What To Do if Your Health Insurance Claim is Denied
A health insurance claim denial can threaten your financial security and ability to access medical care, but it doesn't need to be the end of the story. The following article reviews the reasons why a health insurance claim may be denied and actions you should take following a denial.
Reasons for Health Insurance Claim Denial
The first step will be to identify the insurer's reason for denying your claim. The insurer, your doctor, or the hospital may be able to help explain the insurer's stated reasons for refusing coverage. The reasoning behind a denial will provide some insight as to your options. The most common reasons for claim denials include:
- Denial of services or procedures not covered by your policy;
- Denial because a procedure is considered experimental, cosmetic, investigational, or not medically necessary;
- Denial because a referral or pre-authorization was required;
- Denial because you used an out-of-network provider;
- Denial for typographical errors;
- Denial for timeliness; or
- Denial due to policy limitations.
Many of these reasons for denial can be addressed, either by appealing the insurer's decision, or by contacting the doctor or hospital to make corrections to the documents submitted.
Health Insurance Claim Denial Appeals
When an insurer refuses to pay a claim, you may respond or appeal in the form of a letter that includes your best arguments against the decision and any supporting evidence or documentation. This appeal should focus on the specific grounds for denial that were listed in the notice of denial provided to you by the insurer.
Where an appeal is unsuccessful and the insurer refuses to accept your valid claim you may need to sue them for their claim denial.
Lawsuits and Bad Faith Health Insurance Claim Denials
Insurance is a form of contract and most health insurance claim denial lawsuits are based upon a breach of contract claim. Contract law provides for many duties between contracting parties.
One of the duties the contracting parties owe one another is the duty to deal in good faith. This means that neither party will seek to deny the other the benefits for which they have contracted. When a health insurance claim denial is issued by the insurer wrongfully they are acting in bad faith. Bad faith insurance denial can result from the insurer's:
- Fabrication of evidence;
- Refusal to accept evidence;
- Refusal to conduct an investigation;
- Unreasonable delay in investigation;
- Unreasonable adherence to minor procedural or bureaucratic requirements; and
- Other grounds that show that an insurer has acted unfairly.
In some jurisdictions bad faith health insurance claim denials may also permit tort claims. Torts, unlike contracts, may result in the award of punitive damages, which frequently exceed the amount of the claim itself.
Statutes of Limitations
Each jurisdiction assigns legal claims a deadline, called the statute of limitations, beyond which a person cannot normally file a lawsuit. Breach of contract, torts, and other claims each have their own statutes of limitations. As you appeal and negotiate with your insurer, you should be aware of your potential legal claims and your jurisdiction's statutes of limitations to ensure you don't lose your right to sue.
Next Step: Learn More About Your Rights
Most people have little experience dealing with insurance companies. If your medical claim has been denied by an insurer, you may have options that are worth exploring. For instance, the insurance company may have denied your claim without conducting a proper investigation. This can all be extremely complicated. A qualified bad faith insurance lawyer in your state may be able to shed some light on your options.