“Fighting with a health plan over a denied claim can leave people feeling they’ve been injured all over again,” writes New York Times reporter Michelle Andrews. “The options for challenging an insurance company’s decision are limited. Appeals can be slow and cumbersome, if they are available at all, and most patients are barred from suing for damages resulting from denials and delayed treatments.” See “For Denied Claims, a Bit of Help in the Health Law.”
From our perspective as ERISA lawyers, truer words were never spoken.
Andrews points out, however, that the recent health care overhaul provides policyholders contesting denied claims a new independent state-review process, something not previously available to people with employer-provided coverage. This is good news for the more than half of all covered workers in “self-funded” plans, says Andrews, but only if the plan was funded after the March 23, 2010, passage of the legislation.
It also doesn’t help when punitive damages or recovery for pain and suffering is appropriate. Federal law doesn’t provide for such damages, only recovery for the cost of the benefit the health plan denied.
“Under the current system, health plans must have an internal appeals process,” writes Andrews. “Usually the process has more than one level of appeals, but a study by researchers at Georgetown University’s Health Policy Institute found that the original denial is typically upheld.”
Most states already provide appeal mechanisms, particularly for people with individual policies, and external reviewers tend to rule for policyholders about half the time, Andrews says. But few people take advantage of the external review.
That could be because some states require policyholders to pay as much as half the cost of the review and some allow the insurer to discontinue coverage during the process, which can take months or even years, time most ill people can’t afford to waste fighting their insurance company.
California law does provide for punitive damages and damages for emotional or financial distress resulting from the bad faith conduct of an insurance company. However, such remedies do not apply to plans governed by ERISA (ERISA applies to all employer provided benefits with exceptions for religious or governmental employers). For non-ERISA insurance claims, reviews may be available through the Department of Insurance or Department of Managed Health Care.
Does all this sound like an uphill battle, even with the federal government’s intervention (moderate as it is)? The answer is yes. If you are persistent and able, and can put together a well researched and well supported appeal of your claim denial, you may succeed in get the denial overturned. If not, we have a great deal of experience fighting insurance companies and health plans on behalf of consumers, and may be able to help you. Consultations are always free. Call us at (800) 446-7529.