Health Care and Bad Faith Insurance Claims

When you purchase a health insurance policy, pay your premiums, and file a health insurance claim, you expect your health insurance company to pay your medical bills. That's why you have insurance. You don't expect a notice telling you the company denied your claim. A claim denial letter can make your personal injury feel much worse.

If your insurance company denies your claim without a good reason, there are options available. You may be able to file a civil claim against the health insurance company for bad faith.

Bad Faith Insurance Claims

An insurance claim can be denied for legitimate reasons. For example, the amount of the claim may be below your deductible. In a personal injury claim, you may need to file a claim against the other driver's auto insurance so your insurer can bill them directly. Perhaps you forgot some documentation the insurer required. As frustrating as it may be, your insurer can deny your claim for those reasons.

A bad faith claim arises when you had a valid claim and your insurer wrongfully refused to pay. Some signs of a bad faith denial include:

• Failing to investigate a claim
• Failing to communicate or delayed communications
• Extending the investigation period without good cause
• Offering a quick settlement or a "lowball" payment
• Delaying payment

Policyholders expect their insurers to follow the insurance contract. Contracts require parties to follow rules of good faith and fair dealing. Whenever an insurer breaches those rules, they act in bad faith.

When Suing Your Health Insurer Is Necessary

The elements of a bad faith claim vary depending on state law. In general, a plaintiff must prove the following:

• They had a valid claim under their insurance policy 
• The insurance provider did not pay the claim for an invalid reason

Many states have bad faith laws making it illegal for insurance companies to misrepresent an insurance policy's terms and deal unfairly with policyholders. California's Unfair Insurance Practices Act is a model for other states' laws.

Bad faith laws do not provide an individual cause of action against the insurance companies. You can't sue your carrier for violating the Unfair Insurance Practices Act. You can sue them for breach of contract and use the Act to show what acts constituted the breach.

ERISA and Bad Faith Claims

If federal law governs your healthcare policy rather than state law, you may not be able to file a bad faith lawsuit for a denied claim. ERISA (Employee Retirement Income Security Act of 1974) does not have a provision for bad-faith medical claims. The only recourse for victims of bad faith disability insurance or similar claims is the ERISA appeals process. If you find yourself in this position, speak to an ERISA attorney right away.

Healthcare Benefits Protected by Law

The Affordable Care Act (ACA) does more than mandate insurance coverage for Americans. It also provides a number of protections to prevent insurance litigation. The ACA ensures that all people have baseline healthcare.

The ACA guarantees policyholders:

• Coverage for pre-existing health conditions
• No lifetime or annual caps on essential health benefits
• Free preventative care
• More coverage options for young adults

These guarantees are enshrined by law.

How To Sue an Insurance Company for Denial of Coverage

Sometimes you can resolve your issue with a phone call to the insurance company. Other times, a letter from your attorney can straighten things out. You might need to appeal the claim denial under the terms of your policy. When all else fails, you may need to file a bad faith insurance claim.

You should keep the statute of limitations in mind. These limits vary by state, but the average is two to four years. Failure to meet this deadline bars a plaintiff from a successful outcome in their case.

In proving your case, you must show that the policy should have covered your claim. Your attorney should review the policy carefully to ensure that it covers the injury or medical treatment. After a car accident or other personal injury case, be sure you have filed claims with the right companies.

Damages

If you succeed with your claim, you may recover the cost of treatment and possibly damages for related costs, pain, and suffering. Punitive damages are possible if the insurance company's actions are unusually egregious, but this is often difficult to prove.

Get Legal Advice

It's frustrating when you pay your health insurance premiums on time but have the insurance company deny coverage when you need it. If you're going to be going against insurance attorneys, contact an experienced bad faith insurance lawyer near you. They can help you with your bad faith insurance claim.