Haris Ashley
Suing a medical insurance company for an unpaid claim can be a complex, time-consuming, and expensive process. Before filing a lawsuit, it is important to understand the specific laws and regulations governing insurance disputes, as they can vary from state to state. It is recommended to consult with an experienced attorney who can guide you through the legal process and improve your chances of success. The first step is often to initiate an internal appeal with the insurance company, providing supporting documentation and medical opinions to strengthen your case. If the internal appeal is unsuccessful, you may proceed with external appeals or seek alternative dispute resolution methods, such as arbitration. Understanding your rights as a consumer and the obligations of your insurance company is crucial before considering legal action.
| Characteristics | Values |
|---|---|
| Reasons to sue | Unfair compensation, denial of legitimate claims, underpaid claims, bad faith insurance practices, failure to pay claims promptly |
| Laws and consumer protection | Many states have codes or statutes pertaining to consumer protection within the insurance industry. Federal law also states that bad faith practices are illegal. |
| First steps | Understand why your claim was denied, gather evidence, carefully study the insurance policy, consult an attorney |
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What You'll Learn
Bad faith denial
When you pay your health insurance premiums, you expect your insurer to act in your best interest. Unfortunately, this isn't always the case, and bad faith denials are a common issue.
Bad faith can manifest in several ways, including:
- Deliberately undervaluing or underpaying a claim
- Wrongfully denying a legitimate claim
- Engaging in behaviour to limit their payout on a claim, such as unjustifiably delaying an investigation or settlement
- Claiming non-coverage when the policyholder is, in fact, covered for their submitted damages
- Making offers below the claim's worth, often by providing a low settlement
- Refusing to provide reasons for denial
- Using biased experts to determine the value of a claim
If you believe your insurer has acted in bad faith, it's important to consult an experienced lawyer, specifically a bad faith insurance attorney, who can review your policy and relevant documentation. Official statements from your insurer and communications between you and your insurer will also be important in determining whether you have a bad faith claim.
While suing your insurer may be necessary, it is not usually the first course of action. It is recommended to first go through several formal procedures to address the dispute outside of court.
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Insurance fraud
When suing an insurance company for an unpaid claim, it is important to first understand the relationship between the person who purchases insurance and their insurance company. State legislatures have passed laws to protect insurance consumers, and each state has different rules about the types of damages that can be pursued in a lawsuit. Many states have codes or statutes pertaining directly to consumer protection within the insurance industry. An insurance attorney can explain the damages available to you and the likelihood of your success.
Employees of legitimate insurance companies can also deceive consumers for personal gain. For instance, an unscrupulous agent could collect premiums from a customer without delivering the insurance policy to the company. The insurance company could then cancel or refuse to renew the policy. Signs of fraud with reputable companies include the failure to receive an insurance identification card or a copy of the written policy in a timely manner. Consumers should be aware of the following warning signs, as they may indicate that an insurance company is illegitimate:
- An agent or broker using intense sales pressure tactics, such as urging a consumer to buy a policy immediately, otherwise the price may change
- The premiums from one company are more than 15-20% lower than other companies’ comparable coverage
- A company’s contact information is not readily available or is difficult to track down
According to federal law, bad faith practices are illegal and involve actions by your health insurer that go against the duty they owe you to act in good faith and deal fairly with their consumers. Examples of activities that would qualify for a bad faith suit include when your insurer refuses to cover your claim or when they wrongfully deny a legitimate insurance claim.
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Appealing the decision
If your health insurance claim has been denied, you have multiple options. Firstly, it is important to understand why your claim was denied. Your insurer is required to provide you with a written explanation for the denial, which could be due to an incorrect or duplicate claim, a lack of medical necessity, a procedure deemed experimental, or a lack of supporting documentation. Understanding the reason for the denial will help you determine your next steps and whether you have grounds to appeal the decision.
In some cases, denials may result from simple mistakes such as incorrect coding or typos, which can often be easily rectified by contacting your insurer. Other claims may be denied due to treatment received out of network or treatment considered experimental. It is important to carefully review your insurance policy to ensure that all necessary steps were followed correctly and to gather any relevant documentation to support your position during the appeal process. This may include your personal doctor's opinion supporting the medical necessity of the procedure or treatment.
If your insurer upholds their decision, you can request an external appeal, where a third-party company reviews the claim and makes a determination. The decision made by this third party becomes final and must be honoured by the insurance company. If the external appeal does not resolve the issue, you may need to consult with an experienced attorney, specifically one with expertise in health insurance claims, to discuss your legal options and determine if you have grounds to file a lawsuit.
It is important to note that health insurance litigation is typically not the first course of action. There are laws and state departments in place to protect insurance consumers from unfair practices, and you may be able to seek recourse through these channels before pursuing legal action. An attorney can help you understand your rights, the potential damages available to you, and the likelihood of success in a lawsuit.
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State-specific laws
Following the internal appeal, if the decision is still adverse, you may be required to appeal again, depending on your state's law and the type of insurance. This external or "independent" review is undertaken by a third party, and your insurance company no longer has the final say over whether to pay a claim.
Many states have codes or statutes pertaining directly to consumer protection within the insurance industry, and each state has different rules about the types of damages you can pursue in a lawsuit. For example, in California, there are laws designed to protect consumers from unfair insurance practices. An insurance attorney can explain the damages available to you and the likelihood of your success. They may be able to sue under your state's unfair trade practices laws and pursue punitive compensation in addition to actual damages.
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Independent reviews
If your health insurance claim has been denied, you have multiple options. It is important to understand why your claim was denied. Your insurer is obliged to provide you with written reasons for the denial, which could include incorrect or duplicate claims, lack of medical necessity, or experimental procedures. In some cases, denials may be due to simple mistakes such as incorrect coding or typos, which can be easily rectified.
Before considering legal action, it is advisable to follow formal procedures to resolve the dispute outside of court. You can start by requesting an external appeal, where a third-party company reviews the claim and makes a binding decision that the insurance company must honour.
If your claim is still denied, you may need to consult an experienced personal injury attorney or an auto accident attorney, depending on the nature of your claim. An insurance attorney can advise you on the damages available and the likelihood of success, as these vary depending on your state's laws and regulations. Many states have statutes in place to protect insurance consumers from unfair trade practices.
To support your case, you should gather evidence such as your insurance policy, medical records, financial losses, police reports, and witness statements. Your doctor's opinion supporting your position can also strengthen your case.
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Frequently asked questions
First, you must understand why your claim was denied. Your insurer is obliged to provide you with the reason for the denial in writing. Common reasons for denial include incorrect or duplicate claims, lack of medical necessity, and a procedure deemed experimental. Once you know the reason for the denial, you can begin the process of an internal appeal, which involves a written request to your insurer explaining why you believe your claim should be approved. You may also submit a letter from your doctor explaining why the treatment is necessary.
If your internal appeal is denied, you can file an external appeal before a neutral third party. During an external appeal, an independent entity will review all the facts and make a decision on your claim. This decision is final and must be honoured by the insurance company.
Before suing your insurance company, you should consult an experienced insurance dispute attorney, who can advise you on whether you have grounds to file a suit. Lawsuits often arise when an insurance company fails to indemnify or protect the insured from a covered act under their policy.
