How to Effectively Sue a Health Insurance Company with Legal Guidance

Understanding Your Entitlements vs Healthcare Insurer

Could you imagine being at the mercy of a health insurance company that withholds care? Despite the fact that health insurance companies profit by promising to pay for all medical care in order to preserve life, if they don’t pay for covered services, people could suffer important health problems that can cause long-term damage or even death. Thus, it is critical that policyholders understand their rights to make sure that health insurers will not act arbitrarily or capriciously by wrongfully withholding payment.
Policyholders rightly expect the insurance company to follow the law. Pursuant to the Massachusetts Consumer Protection Act, courts must award policyholders up to three times the damages suffered for unfair and deceptive acts or practices such as:
Policyholders who have filed lawsuits against insurers have sometimes been successful in winning money damages . However, it is important to note that once a person files a claim for damages against a third party or health insurer for an injury, the health insurer will be entitled to seek recovery of the medical expenses it paid on behalf of the injured person. Fortunately, the law provides that the insurer can only recover what they paid for medical bills that were actually related to the injured person’s claim. Even if the health insurer had an assignment of benefits, which is typical in most managed care and some group insurance plans, the health plan cannot claim a lien against the third party tortfeasor’s insurance funds or against the injured person’s recovery from the responsible tortfeasor. The health plan also cannot actively involve itself in the injured person’s negotiations with a third party tortfeasor. Courts generally require that health insurers who cover an injured person’s medical expenses must take on a share of the responsibility for the injured person’s legal costs and fees.

The Logic behind Suing a Health Insurance Company

Common Scenarios Worth Considering a Lawsuit Against a Health Insurance Company
There are several common situations where a policyholder might consider filing a lawsuit against their health insurance company. If your health insurance claim ends in a denial, it usually requires a high level of persistence to have that decision overturned, even with the help of an attorney. If your health insurance company does not pay on a claim in a timely manner, even when your treatment is pre-approved and your medical bills are submitted promptly, this could become an issue. Additionally, if your insurance company underpays your claims, this could be a significant problem which leads to several other issues. If you are not receiving the benefits due to you or there are delays in receiving these benefits, this can create a massive disruption in your life. If you do not have financial security in knowing that your insurance company will pay for eligible claims in a timely fashion, your stress levels are certainly increased. If a lawsuit is necessary to force a health insurance company to act, it can save a person a great amount of stress and add the financial security they deserve.

Finding a Lawyer for a Health Insurance Lawsuit

The selection process for a lawyer to represent you in a health insurance coverage or dispute is one that cannot be taken lightly. Too many times, clients of ours have come to us after prior attempts to seek recovery have failed and we have had to re-litigate their claims. Well that’s not the case with respect to litigation or re-litigation against health insurance companies. With that said, we don’t often retain clients after a prior unsuccessful attempt to recover from a health insurance company.
When searching for a qualified attorney for health insurance coverage or dispute, you need to hire a lawyer who has experience handling those types of cases. Simply hiring an attorney who handles litigation in other states when looking to sue a health insurance company may not put you in the best position to have your case accepted on a contingency fee basis. What we see is typically the "rules" governing health insurance disputes and lawsuits vary from state to state. Even though this can cause problems as sometimes health insurance litigation may proceed differently in different states, the rules are generally pretty similar. However, the biggest difference is the plaintiff’s ability to find legal representation on a contingency fee basis. Not all states allow lawyers to represent plaintiffs in contingent case.
You may think that hiring a lawyer who practices law in your state is a good general rule of thumb. This comes down to whether or not they handle cases on a contingency fee basis. The reason why I keep harping on a contingency fee arrangement when choosing a lawyer to represent you in a lawsuit against a health insurance company is because there are certain "costs" involved in litigating a case that can attributed to discovery costs, expert witness fees, deposition costs, etc.; which usually total in the thousands of dollars. When you hire a lawyer on an hourly fee, these costs will be billed to you before any recovery is obtained whereas in a contingency fee case, these costs as well as the fees for a lawyer are contingent upon the recovery of damages.
The above guide is pretty basic however, hopefully it serves as a starting point as to what I look for when a potential client calls regarding a lawsuit for health insurance coverage; specifically when they’ve been denied their medical bills and expenses.

How Suing an Insurance Company Works

When a health insurance company denies medical coverage, the step between administrative appeal and resolving the matter through trial is to file a complaint with your local court (usually, although sometimes federal courts have jurisdiction as well). (This is somewhat an over-simplification, as sometimes other steps become involved along the way, such as mediation.) The complaint must allege the basis for liability-essentially, why the defendant insurance company was wrong in denying benefits. Not only must the complaint be properly written, it must be served on the defendant via a proper method (which varies depending on whether the defendant is an individual or corporation). Assuming the complaint is filed and the defendant has received it, the defendant can file a motion to dismiss the case (basically, asking the judge to throw the case out for one reason or another) and/or answer the complaint. Legalese for "answer" is "response". In this answer or response, the defendant usually includes its own counterclaims against the plaintiff (the person suing). The plaintiff then replies to these counterclaims with a response. The defendant can then file cross-claims against co-defendants (if there are any), or third-party complaints against additional third-party defendants . Unfortunately, all of these procedural issues can get hairy, and cause the health insurance claims process to slow down or become complex. The parties then engage in discovery, which encompasses the exchange of information like documents, written answers to questions, deposition testimony of witnesses, and so on. Generally, discovery can take many months, depending on the complexity of the case. If the parties can reach a resolution through settlement discussions and mediation, the parties can avoid trial. If that happens, the insurance company will pay the benefit for which you sued, and you’ll sign a settlement agreement and release of liability , and all will be well. However, this is not always what happens. If there is a trial, that means some type of hearing is held where the judge or jury hears testimony from witnesses, and the parties present their cases. A verdict is then issued by the judge or jury. Many a case has settled after the trial begins but before the verdict is rendered. But if it has not and a verdict is rendered, the losing party may choose to appeal the decision of the judge or jury if there are legal grounds to do so. All in all, taking on an insurance company in court is no easy undertaking. This is why skilled counsel experienced in litigating and litigating insurance disputes is essential.

Settlements and Rulings

When it comes to suing a health insurance company, no two cases are the same. In some instances, the case may be settled out of court with the insurance company. This will usually occur if the judge finds that there was wrongdoing on the part of the insurance company. Settlement may also happen before the trial, and could possibly be negotiated even after the trial has begun. As always, any settlement offered by your health insurance company should be considered in consultation with your lawyer. A good settlement offer will compensate you fairly and quickly. Settlements are more likely when there have been violations of contracts and state statutes.
If the case is decided in your favor, the jury or judge may award additional damages. Additional damages may be specified as pain and suffering, punitive damages or other compensatory damages to help you physically, emotionally, mentally or financially. Punitive damages are awarded to punish the insurance company for despicable behavior. Insurance companies don’t expect to be punished; they take steps to avoid this possibility at all costs.
In most situations, the insurance company will not voluntarily compensate policyholders who have been mistreated. The insurance industry is very competitive. It is much more profitable to deny a claim or trick a claimant than to pay damages or approve a claim. Insurance companies do not settle out of court. They only settle outside of court for minor accidents and damages — for example, when someone backs into your parked car and you need about $1000 of work to fix the damage to your bumper. Victims do not expect to receive the full value of the damages sustained. However, if an insurance company does not honor a claim for damages that approach or exceed $5000, you can expect that the company’s legal representatives will use any means possible to deny or dispute the information that you provide to them.

Suing an Insurance Company FAQ

Will my health insurance company fight back if I sue them?
Insurance companies almost always fight back in a case against them. But insurance companies don’t need to win; with the huge amounts of money they have in the bank, they have little to gain from winning a case. They can afford to be stubborn and fight against claims because they know they can just drag out the case for years. Even if the case does not settle, you still have to pay attorney’s fees. In the end, insurance companies typically are more concerned about looking bad in front of a jury than anything else. It’s hard for them to get away with being scary when they are losing a court case.
Will a health insurance company just deny payment for my case to punish me for suing them?
It is possible that an insurance company will try to punish you for your lawsuit, and it is also likely that if you have filed a lawsuit, the insurance company will stop paying your bills or will deny your scheduled tests and treatment. That, however, is why you need a lawyer. With a lawyer at your side, your chances of getting timely treatment and your bills paid go up significantly. And no matter what, you need an attorney on your side who knows the law and can warn you about any insurance companies’ games.
If I win my case against a health insurance company, will it make it harder for other customers to get claims paid?
Most likely, no . Companies that lose a court case may deny claims or behave poorly to save costs without actually changing the way that they do business overall. But companies that care about their reputation will try to do better when a decision is made public.
If I win my case against a health insurance company, will my case just be appealed by the insurance company?
Yes, it is likely that an insurance company will appeal the decision if they lose. That is why you must have an attorney for your case. Your attorney has the training and experience to thoroughly evaluate your case, and will be able to advise you on any potential appeals at every stage.
If a health insurance company denies my claim again after I have sued them, how long will it take to be resolved?
Usually, once you have filed a lawsuit against an insurance company, their decision-making time for your claim is just as long as the renewal time for the health insurance policy, which is normally just 30 days. But an appeal of an adverse benefit determination may take longer, and can be asked for even after renewing the policy.
Will hiring a lawyer make it impossible for me to resolve my case without a long, drawn-out lawsuit?
Not necessarily. Depending on the circumstances, a case can often be settled before it goes to filing a lawsuit. Since insurance companies are difficult to predict, and your claim needs to be evaluated very carefully by a professional who understands the law, the best way to make sure your case is settled sooner rather than later is to hire that lawyer.