mediating disputed health claims

33
MEDIATING DISPUTED HEALTH INSURANCE CLAIMS ICA Annual Education Conference October 4, 2010

Upload: rob-pohls

Post on 27-May-2015

262 views

Category:

Documents


0 download

DESCRIPTION

2010 ICA Annual Education Conference

TRANSCRIPT

Page 1: Mediating Disputed Health Claims

MEDIATING DISPUTED

HEALTH INSURANCE

CLAIMS

ICA Annual Education Conference – October 4,

2010

Page 2: Mediating Disputed Health Claims

MEDIATING DISPUTED

HEALTH INSURANCE CLAIMS

Mariam Zadeh

Mediator

First Mediation Corporation

16501 Ventura Boulevard, Suite 606

Encino, CA 91436

Tel: 818.784.4544 Fax: 818.784.1836

Email: mzadeh@firstmediation

Nancy T. Poblenz, RN, BSN, DDS, JD,

CPHRM

Director Litigation and Loss Prevention

CHRISTUS Health - Risk Management

Direct Dial 281.936.3673

Mobile 281.788.5441

Email: [email protected]

Robert R. Pohls

Pohls & Associates

10940 Wilshire Boulevard, Suite

1600

Los Angeles, California 90024

Tel: 310.694.3092 Fax:

310.694.3093

Email: [email protected]

Forrest Latta

Burr & Forman LLP

41 West I-65 / Service Road N.

Colonial Bank Centre, Suite 400

Mobile, Alabama 36608

Tel: 251.345-8212 Fax: 251.345.9696

E-mail: [email protected]

2

Page 3: Mediating Disputed Health Claims

MEDIATING DISPUTED

HEALTH INSURANCE CLAIMS

Preparing for Litigation – In-House Perspective

Step 1: Document Retention and Litigation Hold Notice

Step 2: Evaluate the Claim File

Step 3: Evaluate the Writing Agent

Step 4: Coordinate with Outside Counsel

STOP, LOOK and LISTEN!

Early Case Assessment

Jurisdiction/Forum-Selection

Evaluate Plaintiff’s Counsel

Establish a Case Budget

3

Page 4: Mediating Disputed Health Claims

MEDIATING DISPUTED

HEALTH INSURANCE CLAIMS

Preparing for Litigation – Outside Counsel Perspective

Step 1: Collect Information

Step 2: Evaluate Claim Handling

Step 3: Develop a Litigation Strategy

Step 4: Identify the Client’s True Objectives

Are there case-specific goals?

What settlement terms are essential?

Are there other business considerations?

4

Page 5: Mediating Disputed Health Claims

MEDIATING DISPUTED

HEALTH INSURANCE CLAIMS

Preparing for Mediation – Practice Tips

Understand the Expectation Gap

Adjust the parties’ needs and expectations

Adjust the plaintiff attorney’s needs and

expectations

Remember the 3 most important jury motivators:

Fear: Evidence of pattern or practice

Anger: Arrogance, mistakes or incompetence

Love: A worthy plaintiff who has been imperiled

If all 3 are present, plaintiff will win BIG.

If any 1 is missing, plaintiff may win small.

5

Page 6: Mediating Disputed Health Claims

MEDIATING DISPUTED

HEALTH INSURANCE CLAIMS

Preparing for Mediation – A Mediator’s Perspective

Know When to Stop Trying the Case at the Mediation

Identify and Remove the Non-Monetary Road Blocks

When Needed, Ask to Talk to Plaintiff's Counsel

Directly

“Make Nice” with the Folks Next Door

When All Else Fails … Find Ways to Keep the Dialogue

Open

6

Page 7: Mediating Disputed Health Claims

MEDIATING DISPUTED

HEALTH INSURANCE CLAIMS

Preparing for Mediation – A Mediator’s Perspective

Prepare Early by exchanging benefit and damage

calculations

Every Plaintiff has a Story … Let them tell it

The Mediator is an Ally … Collaborate Together in

Caucus

Timing is Everything … Be Strategic About the Pace of

the Process

Read In Between the Lines

7

Page 8: Mediating Disputed Health Claims

MEDIATING DISPUTED

HEALTH INSURANCE CLAIMS

Background Facts – Communications with Agent

• Surviving Insured owns and operates a restaurant in San

Francisco

• Surviving Insured and Deceased Insured applied for

coverage with Insurance Company on April 6, 2007

• Surviving Insured told Agent she was planning to marry

in a few weeks and wanted health insurance in place for

her and her fiancé before their honeymoon

• Agent suggested coverage through an association group

policy offered to members of the local Chamber of

Commerce

8

Page 9: Mediating Disputed Health Claims

MEDIATING DISPUTED

HEALTH INSURANCE CLAIMS

Background Facts – Application

• Agent reviewed and completed a short form application

with Surviving Insured

• In the application, Surviving Insured denied any

symptoms of (or treatment for) any health conditions

• Surviving Insured signed the application in Agent’s

presence, immediately below pre-printed text which

stated that each statement in the application was “true

and correct to the best of [her] knowledge and belief”

• Insurance Company issued the policy standard without

riders or rate ups, effective April 15, 2009

9

Page 10: Mediating Disputed Health Claims

MEDIATING DISPUTED

HEALTH INSURANCE CLAIMS

Background Facts – The Deceased Insured’s Injury

• Surviving insured and Deceased Insured were married

on

June 1, 2009

• After their wedding, Surviving Insured and Deceased

Insured held a private reception at Surviving Insured’s

restaurant

• Around 6 p.m., Deceased Insured lost control of his

motorcycle, drove off the road and sustained serious

head injuries

• Deceased Insured was airlifted from the scene of the

accident to Hospital

• Toxicology report later revealed that Deceased Insured’s

blood alcohol content at the time of the accident was

0.15 – nearly twice the legal limit

10

Page 11: Mediating Disputed Health Claims

MEDIATING DISPUTED

HEALTH INSURANCE CLAIMS

Background Facts – Claim for Deceased Insured’s Medical

Care

• Deceased Insured died 2 days after admission to

Hospital as a result of the head trauma he suffered in the

accident

• Deceased Insured had received $35,000 in hospital care

and services

• In June 2009, Hospital submitted Deceased Insured’s

bills to Insurance Company

• Intoxication exclusion provides: “No benefits are

payable for losses which result, directly or indirectly, from

the insured’s intoxication.”

• Insurance Company denied claims based on the

intoxication exclusion

11

Page 12: Mediating Disputed Health Claims

MEDIATING DISPUTED

HEALTH INSURANCE CLAIMS

Background Facts – Surviving Insured’s Depression

• Surviving Insured suffered severe depression in the

months after Deceased Insured’s death

• In October 2009, Surviving Insured was lethargic,

contracted a fever and went to a local acute care facility

• When Surviving Insured’s renal function continued to

worsen, she was transferred to Hospital

• At admission, Hospital contacted Insurance Company to

verify that Surviving Insured had coverage

• Insurance Company verified coverage, but refused to

guarantee payment

12

Page 13: Mediating Disputed Health Claims

MEDIATING DISPUTED

HEALTH INSURANCE CLAIMS

Background Facts – Evidence of Pre-Existing Condition

• Surviving Insured was discharged from Hospital on

October 6, 2009

• Discharge Summary: “Never take acetaminophen-

containing products again since her current and past

hospitalizations both were likely due to chronic

acetaminophen toxicity.”

• On March 28, 2010, Hospital faxed Surviving Insured’s

bills to Insurance Company for payment

• Insurance Company begins claim investigation by

requesting medical records from Surviving Insured’s

internist and other providers

13

Page 14: Mediating Disputed Health Claims

MEDIATING DISPUTED

HEALTH INSURANCE CLAIMS

Background Facts – Claim for Surviving Insured’s

Depression

• Insurance Company denied Surviving Insured’s claim

due to lack of information about a possible pre-existing

condition

• Denial letter also mentioned Hospital’s failure to provide

written notice of claim within the 90-day period required

by the policy

• Surviving Insured, Estate of Deceased Insured and

Hospital filed their complaint 3 weeks after receiving

Insurance Company’s denial letter

14

Page 15: Mediating Disputed Health Claims

MEDIATING DISPUTED

HEALTH INSURANCE CLAIMS

Background Facts – Claims Against the Insurer

By Surviving Insured (and Deceased Insured’s

Estate)

• Breach of Contract

• Breach of Implied Covenant of Good Faith and Fair

Dealing

By Hospital

• Negligent Verification (Hospital)

• Fraud

• Unfair Competition

15

Page 16: Mediating Disputed Health Claims

MEDIATING DISPUTED

HEALTH INSURANCE CLAIMS

Surviving Insured’s Claim for Breach of Contract

• Exclusion: “Expenses that result from care or

treatment of a Pre-Existing Condition will not be

covered as Covered Charges.”

• Pre-Existing Condition: “a Sickness or Injury for

which a person has during the 6 months just prior

to his enrollment date under this plan: a) received

medical care, advice, or treatment; or b) had drugs

or medicines prescribed whether taken or not; or c)

had diagnostic tests ordered whether performed or

not.”

16

Page 17: Mediating Disputed Health Claims

MEDIATING DISPUTED

HEALTH INSURANCE CLAIMS

Surviving Insured’s Claim for Breach of Contract

• Insurer’s Position:

• Surviving Insured’s claims were incurred for Vicodin and

acetaminophen abuse

• Surviving Insured had pre-application history of “Vicodin

and acetaminophen abuse”

• Surviving Insured’s Claims were properly denied on the

basis of the Insurance Certificate’s pre-existing condition

exclusion

• Surviving Insured’s Position:

• No evidence of pre-existing condition

• Post-Claim Underwriting

17

Page 18: Mediating Disputed Health Claims

MEDIATING DISPUTED

HEALTH INSURANCE CLAIMS

Post-Claim Underwriting – Plaintiffs’ Perspective

If the insurer has a right to investigate the

applicant’s eligibility, it should not be allowed to

ignore important information until a claim arises.

By then, the applicant will have relied on the

issuance of a policy by not seeking insurance from

another source.

If the insurer is allowed to rescind the policy based

on information discovered after the claim arises, the

applicant may have no opportunity to obtain any

coverage for the loss.

18

Page 19: Mediating Disputed Health Claims

MEDIATING DISPUTED

HEALTH INSURANCE CLAIMS

Post-Claim Underwriting – Insurer’s Perspective

• Contacting all applicants to thoroughly review

application responses is time consuming

• Contacting Healthcare providers is expensive and time

consuming

• Must distinguish post-claim underwriting from post-

claim investigation

• Every applicant has a duty to disclose material facts

• Surviving Insured gave no information in application

• No opportunity to investigate undisclosed health

history

19

Page 20: Mediating Disputed Health Claims

MEDIATING DISPUTED

HEALTH INSURANCE CLAIMS

Possible Rescission Claim

• On application, Surviving Insured represented that she

had not taken any prescription drugs during the prior 5

years

• Surviving Insured also represented that in the prior 5

years, her medical care had been limited to annual

consultations with her OB/GYN – all of which were

“Normal”

• Surviving Insured signed application which stated that

the representations and statements made in the

application were “true and complete to the best of [her]

knowledge and belief”

20

Page 21: Mediating Disputed Health Claims

MEDIATING DISPUTED

HEALTH INSURANCE CLAIMS

Possible Rescission Claim

• Surviving Insured had an undisclosed health history of

Vicodin and Soma use and low-back pain and

fibromyalgia

• Surviving Insured’s undisclosed pre-application

medical history was material to the Insurance

Company’s risk assumed: Insurance Company would

not have issued coverage for Surviving Insured if this

history had been disclosed on the application

21

Page 22: Mediating Disputed Health Claims

MEDIATING DISPUTED

HEALTH INSURANCE CLAIMS

Possible Rescission Claim

“If a representation is false in a material point, whether

affirmative or promissory, the injured party is entitled to

rescind the contract from the time the representation

becomes false.” Cal. Ins. Code §359

Whether the representation was intentionally or

unintentionally false does not alter the injured party's right

to rescind the policy. Telford v. New York Life Ins. Co., 9

Cal.2d 103, 105 (1937); Contra, Union Bankers Ins. Co. v.

Shelton, 889 S.W.2d 278, 282 (Tex. 1994) [In Texas, an

“intent to deceive must be proved . . . to cancel a health

insurance policy within two years of the date of its issuance

when the cancellation is based on the insured’s

misrepresentation in the application.”].

22

Page 23: Mediating Disputed Health Claims

MEDIATING DISPUTED

HEALTH INSURANCE CLAIMS

Possible Rescission Claim

Insured has a duty to read the contract and the

application in accordance with her representations and to

report to the company any misrepresentations or

omissions.” Telford v. New York Life Ins. Co., 9 Cal.2d

103, 107 (1937); See also, Lunardi v. Great-West Life

Assurance Co., 37 Cal.App.4th 807, 826 (1995).

Insurers therefore have an “unquestioned right” to rely on

the person who would be insured “for such information

as it desires as a basis for its determination to the end

that a wise discrimination may be exercised in selecting

its risks.” Robinson v. Occidental Life Ins. Co., 131

Cal.App.2d 581, 586 (1955).

23

Page 24: Mediating Disputed Health Claims

MEDIATING DISPUTED

HEALTH INSURANCE CLAIMS

Possible Rescission Claim

Hailey v. California Physicians’ Service, Case No.

G035579 (Cal. App. 2007)

Cal. Health & Safety Code Section 1389.3 prohibits

“post-claim underwriting” – a practice involving a plan’s

failure to “complete medical underwriting and resolve all

reasonable questions arising from written information

submitted on or with an application.”

Cal. Health & Safety Code Section 1389.3 gives a health

care service plan the duty “to make reasonable efforts to

ensure it has all the necessary information to accurately

assess the risk before issuing the contract.”

24

Page 25: Mediating Disputed Health Claims

MEDIATING DISPUTED

HEALTH INSURANCE CLAIMS

Bad Faith Claim

• A mere refusal to pay benefits due under a policy is not, by

itself, bad faith.

See, California Shoppers, Inc. v. Royal Globe Ins. Co. 175

Cal.App.3d 1, 15, 54 (1985)

• An insurer’s actions constitute a breach of the implied

covenant only if:

benefits are due under the policy and

the insurer withheld the benefit unreasonably and

without proper cause

California Shoppers, supra, 175 Cal.App.3d at 15, 54; See

also, Gruenberg v. Aetna Ins. Co., 9 Cal.3d 566, 573-575

(1973).

25

Page 26: Mediating Disputed Health Claims

MEDIATING DISPUTED

HEALTH INSURANCE CLAIMS

Bad Faith Claim

If reasonable or based on a legitimate dispute, a mistaken or

erroneous withholding of benefits does not expose the insurer to bad

faith liability.

Tomaselli v. Transamerica Ins. Co., 25 Cal.App.4th 1269, 1280-81

(1984)

Opsal v. United Services Auto. Ass’n, 2 Cal.App.4th 1197, 1205-06

(1991)

Lunsford v. American Guar. & Liab. Ins. Co., 18 F.3d 653, 656 (9th

Cir. 1994)

A delay in payment does not breach the implied covenant if insurer

was investigating a genuine issue.

Fraley v. Allstate Insurance Co., 81 Cal.App.4th 1282 (2000)

Estate of Grant v. State Farm Life Ins. Co., No. 05-CV-02389

(E.D.Cal. 2007)

26

Page 27: Mediating Disputed Health Claims

MEDIATING DISPUTED

HEALTH INSURANCE CLAIMS

Hospital’s Claim for Fraud/Negligent Verification

• A medical provider has standing to sue for damages when

relying on an insurance company’s verification of health

insurance benefits. See, Herman Hospital v. National

Standard Ins. Co., 776 S.W.2d 249, 253 (Tex. App. – Houston

[1st Dist.] 1989, no writ); Memorial Hospital v. Northbrook Life

Ins. Co., 904 F.2d 236, 246 (5th Cir. 1990).

• A Party cannot justifiably rely on pre-contractual

representations that are directly contrary to the parties’

written, integrated agreement. Hadland v. NN Investors life

Ins. Co., 24 Cal App.4th 1578 (1994); Hackethal v. National

Casualty Company, 189 Cal.App.3d1102 (1987).

27

Page 28: Mediating Disputed Health Claims

MEDIATING DISPUTED

HEALTH INSURANCE CLAIMS

Hospital’s Unfair Competition Claim

California Business & Prof. Code §17200, et seq.

• enacted to protect consumers and competitors by

promoting fair competition in commercial markets for

goods and services [See, Kasky v. Nike, Inc., 27

Cal.4th 939, 949 (2002)]

• generally prohibits any “unlawful, unfair or fraudulent

business act or practice” [Cal. Bus. & Prof. Code

§17200]

• virtually anything that can properly be called a

business practice and, at the same time, is forbidden

by law can serve as a predicate for an action under

the UCL [Smith v. State Farm Mut. Auto. Ins. Co., 93

Cal.App.4th 700 (2001)]

28

Page 29: Mediating Disputed Health Claims

MEDIATING DISPUTED

HEALTH INSURANCE CLAIMS

Hospital’s Unfair Competition Claim

Original standing requirements

• “Actions for any relief pursuant to this chapter shall

be prosecuted exclusively . . . by the Attorney

General or any district attorney or by any county

counsel . . . or any city attorney or by any person

acting for the interests of itself, its members or the

general public.” [Former Cal. Bus. & Prof. Code

§17204]

• A private plaintiff who suffered no injury could sue to

obtain relief for others [See, Stop Youth Addiction,

Inc. v. Lucky Stores, Inc., 17 Cal.4th 553, 561 (1998)]

29

Page 30: Mediating Disputed Health Claims

MEDIATING DISPUTED

HEALTH INSURANCE CLAIMS

Hospital’s Unfair Competition Claim

Proposition 64

• Only plaintiffs who have suffered an injury in fact and have

lost money or property as a result of unfair competition may

prosecute claims under the UCL [Cal. Bus. & Prof. Code

§17204]

• Private parties may bring representative action only if comply

with class action certification requirements [Cal. Bus. & Prof.

Code §17203]

• Applies to all cases pending on (or filed after) November 2,

2004

Californians for Disability Rights v. Mervyn’s LLC, Case

S31798 (Cal. 2006)

Starr-Gordon v. MassMutual Life Ins. Co., Case No. C03-

0068 (E.D. Cal. 2006)

30

Page 31: Mediating Disputed Health Claims

MEDIATING DISPUTED

HEALTH INSURANCE CLAIMS

Estate’s Claims for Breach of Contract/Bad Faith

• Toxicology report revealed that Deceased Insured’s blood

alcohol content at the time of the accident was 0.15 – nearly

twice the legal limit

• Intoxication exclusion provides: “No benefits are payable for

losses which result, directly or indirectly, from the insured’s

intoxication.”

• Insurance Company denied claims based on the intoxication

exclusion

• Intoxication Exclusion did not require proof that Deceased

Insured’s intoxication was the sole proximate cause of the

accident, but only a proximate cause of the accident

Ober v. CUNA Mutual Society, 645 So.2d 231 (La. Ct.

App. 2d Cir. 1994)

31

Page 32: Mediating Disputed Health Claims

MEDIATING DISPUTED

HEALTH INSURANCE CLAIMS

Possible Claims Against Agent

• Fraud

• Negligent Misrepresentation

• Negligence

• Insurance agent acting within the course and scope

of his or he employment with a disclosed principal

insurer cannot be personally liable to the insured

• Lippert v. Bailey, 241 Cal.App.376,382 (1966)

Surviving Insured and Deceased Insured had duty to

read insurance certificate upon receipt – Hadland

and Hackethal

32

Page 33: Mediating Disputed Health Claims

MEDIATING DISPUTED

HEALTH INSURANCE CLAIMS

33

QUESTIONS? Mariam Zadeh

Mediator

First Mediation Corporation

16501 Ventura Boulevard, Suite 606

Encino, CA 91436

Tel: 818.784.4544 Fax: 818.784.1836

Email: mzadeh@firstmediation

Nancy T. Poblenz, RN, BSN, DDS, JD,

CPHRM

Director Litigation and Loss Prevention

CHRISTUS Health - Risk Management

Direct Dial 281.936.3673

Mobile 281.788.5441

Email: [email protected]

Robert R. Pohls

Pohls & Associates

10940 Wilshire Boulevard, Suite

1600

Los Angeles, California 90024

Tel: 310.694.3092 Fax:

310.694.3093

Email: [email protected]

Forrest Latta

Burr & Forman LLP

41 West I-65 / Service Road N.

Colonial Bank Centre, Suite 400

Mobile, Alabama 36608

Tel: 251.345-8212 Fax: 251.345.9696

E-mail: [email protected]