Dealing with your health insurance company shouldn’t have to be an ordeal. You expect your insurance company to step up and do the right thing, regardless of whether you or your employer pays the premiums. Unfortunately, insurance companies are businesses fixed on the “bottom line.” For them, it’s all about profits, stock prices, and shareholder dividends.
This section covers common health insurance issues including:
- What happens when your insurance company wrongfully denies your claim
- Incompetent doctors and your insurance coverage
- Medical malpractice settlements and your insurance
- Breach of insurance contract
- Subrogation, and the role of attorneys
Coverage Denial and Filing an Appeal
Each year thousands of legitimate injury claims are denied by insurance companies. If your insurance company refuses to pay the medical bills from your injury, you can go through an appellate process. Ask the company to send you the forms to file an appeal, and ask for a written explanation of the reason(s) your coverage was denied.
While waiting for their response, gather copies of your medical records, medical and therapy bills, and receipts for out-of-pocket expenses (medications, crutches, etc.). Even receipts for the cost of transportation back and forth from treatment are important. Also include copies of all correspondence between you and your insurance company.
It may take several weeks before you hear back from the company. They will either uphold their original denial, offer mediation of your claim, or overturn their denial and agree to provide coverage.
If your appeal is denied and you believe it was wrongful…
File a complaint with your state’s department of insurance. Their website gives information regarding the complaint process, including the forms you’ll need to file a formal complaint.
Once your complaint is filed, a state insurance investigator will be assigned to the case. The investigator will ask you for copies of all the documentation related to your injury, including correspondence with your insurance company regarding the claim denial.
After the investigator reviews your information and contacts the insurance company, she will notify you in writing of her findings. If evidence supporting your allegations of wrongful denial are found, the insurance company may be subject to substantial fines and censure, if they continue denying coverage. The investigation may also get your insurance company to agree to mediate your claim.
The insurance company’s wrongful denial may fall under the category of bad faith practices. If so, you may have the basis of a lawsuit. You’ll need an attorney with substantial experience in plaintiff’s insurance litigation to prove bad faith. There are several elements of proof common to all states. They are:
- Fraud, intentional deceit, or willful neglect of your claim
- Willful obstruction of your appeal
- Sudden cancellation of your policy as a retaliatory measure
- A pattern of intentional behavior to delay or deny coverage
Your Insurance Company’s Responsibility
Unfortunately, there are many incompetent doctors, and some cause injuries to their patients. What happens if your Health Maintenance Organization (HMO) refers you to a doctor who injures you? Does your insurance company have any legal liability?
An insurance company can be held liable for physician malpractice if they know about a doctor’s history of malpractice or incompetence, yet allow the doctor to continue practicing under their plan. Insurance companies need to perform background checks on their doctors, and timely respond to doctor complaints made by their insured.
When a doctor sees hundreds, sometimes thousands of patients over many years, it’s likely some of them will be unhappy. So a few complaints should be expected. But some doctors receive an unusually high number of complaints, and should be closely scrutinized by their insurance companies.
Health insurance companies must have a process for identifying incompetent doctors and removing them from their plans. When insurance companies fail to protect their insured from incompetence, they subject themselves to punitive action and lawsuits from injured patients.
Malpractice Lawsuits and Your Insurance
What happens when an incompetent doctor injures an insured, and the insured files a medical malpractice lawsuit? Or when the insured files a lawsuit directly against the insurance company for negligence in referring him to the incompetent doctor?
The insurance company must continue providing coverage, even while their insured is suing them for negligence. This scenario is legally complicated, but usually the company must comply with the terms of their policy. They must continue to offer other doctors in the plan to treat their insured’s injuries. This includes the insured’s original injuries, and those new injuries caused by the incompetent doctor.
If you’ve been the victim of medical malpractice, you will need two attorneys, one to represent you in your malpractice suit against the doctor, and the other in your lawsuit against the insurance company. These cases involve two separate areas of the law.
While providing medical coverage, your insurance company is bound to respond to your attorney’s requests for pretrial discovery, including subpoenas for all records in their possession related to your case, some of which may be harmful to the company. They have to comply with the rules of evidence and discovery.
Breach of Insurance Contract
Your health insurance company is obligated to provide coverage under the policy they issued to you, which is a binding contract between you and the company. Your duties under the contract are to pay your premiums and report injuries. The company’s duty is to provide medical coverage for your injuries.
If you don’t pay your premiums, your insurance company does not have to provide coverage. But if you pay your premiums and they deny coverage, they have breached your contract. Breach of contract means the party who broke the agreement is liable for the “damages” they cause.
Damages can be labeled as compensatory, consequential, and punitive. Compensatory damages include the actual costs of medical treatment you were entitled to under your insurance policy. Consequential damages include your collateral costs as a result of the breach, which can include medications, travel to and from treatment, parking fees, etc.
If you can prove the policy breach was an intentional conspiracy to defraud or deceive you, the court can award punitive damages, which can be quite high. They are intended to “punish” the insurance company for their intentional, conspiratorial action in denying you coverage.
If you receive a malpractice settlement, your health insurance company has the right to subrogate. This means you have to reimburse them (from the proceeds of your settlement or court award) for the medical bills and other expenses they paid on your behalf.
Under the “third party” liability section of your policy, you must notify your insurance company if you are pursuing a malpractice claim for injuries against a third party (doctor, hospital, dentist, chiropractor, etc.).
Your insurance company will send your attorney a “notice of subrogation lien,” also called a “subrogation interest.” This lien is legally enforceable, and requires your attorney to pay your insurance company for the costs they spent on your behalf, once you receive a malpractice settlement or court award.
Some clients want their attorneys to deduct attorney’s fees only, while promising they will pay the insurance company themselves. This isn’t possible. Your attorney must pay your insurance company first, or risk being sued for the amount himself.
Your attorney can negotiate with the insurance company to reduce the amount of the lien. The basis for the negotiated lien is that if your attorney hadn’t fought to win on your behalf, your insurance company wouldn’t have received a penny. It’s a good idea to ask in advance if your attorney will be charging extra for negotiating your lien.
Your insurance company is bound to pay for the medical treatment required as a result of medical malpractice, but that payment doesn’t include pain and suffering. If you succeed in your lawsuit, and your malpractice settlement or court award includes pain and suffering, you are entitled to keep that amount. The same applies to punitive damages.
The Role of Attorneys
Without expert legal representation, suing an insurance company is almost impossible. The insurance company’s lawyers will vigorously defend any lawsuit you file, and they may even counter sue you for filing a frivolous lawsuit. Do yourself a favor, speak with a lawyer as soon as possible.
Most attorneys who practice plaintiffs’ insurance litigation don’t charge for an initial office consultation. If you believe you’ve been wronged by your insurance company, visit with several attorneys. Bring all of your documentation to the meeting. The attorney will evaluate your case and attempt to answer any questions you may have.
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