Keeping Track of a Bad Faith Insurance Claim

March 29, 2014, 8:00AM. By Heidi Turner

San Diego, CAWhen it comes to reasons why people experience denied disability insurance, the list can be long. Sometimes, a California insurance claim is denied for legitimate reasons. But all too frequently, denials are the result of bad faith insurance, when the insurer acts with disregard for its policyholders and the contracts they have signed. In such cases, lawsuits have been filed - some by policyholders and some by regulators - to force the insurance company to uphold its end of the contract.

In some cases, the insurer may find reasons to deny claims related to health problems that it claims are not covered or not recognized. In 2013, the state of California went after Health Net Inc., Anthem Blue Cross, and Blue Shield for not covering speech therapy and other medically necessary therapies for patients with autism. The situation was so bad that upon independent review, of 36 flagged cases remaining after one insurer reversed five insurance claim denials, 35 were deemed medically necessary. In other words, in 35 of 36 denials, the insurance company wrongly denied treatment.

There are several conditions that insurers seem to routinely flag as being not recognized or not covered. Among them are fibromyalgia, chronic fatigue and post traumatic stress disorder, both of which can have debilitating, life-altering effects on the policyholder - including inability to work.

Insurance companies can use a variety of tactics to avoid paying on claims that involve a condition where symptoms are self-reported. In addition to not recognizing the condition, the insurance company may require the patient to see an independent medical professional - usually one chosen by the insurer and one who may be biased in favor of the insurance company - who will contradict the patient’s own doctor’s diagnosis. In cases where the patient is not sent for independent medical examination, the insurance company may deny the claim on the grounds that not enough documentation has been provided, even if the patient’s full medical records and doctor’s notes have been submitted.

Or the insurance company may claim that even though it recognizes the fibromyalgia diagnosis, the condition is not debilitating and the patient can, therefore, work.

In all cases, it can take a lengthy appeal process and/or lawsuit to force the insurance company to pay the policyholder his or her benefits. In the meantime, the policyholder may have either forgone necessary treatment due to a lack of funds or may have wracked up additional debt to pay for necessary treatments.