What To Do When an Insurance Company Denies Medical Treatment

You file a claim for medical care, assuming your insurance company will pay. Then a denial letter shows up in the mail. What should you do? First, call your doctor. Your doctor is your first option to make sure the health care insurance plan covers your medical treatment.

If your insurance company still won’t pay, you can go through the appeals process. The appeals process is confusing and frustrating. A healthcare lawyer can file an appeal on your behalf and deal with the insurance company to make sure you get the health care services you need. Contact a local health care attorney for legal advice.

Getting a Denial Notice for Medical Care

“Most of us try to do good research before we go to a doctor. You find someone qualified, and the doctor says, ‘OK, I’ve sent you to all these tests and looked at all these scans. This is the plan of action. This is what we have to do to solve your problem.’ Then you breathe a sigh of relief. ‘Yes, I’m finally going to feel better!’ And the insurance company gets back to you saying, ‘This isn’t necessary.’

“It’s infuriating,” says Lisa S. Kantor, an employee benefits attorney at Kantor & Kantor in Northridge.

“People think the doctor is in charge of treatment decisions, but really the insurance companies call the shots,” says William Shernoff, an insurance bad faith litigator at Shernoff Bidart Echeverria in Beverly Hills and Claremont. “For example, we had a pretty serious case where a lady got cancer, and the doctor prescribed a PET scan, which is designed to tell if the cancer is spreading. It was denied, and because of it, the cancer did spread, and my client nearly lost her life. That’s one example; we see these all the time.”

Frustration with medical necessity disputes is unfortunately commonplace—especially in the mental health arena, Kantor adds. “People are sick, need a treatment, a psychiatrist recommends staying for 30 days, and the insurance says, ‘No, we think seven days is enough. You should be better by then.’ Insurance companies should not be dictating treatment.”

The unfortunate reality is that they do. But if and when that occurs, thankfully, you have legal recourse.

Judith P. Broach, an employee benefits attorney at Stulberg & Walsh in New York City, offers some advice to consumers. The main thing: Don’t go it alone. “All these claims and appeals are very complicated, and so if you’re looking at a denial of an expensive claim, you’re going to have a hard time moving forward without an attorney.”

How To Navigate the Appeals Process

Navigating the appeal process depends on the type of insurance you have. Closely review your explanation of benefits (EOB), and keep a copy of all your insurance and medical records. Whenever you contact your insurance provider, it is helpful to have your claim number handy.

“If an individual is covered by an employer-sponsored health plan, their rights depend on whether or not the employer plan is fully insured or self-insured,” Broach says. Fully insured plans, in which employers pay monthly premiums, are usually governed by state law. Federal law governs self-insured plans, in which employers pay their employees’ claims as they occur.

A summary plan description, specifying the type of plan and appeal process, can usually be found on an employer’s website. For Affordable Care Act (ACA) plans, the Health and Human Services and Department of Labor websites detail the appeals process, and for insurance purchased privately, policyholders should go to the insurer’s website.

Under the ACA, individuals who received denials claiming experimental or investigational treatments, alleged fraud on an application, or lack of medical necessity have a second layer of appeal via an external review process, says employee benefits attorney Patricia McConnell, of counsel at Levy Ratner. However, those appeals must be filed within four months of a denial of the initial internal appeal by the health insurance company.

“The denial of the appeal letter will advise folks of their right to file for this external review,” she says.

Filing an Internal Appeal

You have 180 days from the notice of denial to appeal to your health insurance company under the Employee Retirement Income Security Act (ERISA). This is required, Kantor notes, and it’s worth trying to receive a positive result without filing a lawsuit. “Depending on the type of denial and what the issue is, we sometimes advise people to do it themselves,” she adds. “We try to help them through it because it’s obviously cheaper for them.”

In Kantor’s experience, appeals work roughly a quarter of the time. If, as a result, you end up paying for a treatment out of pocket, it never hurts to submit a post-service claim seeking compensation. Kantor says that it has worked surprisingly often. “And I don’t know why—if it goes to a different department, if the surgical report shows they needed it. Many of my clients have gotten paid that way.”

Regardless of your circumstances, Kantor and Shernoff recommend going back to your health professional and asking them to help refute the insurance company’s claim that the treatment or prescription drug is not necessary. “In medical necessity cases, it’s always important that the treating doctor who was overruled by the insurance company is willing to be on your side and testify that the treatment was absolutely necessary,” Shernoff says.

Document Everything

“When you’re dealing with an insurance company,” McConnell advises, “it’s important to keep every piece of paper.”

Documentation is key, Kantor suggests. Keep everything your healthcare provider and insurance company send you, as well as your correspondence with them. “Don’t talk over the phone unless you’re planning to send a letter confirming what you said. If you can send it certified mail or with some kind of tracking, that is best,” Kantor adds.

She sometimes even submits a video of her client discussing how important their treatment is to them. Even if it doesn’t convince your insurance company, it may help with a judge or jury.

The External Review Option

Your state may also offer an external review process (or external appeal) through the state Department of Insurance. “If they decide the insurance company was wrong, the insurance company has to pay for it,” Shernoff says. Insurance laws can vary greatly by state. Talk to a local health insurance coverage attorney about the appeals and review process in your state.

Be Mindful of Deadlines in the Appeal Process

In any external appeal, time is crucial. “It’s become more and more common for insurance companies and employer self-funded plans to have their own statute of limitations, which must be stated in the summary plan description if it’s shorter than what it would be under state law,” McConnell says, adding that New York state’s statute is six years.

After exhausting the appeal process, individuals can file a lawsuit, but McConnell says it’s also worth a shot to try to negotiate on their own up front.

Negotiating the Level of Reimbursement

Often, McConnell says, what is really at issue is the level of reimbursement from the insurance company. She has personally been successful with good old-fashioned phone calls to her own insurance company to try to get a sympathetic ear.

One way to head off potential problems, says Anusha Rasalingam, partner at Friedman & Anspach, is to make sure that your providers are in-network. You may even be able to get billing codes from your doctor’s office ahead of a procedure to check them with your insurers.

In an emergency, federal law bans “surprise billing” for out-of-network emergency services, requiring in-network billing for all emergency-related treatment. There are also no-balance billing provisions designed to protect consumers against getting big bills from out-of-network providers at an in-network facility without a patient’s knowledge or consent.

“Over time, we’ve seen more laws to protect consumers,” Rasalingam says, noting that New York already had a no-balance billing law for some time for insurance plans that fell under state law.

“In recent years,” she says, “the federal laws and the state laws are converging where there’s more patient protection all around, so the main thing is to try to understand your benefits; as soon as you get a bill, try to appeal; also, try to negotiate the bill down. A lot of things are negotiable at the end of the day.”

Filing Suit for a Health Insurance Denial

If all that fails, or time is of the essence, it may be time to file a lawsuit. “Ultimately, it’s good to come to one of us and explain what happened,” Shernoff says. “We can take it from there.”

Shernoff’s own California Supreme Court case, Sarchett v. Blue Shield, is often cited to defend the decisions of treating doctors over those of the insurance company. In addition to case law, juries and press coverage also help.

“These are really strong lawsuits because juries understand,” he says. “Number one, the medical condition could worsen. Number two, if the treatment was done and not a covered service, there’s a big, whopping medical bill. There’s emotional distress, consequential damages, and juries get outraged when they see someone who needs medical treatment but didn’t get it because a company wanted to make a profit. So the chance of punitive damages is also high.”

The likelihood of a settlement before trial is also high. “They realize these cases are often explosive with juries and the press, so they pay a lot of money and insist on confidentiality.”

The Squeaky Wheel in a Health Insurance Claim

“Insurance companies may tell you over and over again, ‘We don’t cover this, we don’t cover that,’ but I have heard people who just keep at it—be it social media, publicity, the news media—and somehow they get what they need. Insurance companies don’t like publicity. So being the squeaky wheel can get things done,” Kantor says.

“Keep complaining; keep putting claims in; keep at it. Sometimes I think it’s designed to make you give up, but don’t give up.”

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