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What Happens If Health Insurance Claim Denied

If Your Health Insurance Claim Gets Denied

Health insurance is a complicated process. The laws around insurance are also complex. There are a number of reasons health insurance claims are denied, but the good news is that they are required to give the reason they denied the claim. Sometimes it is as simple as a doctor mistakenly using the wrong code on a form.  Other times they are associated with whether a specific type of treatment is appropriate for you.

If your health insurance claim is denied, there are steps that you can take to look further into the situation. Often the best first step is to ask the insurance company to look at the situation again and to reevaluate its decision. It is required by law that insurers tell you why they have ended your coverage or denied your claim. They also have to let you know how you can dispute their decisions.

One of the first steps in the process is to figure out why your claim was denied. There are a number of reasons that a claim can be denied by insurance companies. Some of the common reasons that health insurance claims can be denied are as follows:

  • The services are not covered by your policy
  • The service is not medically necessary
  • The service is considered experimental or cosmetic in nature
  • A pre-authorization or referral was required
  • An out-of-network provider was used
  • There were typographical errors
  • The claim did not meet time requirements
  • The policy is denied to policy limitations

A number of the reasons that policies are denied can be dealt with, either by appealing the decision or by contacting the hospital or doctor to make the needed document corrections.

The rights you have in terms of appealing a health plan decision are:

- An internal appeal: If your claim is denied, you have the right to an internal appeal. The insurance company will then conduct an internal review of the decision in a full and fair way. The claim is for something urgent, the insurance company must speed up the internal appeal process.

- An external review: If your claim is denied, you may decide that instead of an internal review, you would prefer to have an independent third party review the decision. This process is referred to as an external review. When an external appeal happens the insurance company no longer gets the final say over whether to pay a claim.

When a health insurance claim is denied, appeals can be made in the form of a letter that includes your arguments against the denial. You will also want to include supporting evidence and documentation. The appeal should focus on the reasons given for the appeal. If a valid claim is still denied and your appeal is unsuccessful, you can choose to sue the insurance company.

Most lawsuits that stem from insurance claim denials are based on a breach of contract claim. Contracting parties are obligated to deal in good faith. This means that neither party will seek to deny the other party contracted benefits. If an insurance denial claim is issued wrongfully, they are acting in bad faith. Reasons a wrongful claim denial could be issued are:

  • Using evidence fabrication
  • By refusing to accept legitimate evidence
  • By refusing to investigate
  • By delaying an investigation unreasonably
  • By unreasonably adhering to minor requirements
  • Other reasons not listed here

In some areas, you may be able to file a tort claim. These types of claims can result in punitive damages. Punitive damages can frequently exceed the amount of the insurance claim itself. Both contract claims and tort claims can be affected by the statute of limitation laws.

Statutes of Limitations

In each jurisdiction, there is a deadline to file legal claims. This is called a statute of limitations. If the statute of limitations has passed, you cannot usually file a lawsuit. Each type of lawsuit has its own statute of limitations. While negotiations and appeals are happening, it is important to remember and be aware of your jurisdictions so the right you have to sue does not pass.

Final Notes

If your health insurance claim is denied, you have options. Researching what those are will prove valuable if you ever need to negotiate, appeal, or sue. While this can be a complicated process, a qualified bad faith insurance lawyer in your area may be able to give you more information and provide you with options. Often, appeals hinge on whether the treatment qualifies for coverage under your plan. In other situations, the appeal can hinge on whether a treatment is medically necessary or scientifically proven. Good communication with your doctor, as well as good research and documentation, can go a long way in how your appeal turns out. If you want to come back to this page for reference, feel free to bookmark it. Remember, that laws vary from one jurisdiction to the next, so research what happens in your area if a health insurance claim is denied is important.

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