What can I do if my health insurance provider refuses to pay a claim?

If a health insurance company or plan denies a claim or refuses to provide a requested benefit or service, it is very important that the insured or member immediately review the health insurance policy, plan or evidence of coverage document relating to claim or benefit denial, appeal or grievance procedures.

Most often, there is a requirement that the insured or member appeal a denial of a benefit or service with a written appeal within a period as short as 15 to 60 days. In addition, there are typically multiple levels of appeal or grievance, which are mandatory and which involve subsequent short time limits. Appeal or grievance procedures, depending on the policy or plan, either require that final determinations of entitlement to benefits or services be made by required arbitration, or they allow the insured or member to file a lawsuit, but only after exhausting the appeal or grievance procedures set forth in the policy or plan.

The two primary legal remedies available in most cases are breach of contract to recover the value of the denied benefit or service and any incidental damages and bad faith. Bad faith is the unreasonable denial of a benefit and may allow recovery for emotional distress, interest on out-of-pocket losses, damages for any attorney fee obligations incurred and, in limited circumstances involving malicious or willful misconduct, punitive and exemplary damages. These legal remedies are ones that are available under state law, not federal law. In addition, especially with regard to the tort remedies of bad faith, infliction of emotional distress and fraud, the availability of the remedy and the nature and extent of damages recoverable vary from state to state.

While legal assistance from an attorney is not necessarily required at the initial levels of appeal, it is strongly urged as soon as possible if the amount involved is large, or the insurer is contending the treatment you need to live is experimental or the matter is going to any arbitration or lawsuit. Rest assured that the health insurer or plan will almost certainly be represented by an attorney, and s/he or he will be out to have your claim denied.