When Insurers Act in Bad Faith: Your Options for Recourse of a Denial of Treatment with an Artificial Disc
What are my options now that I have exhausted all of my payer appeal rights?
- There are still a number of health insurance providers who do not provide coverage for lumbar artificial disc replacement while others place stringent criteria for approval.
- In some instances when your health insurance provider refuses to cover your "medically necessary" surgery, it's deemed a violation of your contract and you may have grounds for a bad faith lawsuit.
- In a bad faith lawsuit, if a patient proves to the court that their health insurance provider acted in bad faith, the court can require the health insurance provider pay for the surgery and may also award punitive damages.
There are a number of commercial health plans that still do not cover lumbar total disc replacement (TDR), despite strong short- and long-term data relative to lumbar fusion. Among these are Aetna, United Healthcare, and a number of Blue Cross Blue Shield plans. In addition, there are commercial health plans that have established criteria for positive coverage of lumbar TDR that are well outside of accepted norms by spine surgeons (or even the FDA!). For example, Anthem Blue Cross Blue Shield requires that a patient have spondylolisthesis, despite the fact that this is really a contraindication for this procedure.
It is understandably frustrating when your surgeon has recommended you for a procedure such as lumbar TDR, only to find out that your insurance does not cover it. You may even jump through all of the appeal “hoops” available to you, i.e., internal and external appeal, only to continue to be denied by your insurance. Do you have any recourse at that point?
The answer is yes, possibly! There are two legal pathways that you may consider if you get to this stage and you and your surgeon feel strongly that this is the right procedure for you. The first is a class action lawsuit. There are many patients experiencing this same frustration, so searching for attorneys who are taking on such class action suits against insurers is feasible. The second option is a bad faith lawsuit, which is specific to your case only.
What is a bad faith lawsuit?
When you pay your monthly premium for insurance coverage, you are doing so out of good faith that your insurance carrier will cover your health care costs when the need arises. Some insurance companies fail to fulfill contractual obligations to policyholders. When an insurance provider violates its contract by denying a service that has been deemed to be “medically necessary” for you, and you can prove the carrier’s failure to fulfill its end of the contract, you have the legal right to sue. This is known as a bad faith lawsuit: when an insurer denies coverage, refuses to pay an insurance claim, or undervalues the claim.
According to legal website Nolo.com, bad faith by an insurance company may include some or all of the following:
- Denying a claim outright or failing to pay or settle a claim falling within the insurance policy’s limits, without asserting a reasonable basis
- Failing to investigate a claim for insurance coverage
- Not providing a valid reason or justification for denying an insurance claim
- Using deceptive practices to deny an insurance claim
- Misrepresenting the terms of coverage or engaging in other misrepresentations for the sole purpose of wrongfully denying an insurance claim
- Failing to offer the full monetary value for the claim (i.e., undervaluing the claim)
Attorney David Suddendorf, who specializes in insurance litigation, notes that if patients can show that the insurance company is “ignoring the evidence of better medicine,” they may have grounds for bad faith. “Ignoring data is the crux of the case,” said Suddendorf.
With regard to lumbar TDR, Suddendorf believes that “insurance providers choose to see evidence one way, saying there have not been enough long-term studies that show that it’s better (than fusion) despite mountains of evidence published over the last 15 years.” He points to Charité, the first lumbar TDR device to receive FDA approval, as the scapegoat that health insurance companies use for denying the evidence behind lumbar TDR. Charité was taken off of the US market in 2011 based in part on design flaws that affected the device’s performance. “Although later devices have addressed these early problems, many insurance company payer ‘holdouts’ who persist in labeling TDR as experimental and/or investigational continue to point unreasonably to the failures of this first-generation device,” said Suddendorf, who often has to argue the 20-plus year world wide track record of lumbar TDR.
Filing a Bad Faith Suit
Per David Suddendorf, patients may file a state court action for bad faith, noting the specific violation of the statute(s) and unfair claims practice(s). “You are suing for your individual damages (reimbursement for your claim, costs, and emotional distress).” The court can also award punitive damages based on the net worth of the insurance company if the claimant can show that the insurer acted in bad faith. “Punitive damages are designed to discourage insurance companies from such behavior.”
If you believe your health plan is acting in bad faith and you have documentation to prove this (e.g., denial form letters, emails, a log of calls made to your insurer, correspondence from your doctor, etc.), you may be able prove to a court that the insurance company has put its own interests ahead of yours and has acted in bad faith. Contact a BackerNation Wellness Coach to learn what you can do to get started.