herself, she “does not meet medical necessity criteria for admission to residential mental health treatment.” The report found that Shepard “is not showing any significant physical abnormalities,” had only “some suicidal ideation,” and “had not participated in appropriate eating disorder treatment at lower levels of care.”

“Those findings are untrue and inappropriate bases for denial of coverage,” says Kantor. “United HealthCare’s blatant disregard for its policyholder’s welfare is a flagrant breach of the terms of its policy.”

Shepard has also filed a complaint in the Northern District court against United HealthCare for damages for breach of contract and breach of the covenant of good faith and fair dealing.

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Last week the health insurance industry informed U.S. Senate committees considering ways to overhaul the country’s health care system, that insurers are willing to accept more aggressive regulation of their premiums, their benefits, their underwriting practices and “other activities,” reports the New York Times “Insurers Offer to Soften a Key Rate-Setting Policy.” The concessions were documented in letters signed by the presidents of the major trade groups that represent most of the industry, Karen M. Ignagni of America’s Health Insurance Plans and Scott P. Serota of the Blue Cross and Blue Shield Association.

In the letter, the industry said it was willing to devise a new business model that would no longer charge sick policyholders, or those with a medical history that could lead to illness, higher premiums than healthy policyholder pay. Instead, they would spread the cost equally over both groups.

In return, the industry wants Congress to adopt a plan that requires health insurance coverage for everyone but cease its consideration of a government-run health insurance plan. And they still want to retain the right to base premiums on age, place of residence and family size.

While we would like to applaud the industry for finally considering what it should have done all along, we are still suspicious of the motives behind this change of heart. In truth, not much has changed.

The industry, fearing the loss of millions of policyholders to a government plan, is offering its own systemic overhaul in order to sign up millions more subscribers under a federal mandate. By retaining the right to base premiums on criteria other than health, a little creative accounting could place insureds right back into the same dilemma of unaffordable insurance they thought they were being rescued from.

Who will keep the industry honest? State regulators around the country are forcing companies to reinsure policyholders whose coverage was rescinded on mere pretext after they became ill. How much more time and taxpayer resources would regulators expend in the future ensuring carriers follow through on their promise to equalize premiums?

Now is not the time for Congress to cave in to insurance demands that will only solve part of our country’s healthcare problems. In addition to equalizing premiums, the industry should standardize its offerings and commit to restructuring claims-handling processes to make them transparent, streamlined and less burdensome on its policyholders. Congress should also insist that carriers return to making benefit decisions based on reliable medical diagnoses rather than the subjective evaluations of insurance adjusters charged with cost-control.

Insurers want a quick fix so they can get back to business as usual. We urge Congress to see beyond this sham compromise and use its leverage to ensure health insurance changes that will serve consumers well for decades to come.

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Time healthcare correspondent Karen Tumulty last month provided an eye-opening account of one man’s journey through the healthcare system by chronicling her brother Patrick’s three-year struggle to receive the level of treatment he needs to fight kidney disease. “The Health Care Crisis Hits Home.”

As the article unfolds, almost everyone involved in Patrick’s care – his family, his doctor, his treatment center, his medical creditors, and his county health care program – showed compassion and a willingness to offer solutions for his care. Everyone, that is, except his insurance company.

Tumulty’s brother, who also suffers from Asperger’s syndrome, a high-functioning form of autism, was relying on a series of short-term individual medical insurance policies he purchased as a temporary worker while seeking full-time employment with employer-provided health insurance. He paid premiums on the policies issued by Assurant Health for six years. It wasn’t until he got sick and was denied coverage that his family understood how “underinsured” he was.

Patrick had been continuously covered by Assurant since 2002, but as he transferred into successive short-term policies, the company treated him as a new customer each time. As a result, because Patrick underwent tests for possible illnesses while one policy was in force but was not diagnosed with his disease until after a new policy was issued, the company considered his illness a pre-existing condition and denied coverage.

Karen Pollitz, project director of Georgetown University’s Health Policy Institute and a leading expert on the individual-insurance market told Tumulty, “These short-term policies are a joke. Nobody should ever buy them. It is false security that is being sold. It’s junk.”

Tumulty’s experience with her brother has caused her to question the Obama Administration’s plan to allow people to opt out of the employer-provided insurance market to purchase their own individual coverage. The premise behind that initiative is that the consumer is the better able to determine which policy suits his or her own needs.

“Pat’s experience suggests it is difficult for an individual to make such judgments,” writes Tumulty. “And the existing market for these kinds of policies leaves a lot to be desired. A 2006 Commonwealth Fund study found that only 1 in 10 people who shopped for insurance in the individual market ended up buying a policy. Most of the others couldn’t find the coverage they needed at a price they could afford.”

Tumulty and Patrick ended up filing a complaint against Assurant with the Texas Department of Insurance. Less than a month later, the company – although it admitted no wrongdoing and even had the audacity to blame Patrick for purchasing inappropriate insurance – agreed to pay some of Patrick’s claims.

And guess what else Tumulty uncovered as she investigated Assurant and its claims-handling practice? Last year, Connecticut insurance regulators fined Assurant $2.1 million for alleged “postclaims underwriting,” that is, belatedly reviewing short-term policyholder’s medical records to uncover pretexts to deny claims or rescind policies. Assurant paid the fine, but admitted no wrongdoing.

Tumulty discovered what we’ve been saying on the blog for quite a while. Healthcare reform is a necessity, but it should begin where the majority of the problems lie: with an industry quick to collect your money for whatever fly-by-night products they create and market as long as you are well, but increasingly loath to fulfill their part of the agreement once you get sick.

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Los Angeles Times reporter Michael Hiltzik once again comes out fighting on the side of consumers in his March 9 column examining an insurance industry trade group’s policy brochure purporting to support universal healthcare and the Obama Administration’s plan to improve the system. “Health Insurers Pay Lip Service to Reform.”

But before inviting us to celebrate the industry’s 180-degree turnaround, Hiltzik examined the fine print and spoke to a number of industry observers who convinced him American Health Insurance Plans is only repackaging its same old proposals to transfer the cost of care for the sickest people to taxpayers and to gain freedom from “pesky state regulations limiting their freedom.”

“Veterans of earlier healthcare battles justly wonder if the industry is merely trying to get out in front of the parade, the better to lead it into a dead end,” Hiltzik writes.

Meanwhile, as Hiltzik reports, doctors “split their working hours 50-50 between seeing patients and dickering with insurance companies over claims and preauthorizations.” That’s a travesty!

We agree with Hiltzik that insurance industry healthcare “reforms” can’t be trusted. No matter what federal legislation eventually becomes law – and we’re not holding our breaths in anticipation – state regulators are charged with much more than standing on curb watching the parade. They need to get strong where they have been lax in regulating this industry and then stay on top of it.

During the next election cycle, California will elect a new insurance commissioner. Whoever is willing to take on the insurance industry and transform that office will likely be hailed as a hero all along Main Street. But he or she needs to act soon, before the sun sets and all the parade-goers straggle home.

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Lisa Girion of the Los Angeles Times reported this week that Blue Shield has become the latest California health insurer to reinstate policyholders whose insurance was rescinded when they applied for medical benefits. Nearly 700 people not only regained their coverage, but also were reimbursed for their medical bills. http://www.latimes.com/business/la-fi-insure7-2009jan07,0,2471877.story

The state Department of Managed Health Care had sued Blue Shield, along with most of the state’s other health insurers, for using innocent mistakes on policy applications as excuses to cancel policies after the insured became ill. Thousands of California policies have been illegally rescinded, the lawsuits allege.

While insurers continue to settle the suits and reinstate and reimburse their policyholders, we agree with consumer advocates who believe the Department of Managed Health Care should do more to regulate the practice of rescission in the future. Some have even suggested that Commissioner Poizner left Blue Shield off easy by this settlement, and that such a settlement will NOT discourage this practice by insurers in the future. We urge the department and state Insurance Commissioner Steve Poizner to complete the regulations he promised that would penalize insurers for their rescission practices, and deter such future conduct.

We also wish to applaud Ms. Girion and the Los Angeles Times for continuing to report about this important consumer-protection issue and keeping government officials accountable to the public. 1/8/09 AK

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This week, U.S. District Judge Faith Hochberg approved a class action settlement that awarded nearly $300,000 to 119 Aetna Insurance Company policyholders who were denied benefits for eating disorders, reports the New Jersey Law Journal. Hochberg also allowed $350,000 in attorneys’ fees for plaintiff counsel Nagel Rice that Aetna must pay directly. In the settlement, Aetna agreed to consider future claims more liberally and institute reforms to resolve benefits disputes about eating disorders.

Plantiffs’ counsel estimated that about 530,000 of Aetna’ 1.2 million policyholders are eligible for the new claims procedures. That could amount to $2 million in recoveries.

Aetna isn’t the only insurer that systematically denies benefits for eating disorders. California is among the few states that have done something about this, passing a mental health parity statute that forces insurers to provide the same treatment for mental illness they provide for physical diseases. The recent economic bailout package approved by Congress contained a federal mental health parity provision.

Still, insurers attempt to get away with as much as they think they can. We have been fighting insurers for benefits for clients with eating disorders for a number of years and winning cases at the appellate level. In fact, we had the first published decision in California involving denial of benefits for in-patient treatment of an eating disorder. Thompkins v. BC Life and Health Ins. Co., 414 F.Supp2d 953, (C.D.Cal. 2006).

Early this year, we won an appellate decision for a client suffering from bulimia. Jacobs v. Kaiser Foundation Health Plan, Inc., 04-57131 (C.D. Cal. Jan. 30, 2008). In that case, medical plan provider Kaiser, which did not offer adequate treatment for plan participants, declined to refer Ms. Jacobs to an out-of-plan treatment facility and refused to pay for the cost of treatment when Ms. Jacobs’ mother obtained the care her daughter desperately needed by checking her into an eating-disorder treatment facility. Although the lower court found that Kaiser had not abused its discretion, the California Court of Appeal ruled that her mother’s “decision to take Laura outside the Kaiser treatment system may have saved her daughter’s life.” The case was reversed and remanded with instructions for the lower court to reimburse the Jacobs for the non-plan services and to pay attorney fees and costs.

It is gratifying to see other courts around the country agree with the Jacobs decision. Perhaps this most recent ruling against Aetna will make the fight for mental health parity for eating disorders much less contentious.

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In an annual report released October 17, 2008, the Centers for Medicare and Medicaid Services (CMS) predicted that during the next 10 years, spending on Medicaid for low-income seniors will outpace the rate of growth in the U.S. economy. See

This means, according to Health and Human Services Secretary Mike Leavitt, “that the current path of Medicaid spending is unsustainable for both federal and state governments. We must act quickly to keep state Medicaid programs fiscally sound.”

States are already struggling to keep up with Medicaid cost. In considering a second economic stimulus package, lawmakers are contemplating supplying federal funds directly to states to pay costs of running government programs, including Medicaid. The outlook for government long-term care assistance is increasingly more dismal.

This is frightening news given our aging population and the seeming increase in need for medical services. People who are fortunate enough to be able to afford health insurance, and long term care plans from quality providers will probably be okay, assuming their insurers pay benefits (which we know from experience is not always the case). Still those people represent only a small minority of our population. The future of health and long term care in this country is getting closer to a breaking point.

The full CMS report is available by following this link: http://www.cms.hhs.gov/ActuarialStudies/downloads/MedicaidReport2008.pdf.

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At Kantor & Kantor we hear from people every day about their troubles in trying to obtain benefits under Long Term Disability, Long Term Care, Health and Life insurance policies. We created our Blog as a way to try and share some of the stories we hear, as well as the news being made in these and other related insurance areas.

Well, it seems people are reading our Blog and getting a benefit out of our efforts, all of which makes it even more worthwhile. Our Blog was just recently named as one of the Top 50 Legal Blogsites by the LexisNexis Insurance Law Center. This is what they had to say: "These blogsites contain some of the best writing out there on insurance on coverage, catastrophic loss, regulatory compliance, life insurance, health care and insurance issues in general,...They contain a wealth of information for the insurance community with timely news items, practical information, expert analysis, frequent postings and helpful links to other sites. These blogsites also show us how insurance issues interact with politics and culture. Moreover, they demonstrate how bloggers can impact the world of insurance law and insurance industry issues.”

Thanks LexisNexis. We will keep on blogging!

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Posted In: ERISA , Health Insurance , Insurance Bad Faith , Life Insurance , LongTerm Care Insurance , LongTerm Disability (LTD) Insurance

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Health Net Inc. has now joined the growing list of health insurers to reinstate policies it canceled after policyholders got sick, reports the Los Angeles Times. In the settlement, called the first of its kind because it involved both the state Department of Managed Healthcare and the Department of Insurance, reinstated 926 policies and forces the company to pay $3.6 million in penalties and $14 million in restitution for unpaid medical bills. Heath Net admitted no wrongdoing.

Critics are calling the deal only a partial solution, and we agree. As a result of the settlement, individual policyholders with legitimate suits against Health Net may be persuaded to give up their rights to seek damages for economic losses and emotional distress.

Health Net CEO Jay Gellert calls the deal an opportunity “to move forward” and help the state overhaul the healthcare industry.

What do you think? Are these settlements letting wrongdoers off the hook by allowing them to save millions in court costs, or is it more important that insurers are allowed the flexibility to fix past mistakes and perhaps do a better job in the future?

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Suit Seeks More Than $1 Billion in Damages

The Los Angeles Times reports that in a lawsuit filed July 16, Los Angeles City Attorney Rocky Delgadillo has accused health insurer Blue Shield of using complex and confusing applications to trick consumers into making allegedly false written statements the insurer can use against them in rescinding coverage. (“Blue Shield Sued for Allegedly Lying About Its Coverage”)

The suit alleges the insurer cancels coverage when insureds are ill and facing substantial healthcare costs. Blue Shield may have to pay more than $1 billion in fines and penalties. A similar recent lawsuit against Athem Blue Shield forced the California Department of Managed Health Care to review more than 2000 rescission cases to determine if the cancellations occurred after the policyholders became ill.

The article quoted Dr. Richard Frankenstein, president of the California Medical Assn. “Having health insurance does not mean you will receive healthcare when you need it,” he said. “Insurance companies promise you the moon and a thousand doctors, but if you really need your medical care you can bet they will be looking for a way to deny treatment or cancel your policy.”

We’ve been saying that all along, and its rewarding to know that the head of California’s medical community agrees with us.

Delgadillo’s attempts to keep health insurance carriers honest are praiseworthy, and we hope it is motivated by more than political aspirations. Ending this harmful rescission practice is a huge undertaking, however, and will require more than participation than just one California city attorney’s office. We urge the legal, medical and regulatory communities to get behind these efforts, and we challenge the state legislature to take note and begin to legislate accordingly.

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A report this month compiled by the American Association for Justice documents what most of us already know: Some of the county’s top insurance companies consistently place their own financial interest above the interests of their policyholders and raise premiums, delay claims and deny coverage. For "The Ten Worst Insurance Companies in America, see, www.justice.org/docs/TenWorstInsuranceCompanies.pdf.

Although Allstate stood out as number one because of its shameless mission statement “to earn a return for our shareholders,” our old nemesis Unum ranked number two. Conseco, another insurer we regularly battle on behalf of policyholders, ranked number five.

On page one of the report is this telling statement: “The insurance industry has so much excess cash, it may spark a downturn in the industry.” How did the industry amass such wealth? According to the report “the name of the game is deny, delay, defend – do anything, in fact, to avoid paying claims.”

Take disability insurer Unum, for example, which paid it CEO $7.3 million in 2007, raked in $679 million that same year, and has assets of $52.4 billion. Debra Potter sold Unum disability policies for many years as part of financial services packages. She bought one herself. She developed multiple sclerosis and filed a claim for benefits. Unum denied the claim, alleging the disease was “self-reported,” a euphemism for “fraudulent.” Potter’s physicians supplied letters and memos validating her illness. Unum continued to deny the claim for three more years. Potter hired a lawyer. Only then did Unum eventually pay Potter’s disability benefits.

We see this every day. It doesn’t matter the disease and, sadly, it’s beginning to infect the entire industry as more carriers realize what insurers such as Allstate and Unum are able to get away with until regulators step in and administer what many times is little more than a slap on the wrist.

The insurance industry is sitting on mountains of gold accumulated from policyholder premiums. Understandably, the carriers have a duty to their shareholder’s to protect assets from fraudulent claims. But, the carriers go way beyond that objective and deny valid claims every day knowing that the fewer claims they pay, the higher their profits will be. Nothing in the AAJ report shocked us. In fact, we would have been surprised had the report reached any other conclusion. But don’t expect the insurance industry to show any shame. They’ll deny and delay as always, and continue business as usual until laws are changed to prevent such conduct.

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We have been helping people with claims against insurance companies for over 18 years. Obviously, there is a lot to know about this process. From the countless claim appeals and lawsuits we have handled over the years, three basic, yet critical considerations rise to the top of our list of things to keep in mind when making a health related insurance claim:

1) ALWAYS GET A COPY OF THE POLICY, AND READ IT, BEFORE MAKING YOUR CLAIM.

It may seem obvious to suggest a careful read of the policy, but we have encountered countless people who forget about this critical step. Almost every insurance policy is written with subtle (and not so subtle) limitations on or exceptions to coverage. Look for things such as “mental and nervous” or “own occupation vs. any occupation” in exceptions in Long Term Disability policies. In health policies, look for limitations on “experimental” or therapeutic treatments, brand name pharmaceuticals, eating or psychiatric disorders. Long term care policies might require lengthy periods of hospitalization, or skilled nursing as prerequisites to coverage, or may condition coverage on an unreasonable definition of incapacity. Insurance companies are notorious for trying to characterize a claim so that it falls within one of the limitations or exceptions, and oftentimes mischaracterize an unwary claimant’s own words or writings to try and support a denial.

Often, policies are governed by ERISA (Employee Retirement Income Security Act) which is a Federal Law with very specific mandates about insurance claims, and can severely limit the available remedies.

2) PAY CAREFUL ATTENTION TO THE TIME LIMITATIONS SET FORTH IN THE PLAN.

Almost every policy has specific time limitations relating to things such as when a claim must be made, how much time the insurance company has to respond to a claim, and/or how long a claimant has to file a lawsuit if the claim is denied. The time limits are one of the very first things to look at, and calendar, when reviewing your policy. You might be able to make some legal arguments to avoid the harsh consequences of failing to comply with these deadlines insofar as they pertain to pursuing your claim, but it is always wise to act as though the deadlines are absolute.

3) ALWAYS COMMUNICATE WITH THE INSURANCE COMPANY IN WRITING, KEEP COPIES, AND USE CERTIFIED MAIL.

Insurance companies are in the practice of making copious notes about the substance of every phone conversation they have with an insured. The problem is, those notes may not always accurately reflect what you communicated, or even how the company representative communicated with you. The best solution to this is for you to send your questions in writing, AND to always confirm the substance of important conversations with a follow-up letter. If you can, try to get an email address for your representative, as email can serve as a very good substitute when sending letters via certified mail might be difficult.

Paying attention to these three simple rules related to insurance claims can greatly increase the probability of a successful claim, or if necessary, a successful lawsuit to force claim payment.

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Posted In: ERISA , Health Insurance , Insurance Bad Faith , Life Insurance , LongTerm Care Insurance , LongTerm Disability (LTD) Insurance

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Insurers Are the Last People Who Should Decide How to Reform Health Care

California Gov. Arnold Schwarzenegger late last month proposed controversial health care reform legislation that would ensure everyone in the state has health insurance. As far as we are concerned, it’s an idea whose time has come. And we’re not alone. The measure has already passed the Assembly and most likely will receive Senate approval.

So who is against this plan? Most notably, the insurance industry. According to the New York Times business an insurance industry trade group has come up with its own proposals to help 47 million uninsured Americans obtain health coverage. The trade group acknowledges what most of us have known for a long time: that many insurers are too quick to deny coverage or cancel pre-existing policies of people most likely to need health care. Now they want us to believe they want to fix the problem.

The Times quotes Karen Ignagni, chief executive of America’s Health Insurance Plans, “We are taking responsibility for ensuring that no one falls through the cracks.”

But isn’t the insurance industry the entity responsible for the cracks in the first place? And haven’t they been zealously blocking all attempts to repave the road to affordable health care?

The insurance industry will not – nor should it be given the option to – police itself. Our office files are filled with the heart-wrenching stories of too many people who had to fight insurers to obtain benefits they paid for. Are we now to believe that overnight insurers have decided they really want to help sick people?

Our state government has a good plan that attempts to spread the cost of universal health care proportionally among all stakeholders. The insurance industry is being asked to share their part of the cost. They don’t like it and they never will. And any so-called fix they are likely to devise on their own will certainly be skewed in their favor.

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In January 2008, Lisa Kantor won an appellate decision for a client suffering from an bulimia. In Jacobs v. Kaiser Foundation Health Plan, Inc., 04-57131 (C.D. Cal. Jan. 30, 2008), Laura Jacobs, was diagnosed with life-threatening bulimia, but was denied adequate treatment by her medical plan provider Kaiser. Kaiser did not offer adequate treatment for plan participants, and declined to refer Ms. Jacobs to an out-of-plan treatment facility. It further refused to pay for the cost of treatment when Ms. Jacobs’ mother obtained the care her daughter desperately needed by checking her into an eating-disorder treatment facility. Although the lower court found that Kaiser had not abused its discretion in denying treatment, the Court of Appeal ruled that her mother’s “decision to take Laura outside the Kaiser treatment system may have saved her daughter’s life.” The case was reversed and remanded with instructions for the lower court to reimburse the Jacobs’ for the non-plan services and to pay Ms. Kantor’s fees and costs.

Although the Jacobs case was unpublished, it is still part of only a few appellate decisions addressing the issue of health coverage for eating disorders. In January 2006, Lisa Kantor previously won the first published appellate decision in an eating disorder case where her client was denied benefits for in-patient treatment of bulimia. In Thompkins v. BC Life and Health Ins. Co., 414 F.Supp2d 953, (C.D.Cal. 2006), the Court of Appeal interpreted California’s mental health parity law AB88 to include beneficiaries who did not live or seek medical care in California. That law requires health insurance policies to cover treatment for mental illness (including eating disorders) on the same terms and conditions applied to other medical conditions. As such, BC Life and Health was obligated to pay Ms. Kantor’s client benefits under its plan.

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Posted In: ERISA , Health Insurance

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