When you file an insurance claim with an insurance company, by law, in any state, that company owes you a duty to act in good faith. Simply put, this means that the insurance company must not look for ways to escape its obligation to investigate the claim or to pay you. Doing so would constitute bad faith. Here are some of the typical reasons insurance companies get sued for bad faith:
- Unwarranted denial of coverage
- Failure to communicate pertinent information to the claimant
- Failure to conduct a reasonable investigation of the claim
- Refusal to pay the claim without investigating
- Failure to deny or pay the claim within a reasonable period of time
- Failure to confirm or deny coverage within a reasonable period of time
- Failure to attempt to come to a fair and reasonable settlement when liability is clear
- Offering substantially less money to settle than the true value of the claim
- Failure to promptly provide a reasonable explanation for denial of a claim
- Failure to enter into any negotiations for settlement of the claim
- Failure to respond to a time-limit demand
- Failure to disclose policy limits
Insurance Plan Through Employer = Federal Jurisdiction
Fully funded, insured health plans must adhere to federal and state mandates because there is an insurance carrier involved. Self-funded plans as they are generally only subject to federal laws. The main law that regulates self-funding is ERISA – The Employee Retirement Income Security Act of 1974. It is enforced by the Department of Labor (DOL) with fiduciary duty as a guiding principle. Self-funded plans are subject to other federal rulings, too, like HIPAA, ADA and COBRA. In the case of a private employer self-funding its health care plan, federal requirements preempt state ones. Some states still impose regulations on public employer self-funded plans. In general, ERISA does not apply tp group health plans established or maintained by governmental entities, or churches for their employees.
Complaints involving alleged violations of ERISA are handled by Benefit Advisors in our national and field offices. Those who file complaints can expect a prompt response from ERISA staff. Every complaint received will be pursued and, if determined to be valid, resolution will be sought through informal dispute resolution. You will receive a status report from the assigned benefits advisor every 30 days. If your complaint cannot be resolved informally, it may be referred for further review by our enforcement staff. For technical assistance and complaints, you should call EBSA's toll free number at 866-444-3272. You may contact ERISA electronically at www.askebsa.dol.gov.
Insurance Provided by Church or Government Employer = State Jurisdiction
State Department of Insurance (DOI) are a resource for information on insurance companies’ financial stability, but it also regulates insurance companies’ handling of claims for promptness, fairness in negotiations and good faith settlements. Simply put, you, as a consumer, have a right to file a complaint with them if you believe your insurance claim has been mishandled or you haven’t gotten a reasonable, timely settlement.
Consumer Complaints and the Department of Insurance
Every state has a Department of Insurance, known by different names around the country. In California, for example, it is the Department of Insurance, but in Massachusetts, it is the Division of Insurance and in Michigan, it’s the Office of Financial and Insurance Services. Each state has a website for its insurance department. Most of the websites allow you to easily file your complaint online. Individual complaints are typically made for such things as improper denial or delay in the settlement of a claim, illegal cancellation or termination of an insurance policy, misrepresentation by an agent or broker, and problems regarding insurance premiums and rates. If your complaint is regarding the handling of a claim, the insurance company may be guilty of dealing in bad faith. This means that they have treated you unfairly either in the process of investigating your claim, denying coverage for it, or settling it.
To initial an ERISA consumer complaint, click here.
When payers operate in bad faith, we circle the wagons!Patients file complaints.We file suit.