The insurance industry group, America’s Health Insurance Plans (AHIP) has proposed an independent appeals process for policyholders whose insurance companies have rescinded coverage. The proposal is in response to increasingly heavy fines, investigations and multi million dollar damage awards against insurers from state regulators, judges and juries.

Case in point: Assurant, Inc.

Assurant, Inc., a New York based insurer, was investigated by the Connecticut Attorney General’s office in 2007 for rescinding health care policies. According to a press release from Richard Blumenthal, Connecticut’s long time Attorney General:

A 34-year-old woman was diagnosed with Hodgkin's Lymphoma one month after her enrollment in a six-month policy underwritten by Fortis Health Insurance [now Assurant, Inc.]. During a post-enrollment diagnostic visit, the woman recalled experiencing mild shortness of breath while exercising some six months prior to her doctor's visit. Fortis, in seeking to deny coverage, concluded that the shortness of breath she recalled during a single workout six months prior to enrollment constituted a pre-existing condition because the symptom should have caused her to seek medical treatment prior to enrollment.

Luckily for this policyholder, Blumenthal’s office was able to show that the insurer acted in bad faith and her rescission was reversed.

AHIP’s proposal

According to a recent article in the Wall Street Journal, the AHIP’s proposal would create an external independent panel, consisting health care professionals and attorneys, who would review an insurance company’s decision to rescind a health care insurance policy. The panel’s decision would be binding on both parties. At this point, the proposal is still preliminary. The AHIP said that it is meeting with the National Association of Insurance Commissioners in March to discuss the plan further.

Who’s on board?

Several insurance companies, including Health Net and Blue Cross are apparently on board with the proposal and have indicated that they may institute similar independent panels to combat the ever increasing fines and awards they’re being hit with from all sides. However, only time will tell whether the proposals actually become functioning programs.

If your valid insurance claim has been denied, your insurer may be acting in bad faith. It’s important to realize that you have rights. To contact an attorney whose practices focuses in this area of law, please click here. The consultation is free, without obligation and strictly confidential.