How to Sue a Health Insurance Company

People often sue their insurance companies, and for many reasons. In order to understand why it is possible to sue an insurance company, it is important to discuss the relationship between the person who purchases insurance and their insurance company. The person who purchases insurance is referred to as the insured, and the insurance company is referred to as the insurer.

The insurance policy could be considered a type of contract in which one party agrees to pay a premium, in exchange for the insurer to provide coverage for the insured. Should a loss occur due to an event covered by the insurance policy, the insurance company will protect the insured from any losses, damages, or liability. Because of this, a legal contractual relationship exists between the insured and an insurer.

Lawsuits often arise when an insurance company does not indemnify, or protect, the insured from a covered act under their policy. They also occur when an insurance company does not otherwise fulfill their end of the contract, such as when they wrongfully deny a legitimate insurance claim. 

It is important to note that if you are involved in a dispute with your health insurance company, health insurance litigation will not usually be your first course of action. Rather, you must first go through several formal procedures in order to address the insurance dispute outside of court. If no resolution is achieved, it could be necessary to sue your insurance company.

Pre-Litigation Forms of Resolution

Prior to filing a lawsuit, you will most likely go through the process to appeal a health insurance decision. As part of your dispute with an insurance company, you may be required to go through a series of reviews which serve as the appeals process. At first, these appeals will be made to your insurance company, and then to an independent organization.

In the first internal review, the insured asks the insurance policy to reconsider its decision. The decision must be one that denies, limits, or withdraws coverage, or affects some other aspect of coverage. This also includes the payment of a charge. It is important that you carefully study the insurance policy in order ensure that all necessary steps are properly followed. To support your position during this first appeal, you should be prepared with the following information and documentation:

• Your personal doctor’s opinion supporting your position, such as their opinion being that a medical procedure is necessary;
• Second opinions from other doctors supporting your personal doctor’s opinion; and
• Additional explanations about your conditions, such as those provided by other healthcare providers.

The second review or appeal is also filed internally with the insurance company, and may take many different forms. Examples include a hearing, a committee, special panel, or arbitration. Some of these may require your attendance, while others may not. In order to provide a strong defense for your position, you should consult with a qualified attorney at this stage, before the need for a lawsuit arises.

Should the second internal review result in an adverse decision, you could be required to appeal again. This depends on your state’s law, as well as the type of insurance. This external or “independent” review is undertaken by a third party. If your state does not maintain such an entity, the Department of Health and Human Services (“HHS”) may oversee this independent review.

Your doctor may file an external review on your behalf. This external appeal is usually free, or it may come with a relatively small fee. The appeal for external review must be filed within sixty days of the prior denial letter, while the review itself usually takes no more than sixty days to be completed. Documents provided by the insurance company, such as denial letters, could provide you with more information about the external appeal process in your state.

Bringing a Lawsuit against Your Health Insurance Company

Once you have been through the appeals process, and you decide to file a lawsuit against your insurance company, you should perform the following steps:

1. Request that your insurance company provide you with a full copy of your insurance policy, if you do not already have it; 
2.  Send a written letter to your insurance company requesting that they send, in writing, their denial of your claim. They should also send a detailed list of reasons as to why your claim was denied. The letter that you send to them should include a demand for payment;
3.  Allow your insurance company a reasonable amount of time in which to respond to your demand for payment, as they may offer a fair settlement;
4.  File for an administrative hearing, as previously mentioned in the appeals process. Your insurance policy may contain a section instructing you to “exhaust all available administrative remedies” prior to filing a civil lawsuit. Failure to do so could result in your lawsuit being dismissed; and
5.  If all administrative and out of court options have failed, you should file a civil lawsuit against your insurance company seeking that they pay out your claim. 

If you are not working with an attorney, you should expect the process to be long and difficult. The insurance company will likely delay paying your claim, especially if they have grounds for denying the claim. However, insurance companies are required by law to pay out a properly filed insurance claim in a timely manner. As such, it is important to first properly submit your claim to the insurance company before filing suit. This must be done in writing.

Additionally, federal law states that insurance companies owe an “implied covenant of good faith and fair dealing.” Suing a health insurance company for bad faith could result in the insured recovering actual claim damages as well as punitive damages. An example of when an insurance company breaches their duty of good faith and fair dealing would be wrongfully denying a properly filed and covered claim.

Insights and Precautions for Suing Your Insurance Company

Prior to consulting with an attorney, you should gather the following information:

1. A copy of your health insurance policy;
2. Copies of all communications with your insurance company;
3. Documentation the insurance company’s denials of your claim; and
4. Copies of documents received during the internal and external review processes.

You should keep the following in mind in order to have a strong chance of winning a lawsuit, or obtaining a satisfactory settlement:

• Your insurance provider may send back your premiums, along with other documents that may ask for a release. However, you absolutely should not sign anything. Once a lawsuit has been filed, all communications from your insurance company must be reviewed by your attorney;
• Ensure you understand the bad faith insurance laws of your state; and
• Prepare to only pay an attorney if you win or settle the case, as bad faith insurance lawsuits generally involve contingency fee payments.

A bad faith claim may result from your insurance company’s:

• Failure to respond to your claim in a timely manner;
• Declining a claim;
• Refusing to settle; and/or
• Failure to investigate.

The insurance company must prove that it acted appropriately. What this means is that the insurance company has the burden of proving its innocence in court.

Seeking Help from an Attorney

As previously mentioned, you will likely be more successful in your lawsuit if you hire a lawyer for health insurance claims. If you find that you need to sue a health insurance company, you should consult with an experienced and local personal injury attorney before doing so. 

State laws vary in terms of how and when you may sue an insurance provider. As such, a local attorney will be best suited to helping you understand your state’s specific laws, and how they will affect your legal options. An experienced personal injury attorney can guide you through all steps of the appeal process, communicate with your insurance company on your behalf, and also represent you in court, should filing a lawsuit become necessary.