Bad Faith Lawsuits When Health Insurance is Denied

Ohioans can appeal, and sue, their insurance when medical treatment is denied

With the costs of healthcare continuing to skyrocket, Ohioans are more dependent than ever on their insurance companies to pay for necessary procedures and treatment. But as we all know, insurance companies are for-profit businesses that often put their own bottom-line ahead of patient needs. And this often means Ohio insurers will delay or deny paying valid claims for medical care.

Internal and External Review Processes

But at the end of the day, an insurance policy is a contract between you and the insurer. And if the insurance company is refusing to live up to its end of the bargain, there are legal remedies available to you. First and foremost is challenging the insurance company's decision to deny you coverage. There is typically an internal review process available for insurance plan members to seek reconsideration a decision to deny, reduce, or terminate healthcare services.

If you are dissatisfied with the outcome of the internal appeal process, Ohio law requires all insurance companies to provide for “external review” of “adverse benefit determinations.” If the insurer's denial is based on the exercise of “medical judgment” or involves an “experimental or investigation service,” an accredited independent review organization (IRO) handles the appeal. But if the insurer denied coverage for non-medical reasons, the appeal is heard by the Ohio Department of Insurance.

If the Department of Insurance or IRO decides not to reverse your insurance company's decision, at that point you may file a private lawsuit in state or federal court.

The Tort of Bad Faith

Separate from the question of whether you are entitled to coverage is whether or not the insurer acted in “bad faith” in denying your claim in the first place. As a matter of Ohio law, every insurance company has a duty to act in “good faith” with respect to its policyholders. Now, the mere fact you disagree with the insurance company's decision does not prove there was “bad faith,” even if that decision is later reversed through the review process. But if you can show the insurer's initial decision was “unreasonable,” then you may be entitled to additional damages arising from bad faith.

It's important to note that there is no specific Ohio statute regarding bad-faith insurance claims. Instead, bad faith is a type of common-law personal injury claim. Basically, if you can show by a preponderance of the evidence that the insurer lacked any “reasonable justification” for its actions, you are entitled to compensatory damages.

What constitutes an “unreasonable” justification will depend on the particular facts of your case. But some of the factors an Ohio court will look at includes the insurance company's failure to properly investigate your claim, deliberately undervaluing your claim, creating unnecessary delay in processing the claim, or misrepresenting the terms of your policy.

In extreme cases—like where the insurer acted with fraud or malice in denying your claim—you may be entitled to seek punitive damages on top of compensation for your direct injuries. A qualified Ohio insurance attorney can advise you further on this and other issues related to bad-faith insurance lawsuits.

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