California Regulation SB 946 to Impact Health Insurance Coverage of Autism Therapies

California Regulation SB 946 to Impact Health Insurance Coverage of Autism Therapies

Children Losing Access to Vital Autism Therapies

If you are the parent of an autistic child, you know how challenging it is to access, and pay for, the care your child needs. Did you know that your health insurance may be required to fund your child's therapy? If you have a valid insurance claim that you feel has been wrongfully denied, an attorney experienced in health insurance law can be vital to ensuring that your child's treatments will be covered. From filing the necessary documents for the appeals process to collecting interviews from your care providers, a knowledgeable attorney can make the difference between winning and losing your appeal or lawsuit. In many cases, legal fees are on a contingency basis, meaning fees are paid exclusively out of funds the attorneys help you recover. If you feel you can benefit from the knowledge of an attorney experienced in health insurance law, click here.

In California, much of the care necessary for autistic children has traditionally come from the public school systems and regional centers. However, with school district and governmental funding being cut in recent years, many of these therapies have been drastically trimmed. Occupational therapy, physical therapy, speech therapy, and ABA provided both in a school setting and in the home have all been reduced.

In response to their inability to provide services to all children in need, schools in California are now requiring parents to first go through their insurance companies in order to fund their children's autism therapies. The difficulty, of course, is forcing insurers to cover these treatments.In California, autism treatments are currently regulated under Assembly Bill 88/Mental Health Parity Law, which stipulates that those with severe mental illnesses must receive the same therapies as those with any other medical condition. In other words, if an insurer provides a stroke victim with speech or physical therapy, they must provide that same service to a person with autism, if it has been deemed medically necessary.

While AB88 does provide some coverage for autistic children, it does NOT require coverage for ALL medically necessary treatmentsrecommended by a treating physician. Insurance companies have been able to deny treatments, saying that some therapies are educational or used to treat learning disabilities, rather than for medical purposes. For all practical purposes, in spite of current legislation, many insurers have been able to deny valid claims for autism therapies.

SB 946 Holds Insurance Companies Responsible - To A Certain Extent

Beginning July 1, 2012, insurance companies will have a harder time denying valid claims for autism treatments. California Senate Bill 946, which takes effect July 1, 2012, requires insurance companies to provide coverage for ALL behavioral health treatment deemed medically necessary. While this is good news, it must be expected that many insurance companies will use any means necessary to deny claims under the new legislation. Furthermore, some types of insurance, such as self-funded plans, aren't subject to state mandates - the new regulations will not be applicable to these plans. For these reasons, parents of autistic children need to understand what is the best health care policy for their family, how to submit their claims correctly, and how to appeal a decision if their claim has been denied.

Timing is Everything in an ERISA Claims Denial

If your insurance is part of an employee benefit plan, meaning you get your insurance through your job, then the way you can challenge a claims denial is regulated by ERISA, the Employee Retirement Income Security Act of 1974. ERISA, a federal program enacted to protect the interests of employees covered under employee benefit plans. ERISA pre-empts state law. This means that ERISA lawsuits filed in state court are subject to removal to Federal Court as ERISA claims "arise under" federal law. Government plans, including public school employees and church plans, are exempt from ERISA.

It is absolutely imperative to know that ERISA has a mandatory appeal that is necessary prior to filing an ERISA lawsuit. There is a 6-month time limit in which to appeal, which runs from the date of the denial. Your appeal rights and instructions will be stated in the denial letter. A lawsuit can be filed only after an appeal is denied.

What is Necessary When Filing an ERISA Appeal?

When filing an ERISA appeal, it is crucial to follow the proper procedures, which is why hiring an attorney can be make or break your case. You must first make a written demand to the insurance company for the "administrative record" or "claim file." This is necessary to determine proper or improper conduct in the denial of the claim. Once the claim file is received, it must be reviewed to determine if a comprehensive investigation was made prior to denial. Did the insurer obtain the necessary medical records? Did they speak with your child's health care providers? Was there a full and fair review of the claim? If the answer to any of these questions is "no," your attorney will use this information to support your ERISA appeal.

You will need to obtain an extensive amount of documentation, including letters and medical files to support the ERISA appeal. Doctors and care providers need to support the medical necessity of the care - however, you must know what should or should not be contained in such letters. These reports, letters and files should be included with the ERISA appeal.

The next step is to send the ERISA appeal to the ERISA "plan fiduciary" for determination. There is no hearing, trial or jury. Your ERISA appeal is the basis for the Federal Court's ruling in any later ERISA lawsuit brought if the ERISA appeal is denied. It is generally based on the insurer's "administrative record" and the ERISA appeal only; pre-trial discovery is generally not allowed.

If your ERISA appeal is denied, you then have the ability to file an ERISA lawsuit in Federal Court, requesting contractual damages and reasonable attorney fees. You cannot recover emotional distress or punitive damages in an ERISA lawsuit.

Obtaining Autism Benefits Can Be Difficult Under Self-Funded Plans

Unlike fully-insured employee benefit plans, where the employer contracts an insurance company to cover the employees and dependents, in self-funded plans, the employer pays employee benefits from the employer's own pocket and assumes the direct risk for payment of the claims for benefits. What makes these plans potentially difficult for parents of autistic children is that ERISA pre-empts most state insurance regulation, including benefits mandates. Unless the employer has opted to provide coverage for autism therapies, it can be difficult to obtain autism benefits under these plans.

Self-funded plans, as they are governed by ERISA, follow the same mandatory appeals process as fully-insured employee benefits plans, with the same strict timeline for appeals. Similarly, you can only sue for breach of contract, meaning contractual damages, not for bad faith or for punitive damages.

Bad Faith Claims Can Be Made with Individual Health Insurance Policies

Individual health insurance policies are separately purchased and are not part of an employee benefit plan; in California, they are subject to California law. Insurance companies are regulated by the California Department of Insurance (DOI) and Health Maintenance Organizations (HMOs) are regulated by the California Department of Managed Health Care (DMHC). If you have an individual health insurance policy, and you suspect that you have had a claim wrongfully denied, you can make an appeal to the respective regulatory body. However, unlike with employer-sponsored plans, such an appeal is not mandatory prior to filing a lawsuit.Also unlike employer-sponsored plans, with individually purchased policies, you can sue for bad faith, in addition to, or instead of, breach of contract.

With a breach of contract suit, such as in employee benefit plans, you are saying that the insurance company did not live up to its end of the bargain. You incurred an expense that should have been covered by your policy, and the insurance company refused to pay. Damages awarded equal what you should have received had your insurance company honored its policy.

In a bad faith claim, you are asserting that the insurance company acted unreasonably. If the insurance company did not adequately investigate your claim, or if they attempted to settle your claim for less than what it was worth, you may have a bad faith claim. If you can establish a bad faith claim, you may be able to claim damages for emotional distress, or punitive damages, which can exceed the actual amount owed under the contract.

How Can an Attorney Help You?

An experienced legal team should be able to provide:

  • An initial free phone consultation
  • Health care policy review for a flat fee, helping you choose the plan that best covers your child's autism therapies
  • Assistance with filing an insurance claim
  • Assistance with appeal process, whether it be through:
    • Insurance company
    • State regulatory bodies (DOI or DMHC)
    • ERISA appeal
  • Assistance with bad faith cases

To contact an attorney experienced in health insurance law, click here.