Imagine going to an in-network provider for treatment and being turned down because your health insurer wrongfully refuses to honor its policy. That happened to one of my clients who hurt her back in a car crash. Her primary care doctor referred her to physical therapy. So she went to an in-network physical therapist. However, Blue Cross of Mississippi refused to pay for the physical therapy treatment of their health insurance policyholder. Blue Cross rationalized that my client’s own auto insurance was responsible for paying the claim. The problem with that reason is her auto insurance policy did not provide such coverage and, even if it did, Blue Cross was still responsible for paying for the treatment.
Because of the wrongful denial, my client couldn’t get the treatment she needed to get better. I helped her appeal the denial by sending a demand letter with paperwork documenting the claim and citing the applicable law. Yet Blue Cross persisted in denying the claim. Having no other choice, I filed a lawsuit to enforce my client’s rights. Here is a copy if you would like to see an example lawsuit for wrongful healthcare denial. (The client’s name and contact information have been redacted for privacy reasons.)
Within weeks, Blue Cross called to discuss settlement. Under La. R.S. 1821, the health insurance carrier faced bad faith penalties and attorney fees. And the lawsuit and demand letters showed that coverage was available.
Louisiana residents have the right to have their healthcare insurance claims promptly processed and paid. These rights are enforceable by statutory penalties. Similar to the bad faith statutes applicable to property insurance and personal injury claims, the Legislature wanted to give health insurers the financial incentive to do the right thing and promptly pay claims. So it passed La. R.S. 22:1821.
That statute requires that health insurers pay claims to the health insurance policyholder within 30 days of presentment. If they’re not promptly paid, then the health insurer can become liable for a penalty of double the amount of the claim due plus reasonable attorney fees. The pertinent part of the statute is quoted below:
Ҥ1821. Payment of claims; health and accident policies; prospective review; penalties; self-insurers; telemedicine reimbursement by insurers
- All claims arising under the terms of health and accident contracts issued in this state, except as provided in Subsection B of this Section, shall be paid not more than thirty days from the date upon which written notice and proof of claim, in the form required by the terms of the policy, are furnished to the insurer unless just and reasonable grounds, such as would put a reasonable and prudent businessman on his guard, exist. The insurer shall make payment at least every thirty days to the assured during that part of the period of his disability covered by the policy or contract of insurance during which the insured is entitled to such payments. Failure to comply with the provisions of this Section shall subject the insurer to a penalty payable to the insured of double the amount of the health and accident benefits due under the terms of the policy or contract during the period of delay, together with attorney fees to be determined by the court. Any court of competent jurisdiction in the parish where the insured lives or has his domicile, excepting a justice of the peace court, shall have jurisdiction to try such cases.”
