Can an Attorney Help Me If My Medical Bills Are Denied by An Insurance Company or by My Employer’s Health Plan?

by Eric L. Buchanan

If an employee has a health insurance policy at work, he or she expects her medical bills to be paid.  However, sometimes insurance companies and other employee healthcare plans will deny valid claims, and refuse to pay for medical treatment.  Common reasons insurance companies give to deny a claim is that the treatment was “experimental” or was not medically necessary, or is not covered by the policy.  However, many times when insurance companies make that decision, they are wrong, and should not be denying the claim.  If a person has a significant medical bill that his or her employer’s health insurance company is refusing to pay, that person may need the help of an attorney experienced in health care claims and in dealing with the rules that apply to those claims.  At Eric Buchanan and Associates, we know the rules and understand how to protect our clients’ rights when it comes to these denied claims. If you have been denied a claim, you should contact our firm, or another firm that handles these claims, and you should do so promptly, because the rules are confusing and complicated, and there are many time deadlines that may apply.

With limited exceptions, almost all employee benefits claims, including claim under company health plans, are governed by the Employee Retirement Income Security Act of 1974 (ERISA).   The basic framework of law surrounding ERISA healthcare claims is largely the same as any other ERISA benefits claim, such as long-term disability benefits.  There are some important differences, though, including different appeal deadlines, and the fact that health insurance companies are less likely to comply with ERISA’s notice rules, because they often fail to properly explain the reason for denying a claim.

Just like other ERISA benefits claims, the internal appeals process must be completed before filing a law suit.  If the denial is upheld through the mandatory appeals process, there may be additional, voluntary appeal levels available.  In court, however, there are only limited remedies available.  Most state laws will be preempted, and more than likely the only cause of action available will be one “to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.”  ERISA § 502(a)(1)(B), 29 U.S.C. § 1132.  In court, there will likely by no jury trial, no medical testimony, and no “merits” discovery.  Normally, a denied claimant will recover no more than the benefit he was owed in the first place.  So, for a $50,000 surgery that the medical insurer refused to pay for, the most the claimant will recover in court is likely $50,000.  Some courts will allow pre- and post-judgment interest on top of the recovery, but not all. Also, a court may award attorneys’ fees, but those are not guaranteed, and almost always require the parties to litigate a case to the very end.

There are, however, some subtle differences between ERISA healthcare claims and other claims for employee benefits – differences that representatives must be aware of to effectively represent the claimant.  First and foremost are the timelines of the internal appeals process – often referred to as the “administrative remedies.”  Healthcare claims are divided into three different categories by the Department of Labor’s ERISA claims regulations: urgent care claims, pre-service claims, and normal post-service claims.  29 C.F.R. § 2560.503-1(m)(2-4).  Post-service claims must be decided by the insurer within 30 days, but the insurer is allowed one 30-day extension.  Pre-service claims must be decided within 15 days (with a one-time 15 day extension available), and urgent care claims must be decided within 72 hours.  No extensions are available for urgent care claims, but if the insurer determines that it does not have sufficient information to decide the claim, it must notify the claimant of the deficiency within 24 hours of receiving the claim, and give the claimant 48 hours to provide the requested information.

In theory (and by regulation), the extensions noted above may only be taken if necessary due to circumstances beyond the insurer’s control.  Those circumstances must be specifically cited in the notification of extension to the claimant, and the extension notice must be given before the initial 30-day period ends.

>In practice, however, these extensions are taken frequently, with little explanation, sometimes late, and often due to purely internal delays.  As a technical point, failure to comply with the regulations in this manner could trigger “exhaustion” of the claim, giving the claimant a right to sue without pursuing any further internal appeals.  29 C.F.R. § 2560.503-1(l).  In practice, it is usually best to overlook these minor technical violations and complete the mandatory appeals.  In rare cases, a technical exhaustion can be a boon to case, especially where the initial denial was clearly arbitrary and capricious and could be easily defeated in court.  Usually, though, you will want to avail yourself of the full 180 day appeal window to develop the medical record.  The claimant must be afforded 180 days to appeal an adverse benefit determination.

Which begs the question: what is an “adverse benefit determination?”  An outright denial is easy to recognize, but in the healthcare arena especially, there are varying degrees of “denial.”  An exhaustive definition is available at 29 C.F.R. § 2560.503-1(m)(4), but in essence, anything less than a complete approval of the claim can (and should) be appealed as if it was an outright denial.  For example, health insurers may use “post-payment audits” to demand partial refunds of fees paid to providers.  While beyond the scope of this article, these practices are adverse benefit determinations, and have generated large-scale class action ERISA litigation by medical providers.

So, if a claimant has been denied, and has exhausted the mandatory appeals process, then the window in which he can file an ERISA § 502 suit has opened.  When that window closes, however, is a more difficult question.  ERISA does not contain a statute of limitations for § 502(a) claims for benefits.  If there is no contractual provision stating a limitations period, the courts will look to analogous state statutes of limitations, such as for contract actions.  Where the insurance contract itself contains a contractual period of limitations, courts will usually uphold those provisions, even if they are shorter than the relevant state-law periods, if they allow claimants a reasonable amount of time to sue.  Limitations periods as short as 90 days have been upheld by the courts in healthcare claims.  E.g., Northlake Regional Medical Center v. Waffle House System Employee Benefit Plan, 160 F.3d 1301, 1303-04 (11th Cir. 1998).  These periods are not necessarily tolled while the claimant exhausts the mandatory appeals, either.  See, e.g., Rice v. Jefferson Pilot, ___ F.3d ___, No. 08-4180 (6th Cir. Aug. 24, 2009).

Once in court, the die is cast.  At that point, if you haven’t done everything you needed to do earlier, it will all come back to haunt you.  The court will likely only be looking at the record that the insurance company had when it made the denial decisions, so if your best evidence was never submitted to the insurance company in support of the claim and/or the appeal, then the court will likely never see it.  This is part of what makes these cases so difficult.  The client has to know to consult an experienced attorney when denied, rather than filing a simple appeal letter with no evidentiary support, and the attorney must know to fully develop the evidence before saying the magic words, “I appeal.”  Once the insurance company issues its “final denial,” the record might be closed forever.

Since the remedies are generally limited to the amount of the denied claim, and, normally, under the policies, the any money due is paid directly to the provider, it is sometimes difficult for a client to pay his attorney.  Either the client must agree to pay a percentage of the recovery out of money the client has, or the medical provider (i.e., doctor, hospital, etc.) must agree to recognize the attorney’s fee and pay a portion over to the attorney.  However, if the case goes all the way to a judicial decision, the attorney and his client may ask the court to order the insurance company to pay all or part of the attorneys’ fees pursuant to ERISA § 502(g).   Depending on how much time the attorney spends on the case and the amount of benefits at stake, a well-crafted § 502(g) motion could pay an attorneys’ fee completely, or may such a significant portion of the fee that the client can afford to pay the rest.

ERISA benefits claims of any kind can be a technical morass, and healthcare claims are no different.  With the difficulties involved in clients’ ability to pay on these cases, and the incredibly short deadlines that may be imposed, it is important to discuss a case with an attorney who can help a client understand the law, and how to best deal with getting the claims paid and addressing the attorney fee issue.