As a former nurse and now a lawyer for over 23 years, I become a little disheartened when I see what I believe are legitimate insurance claims being denied by medical insurance providers. I understand they need to contain costs and ensure that only tests and treatments that are necessary are covered, so that the ever-escalating insurance premiums do not continue to overburden individuals and especially small businesses. But we pay our premiums so that we have the coverage we need, and insurance companies need to be fair.
The reality is that the insurance policy is a legal contract between the company and the individual that outlines the responsibilities of both parties. Most insurance companies must pay for the reasonable and necessary expenses incurred by the insured and the insured (or her/his employer) must pay the premium.
The policy provides for what is, and is not covered, and there are generally exclusions for some things. The contract will sometimes indicate that some procedures, tests or care needs to be preapproved by the insurance company before you incur the cost. Make sure you know what those things are. When in doubt, get preapproval for all expensive tests or referrals.
Most people understand that when they have paid their premium, they get health care and most do get the care they need. It is that simple. What disturbs me, is when I see a case where the insurance company refuses to pay for a particular test or service and yet the policy does not clearly exclude the care item and the insured did everything they were supposed to do, but are now left to fight with the insurance company over the sometimes very large bill. Often, the insurance company indicates that they have not paid because it is not a covered item, or it needed preapproval or they could argue that it was not medically necessary or is experimental. Sometimes they are wrong. Maybe preapproval was not required or maybe the insurance company had paid for that same test or service in the past and is now refusing, or maybe it is simply a covered item and should not be excluded.
Whatever the reason given by the insurance company for not paying, the problem with this scenario is that the insured is left with a bill from a provider and the insurance company is refusing to pay without a fight. To add insult to injury, the provider many times sends the bill to a collection agency, while the insured is trying to have the matter straightened out with the insurance company. It is one thing if it is a small bill, but what if it is a large bill for thousands of dollars or tens of thousands and the insurance company is not budging on the coverage issue and refuses to pay.
The reality is that because the insurance policy is a contract, it must be analyzed in relationship to the particular care that is being rejected as not covered. You must first determine what is covered under the policy. What was the care or test that is being denied? Is it clear under the policy or is a policy interpretation necessary? Many times there are appeal rights under the insurance contract itself, but you must be careful because many impose deadlines for the filing of such an appeal.
To get the claim paid, sometimes the answer lies in getting complete information to the insurance company. This can be frustrating and involve a lot of time, on hold, to get to the right person. Sometimes it may involve negotiations with the company. Under Minnesota law, the insurance company has an obligation not to engage in unfair practices. These laws are generally enforced by the Department of Commerce. The Department of Commerce has also developed a Health Insurance External Review Appeal process. The appeal entails an application and the filing fee is currently $25. The appeal is performed by an independent company that contracts with the State of Minnesota to review appeals. Its employees and physicians are impartial and separate from the insurance company. They review the situation and give an opinion. It is binding upon the insurance company, but not on the individual. In other words, if they do not find in your favor, you can appeal to a court. You can also start a lawsuit against the company to try to obtain a court order regarding the coverage issues. This case would be one for breach of contract and potentially Declaratory Judgment. In a Declaratory Judgment case you would ask the court to declare your rights under the contract. All court options will be expensive, but sometimes it is necessary to obtain the correct result.
I have assisted clients where the insurance company has denied a claim and the denial appears to be in error or in bad faith. I can represent individuals for an hourly rate to assist them in how to best deal with the denial of benefits and to determine if the insurance contract should have provided coverage. On small claims it may not be cost effective for the client to make the decision to hire us, to assist with those matters, but if the denial involves thousands or tens of thousands, we would be happy to determine whether we can assist in the determination of your benefits.
Joan M. Quade, J.D., R.N.
BARNA, GUZY & STEFFEN, LTD.
400 Northtown Financial Plaza
200 Coon Rapids Boulevard
Minneapolis, MN 55433
Phone: (763) 780-8500
Joan Quade is a shareholder of Barna, Guzy & Steffen and is the head of the Employment Law and Business Litigation Section. She negotiates solutions to problems that arise in business and/or for individuals.
This article is intended to provide general information only and should
not be used as a substitute for legal counsel or advice.