12 February 2010

Insurers behaving badly Part Two

Why This Matters: A Colorado Story
Via the Boulder Daily Camera: Jennifer Latham is a Colorado preschool teacher with four children, who suffered multiple, debilitating injuries when she was hit by a car in 2005. She spent two months in the hospital recovering, running up $185,000 in medical expenses. She was lucky to have health insurance.

Or so Latham thought. Shortly after coming home, the insurer, Time Insurance Co., told her that it was refusing to pay the bill and that it would be canceling her coverage outright. The reason? When applying for her insurance coverage, the insurer said, she'd failed to disclose two past medical incidents--an emergency room visit for shortness of breath and an episode of uterine prolapse. Not only did that leave her on the hook for $185,000; it also left her without insurance, since no private carrier would touch her after the injuries and cancellation.

Latham had the good sense to sue--and a Colorado jury had the good sense to side with her. Last week, it ordered Time Insurance Co., which also operates as Assurant Health, to pay her $37 million. Latham's lawyer had asked only for $7 to $8 million in damages. Apparently, the jury found the whole incident revolting.

I had heard about this. Assurant, I think, is the plan administrator for our health plan, which has a nasty habit of imposing financial penalties on our employees for non-emergency use of the ER.

Remember, by the way, that all of our employees are Board-certified Emergency Physicians. Apparently the judgment of the claims-editing computer software at Assurant, which uses the diagnosis code to decide which claims to pay and which to reject, is more reliable than the judgment of ER doctors about their families' health needs.

And remember, that if the health care bill dies, the above practice, of retroactive recissions, will remain legal.

Pass the damn bill.

11 comments:

  1. And remember, that if the health care bill dies, the above practice, of retroactive recissions, will remain legal.

    Not necessarily. If the health care bill dies, Congress can pass an anti-rescission bill without passing the entire health care bill. Unless, of course, the Democrats decide they'd rather sulk and the Republicans decide they'd rather gloat than do something useful.

    Or States themselves can pass such laws. They regulate their insurance companies. I'd say that Colorado is doing a terrible job. But then I already knew that from reading the letter Golden Rule sent to Peggy Robertson. Whatever you think of the insurance company - and I imagine you and I would disagree on that - it's pretty clear whoever is writing the rules for insurance companies in Colorado isn't very bright.

    Finally, as far as I can tell, neither the House nor the Senate bill prohibits insurance companies from dropping claimants for fraud - and there are already Federal and State laws that prohibit rescission except in cases of fraud. You can see this and this for some thoughts on that. It appears the House bill (not sure about the Senate bill) will make the process better by providing an appeal process for claimants before the insurance company can stop paying their claims but neither bill outlaws rescission. They can’t unless we’re willing to put the insurance companies out of business - rescission is the enforcement mechanism for the pre-existing conditions exclusions - and I don’t see any signs that Obama and the Democrats are any more willing to do that than are the Republicans.

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  2. If the health care bill dies, Congress can pass an anti-rescission bill without passing the entire health care bill. Unless, of course, the Democrats decide they'd rather sulk and the Republicans decide they'd rather gloat than do something useful.

    Ha ha! Too true, and sadly, too likely.

    having said that, states have difficulty regulating health insurance plans; more than 60% of the market is organized under ERISA which is a federal statute which pre-empts state laws. That is mitigated somewhat by the fact that most of the abuses take place in the individual markets, which I think are more subject to state regulation.

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  3. Yeah to that jury! Now if the lawyer would just drop his 33% share, I'd really like this story.

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  4. That firm is pond scum. They dropped our group (and all of them in the state like ours) on the last day allowed by law while my mom was in the middle of treatment for metastatic breast ca. Did I mention that it was two days before Christmas?

    They used a loophole in Oregon law to do it, so that they could continue to write insurance as Time rather than as JALIC, their other certificated company, to avoid losing the ability to write as Ass***** (I refuse to type the whole name) for five years. Then, on the *last* day allowed by law, 24 hours before our new coverage with another carrier was to become effective, they changed their minds and continued writing business in the state. It was a plain and simple purge of groups with sick members from the rolls. Stay classy, Ass*****.

    You have a choice of TPAs, Shadow. Don't support these douchenozzles and their escapades. There are local firms that are *really* good. Contact me offline for two names.

    E

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  5. Damn, I don't like hearing this. Mine/my husband's insurance is with this company. We've been healthy so far, but ........

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  6. @RLB - I have to say, until that stunt, and aside from premium increases that were ungodly (30%/year on average), they were pretty good. We didn't have a lot of choice in our area (one Blue, or them) for PPO or traditional-indemnity type coverage, and the Blue was about $100/mo higher per subscriber for comparable coverages when we signed up. Oregon changed the laws on portability for small business, so we *could* have switched on our own, but the enemy you know feels better than the one you don't know, and we'd still end up getting experience-rated in a year, anyway, so who knew what would happen?

    When things got Really Bad, Ass***** was contracted with Mayo, which was a bonus. It was the small things, like not being contracted with any medical oncology groups within an eight-hour drive of the house that drove up the out-of-pocket costs.

    Here's what's telling about their character as a firm: my mom chose to work as much as possible during her illness and treatment. She slowed down from 80-hour weeks to 40-hour weeks, and in any event was a salaried employee of the firm, so her number of hours didn't matter.

    Ass***** repeatedly tried to cancel her as disabled and not eligible for the group coverage because nobody doing chemo like hers could possibly still be working, despite multiple letters from her, our CEO and her oncologist describing her performance status and providing evidence of the work she was doing.

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  7. The mistakes she made (not disclosing pre-existing conditions), as written the insurance companies won't even be able to ASK about pre-existing conditions. They will have to take everyone.

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  8. Yeah, Mike, that's actually one of the puzzling things about the health bills. Since the bills outlaw exclusion based on pre-existing conditions, why do they also have new law about rescissions? I'm not willing to go back into the weeds and read the bills but I'm wondering if, until the exchange is up and running in 2014 (I think) the bills allow higher billing for people with pre-existing conditions.

    SF - there's some case law on ERISA, State law, and rescission. I took a quick look at it but it made my eyes glaze over. It may be, though, that there is some question about whether ERISA controls rescission. Apparently - if I understood it correctly - some cases are arguing that rescission is general business law and not specific health insurance law. Doesn't make sense to me but I passed on law school.

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  9. um, okay.. i agree that the insurance company is in the wrong but the outcome of the case should be for her hospital bill to be paid off, her to be covered again, and possibly her legal expenses paid for as well. and not a penny more. where the hell do people think this company is going to dredge up 37M?? i'll give you a hint, it's not from the insurance company executives.

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  10. Yep, clap for little tinkerbelle who just got $37 million from feebs who ensure with that company. Guess what fools? The company isn't suddenly finding that sort of loose change under the sofa pillows, or snuffling it out of executive compensation packages, nope, it's going to raise what it charges you by 30% a year and/or simply go out of business in your state and cancel all existing policies.

    It takes a rare kind of stupid for people who claim to be intelligent to fail to acknowledge such a simple and obvious fact.

    How you are so blind to that just boggles my mind.

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  11. Not like we need another example of Ass***** behaving badly...but...

    http://www.msnbc.msn.com/id/35910173/ns/health-health_care/

    In short? Kid does the responsible thing, gets insurance before he goes to college, a year later gets HIV, Ass***** uses an automated process to target anyone with a new HIV diagnosis and cancels them.

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