What is Health Insurance Bad Faith?
Health insurance bad faith exists when an insurance company unreasonably withholds treatment or services from its insured. Insurance companies, as a part of the insurer/insured agreement, have a legal obligation to fulfil their side of the bargain. In California, health insurance companies are legally required to act in good faith and to use fair claims practices.
What Does Health Insurance Bad Faith Look Like?
Any action on behalf of the insurance company that unreasonably or without proper cause withholds covered benefits from its insured is considered bad faith. California law defines several of these actions, including:
- Misrepresentation of facts or policy details to the insured
- Failure to respond to a claim
- Unreasonable denial of benefits
- Failure to take prompt action regarding a claim
- Misrepresentation of deadlines to file claims
- Failure to approve or deny claims within a timely manner
- Lack of fair standards for investigating and processing claims
- Failure to provide justification for a claim denial
- Attempts to settle for an unreasonably low amount
- Failure to utilize a qualified health practitioner claims reviewer
These are just some of several actions that may constitute grounds for a bad faith claim.
What Are Some Tactics That Health Insurance Companies Might Use?
Health insurance companies are legally required to promptly investigate and make determinations regarding all claims. They are also legally obligated to provide the coverage that you pay for as a part of your plan. Unfortunately, many insurance companies put money first, and attempt to pay out as little as possible. This can result in the use of several common tactics to avoid covering a legitimate claim. The ultimate goal of these tactics is to convince policyholders to either drop the claim or accept a significantly lower payout.
- Stalling Tactics: If there are no legitimate reasons for a denial, some insurers will stall your claim for as long as possible. They may continuously ask for different documents, additional information, claim they need more time to investigate the claim, or keep you busy with paperwork. Many times, policyholders never receive an approval or a denial, and are instead stuck in limbo waiting for a determination. This stalling is often enough to cause policyholders to drop their claims out of frustration.
- Refusal of Payment: Even if you provide all the necessary information for your claim, oftentimes this information can be twisted to fit the insurer’s interests. Using twisted or misrepresented information is one way insurance companies may unlawfully deny a claim. When this happens, you may feel frustrated or defeated, or like there are no further steps that can be taken. At this point, many policyholders drop the claim.
- Underpayments on Your Claim: Sometimes an insurance company will agree to pay only a small percentage of what you’re entitled to. Your claim is approved, you’ve been offered a payment, but it’s not enough to cover all the expenses and damages, and it is not commensurate to the amount agreed upon in the policy. When policyholders receive an underpayment, they might think it is all they can get. The company’s goal is for you to accept an unfairly low offer because you are stressed and ready for the claims process to be over with. You might also think an underpayment is better than no payment.
- Stating the Claim Invalid: It is also common for insurance companies to state that a claim is invalid due to any number of small errors such as incorrect mailing addresses, wrong codes, or missed deadlines. If documents in the mail take a day or two longer than expected, the insurance company may claim they were forced to make the determination without all the necessary information. If the insurance company can strike down your claim for something trivial, they hope that you will feel discouraged and let it go.
What Constitutes Bad Faith Actions?
If you purchase a health insurance policy and file a covered claim, it is the insurance company’s responsibility to help you pay for your health expenses. This is why people have health insurance plans. Your insurance company has a duty to provide the care and services you agreed upon and pay for. Unfortunately, insurance companies oftentimes prioritize their own interests, and they work to save as much money as possible. This can result in the denial of legitimate claims.
- Insurance bad faith is when your insurance company does not uphold its obligation to you as agreed upon in your policy. If your claim is legitimate, and your insurance fails to properly investigate or process your claim, this is bad faith.
- It may be bad faith if an insurer fails to act in a timely manner regarding your claim, especially if it results in an adverse determination.
- Bad faith can occur if an insurance company fails or neglects to inform you of policy coverage that may apply to your claim.
- An insurer acts in bad faith when they make unreasonable demands regarding your claim or ignore submitted evidence in support of your claim.
- If an insurance company fails to explain or provide a reason for why your claim has been denied, it may be bad faith.
- Bad faith may also occur when an insurance company delays making a determination on a claim for so long that it effectively denies the claim.
What Actions are Not Considered Bad Faith?
Health insurance bad faith happens all too often, which is why most states have laws in place to protect insurance policyholders. However, all people can make mistakes in their jobs, and these mistakes don’t necessarily equate to bad faith.
It is not your insurance company’s job to approve every single one of your claims. It is, however, its duty to thoroughly investigate your claim, consider all necessary information, and, if they have denied your claim, it is their responsibility to provide strong reasoning for their determination. If the company has fulfilled its responsibility to conduct a timely, fair and thorough investigation into your claim, the investigation of your claim should not be considered a bad faith action.
This process can be extremely confusing, and it often can take a trained eye to sort through all the insurance paperwork you might receive. You may need an experienced attorney to help you determine whether your claim denial constitutes insurance bad faith. It is possible that after reviewing your claim and denial letters that your attorney may find that your insurer did not act in good faith. To determine this, we must see their reasons for how they answered your claim and why they rejected the claim.
Should You Consult a Health Insurance Claim Denial Attorney?
If you feel as though your health insurance company has acted in bad faith, it is in your best interest to reach out to an attorney. Insurance companies deal with lawsuits every day, and they employ teams of experienced lawyers who know how to help them get away with their wrongful actions.
We know what strategies health insurance companies use, and we know how to fight them. Our goal is always to get our wronged clients the fair and reasonable justice they deserve.
Never walk away from an insurance claim because your insurer is causing you stress and frustration. Our firm has the experience and expertise to deal with insurance companies and their lawyers. We understand how to navigate the insurance industry and advocate for your rights.
If you’ve received a medical denial that you think may be a bad faith action, contact the Law Offices of Scott Glovsky, and we can help you get the care and coverage you deserve.