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How to Sue a Health Insurance Provider

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The lowdown...
  • Read and understand your insurance plan documents before contacting the company
  • Follow internal procedures to settle a dispute and keep accurate records
  • Use internal and external review processes to settle your claim
  • Your case could be settled via arbitration or small claims court
  • Contact a qualified legal professional if your case is complex and involved

Health insurance has become so complicated that disputes between people and their insurance companies are frequent. If an insurance company has denied you coverage for needed care or refused to authorize a procedure, a lawsuit is one way to receive financial compensation, and potentially, the health care you need.

If you are looking to change health insurance, use our free insurance comparison tool above! 

You may also believe you’ve been charged incorrectly for various services. Complex legal considerations regarding health insurance mean that you will need to follow a step-by-step process to be prepared to sue your health insurer.

The steps involve time, planning, and good record-keeping, but the good news is: you may be able to resolve your situation before a lawsuit becomes necessary.

Step 1: Know Your Rights and Plan Description

AdobeStock_118704820-1600x1600Insurance plans are usually not entertaining reading, but before you call customer service, read your Evidence of Coverage. Evidence of Coverage is a lengthy, detailed document describing what your insurance will and will not cover.

If your employer provides your health insurance, you can request a copy of your Evidence of Coverage from them. If you pay for your insurance directly, you should ask to see Evidence of Coverage from the company. After that, review your Summary Plan Description, which will summarize facts about your health insurance.

You will learn whether or not your situation is covered by your health insurance, and whether it is worth your time to pursue your claim.

Step 2: Contacting Your Insurer

You will be unsuccessful in suing your insurance company if you don’t follow recommended procedures to settle the dispute through other available means. Nolo.com advises you to call customer service first. Customer service agents may be able to reverse the initial denial of coverage or remove a charge.

If the agent cannot help you, request that you be able to speak with a supervisor. If the supervisor denies your request, ask for a notice of denial. A notice of denial is a formal letter that details what the insurance company has determined, and their reasons for a denial of coverage.

Step 3: Request an Internal Review

The next step after contacting customer service is an internal review. The Affordable Care Act (ACA) mandates all that insurance companies must have established procedures for reviewing a denial of service or charges to customers.

Internal reviews may also be called “grievances” or “consumer complaints.” Assemble all the documentation you have and review your evidence of coverage before preparing for an internal review.

Step 4: Outside Review

adobestock_60114306-1600x1600-3Your health insurer must respond to your appeal within a specific amount of time specified by your Evidence of Coverage. A negative response from your insurance company at this stage is called an “adverse determination.” Your insurance company may request you to enter voluntary or required arbitration at this point.

If the company requires you to pursue arbitration, the results aren’t legally binding. If you can choose whether or not to go to arbitration, you might be required to accept the decision of the arbitrator.

Step 5: Understanding Your Rights

Most of the time, making an external review of an insurance company’s decision regarding your care involves “medical necessity.”

In other words, you are not supposed to pursue a dispute with your insurer for procedures like cosmetic surgery or non-essential prescription drugs. Time limits also come into play.

Once again, your Evidence of Coverage document will tell you how much time you have to make an external appeal.

Step 6: External Appeal

As an alternative to an individually-filed lawsuit in Superior Court, states have external review programs that you can appeal to if your internal review process fails, and you do not want to pursue arbitration. States limit external appeals.

If you have a self-funded insurance plan, or if your employer pays directly for their employees’ health care, you are not able to receive an external review. If you pay for your insurance, or your employer pays your insurance premiums, you can proceed to an external review.

Step 7: Lawsuit or Official Complaint

adobestock_40258869-1600x1600The rules regarding whether you will be eligible to file a lawsuit against your health insurance company are so complex that Nolo.com says that you would be wise to consult with an attorney who specializes in health insurance lawsuits before proceeding to court. If your insurer is a Health Maintenance Organization (HMO), you have a few additional options.

You can file a complaint with the accreditation organization that covers your HMO, which can sometimes encourage the company to resolve your complaint. Your state insurance commission or department licenses most HMOs.

Filing a complaint with the state agency overseeing your HMO can also change prior decisions. Some state insurance commissioners may even intervene in your dispute if it is justified.

Smaller Disputes and Small Claims Court

If you believe your health insurer doesn’t owe you a large amount of money, you can file a claim in small claims court. If you have the documentation necessary for an internal review, it’s likely you have enough information to successfully file a claim in small claims court, and receive a judgment. Small claims thresholds vary from state to state.

A successful small claims court litigant filed a suit against an insurance company that overcharged him for premiums for several months. He filed the suit for premium overcharges, plus an additional $2,000 for the hassles he experienced trying to receive a refund.

The insurance company called him the day before the small claims court date and settled his claim, sending a check for the amount he requested.

Anyone can file a lawsuit at any time. Winning a lawsuit is another matter.

Health insurance companies can pay nearly unlimited amounts of money for attorneys to defend against adverse judgments. Being organized, knowing your coverage, and keeping accurate records, are keys to filing a lawsuit against your health insurance provider with success.

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