If your insurer's response to your claim seems misplaced to you, don't hesitate to question it. To avoid a bad faith lawsuit or claim, an insurer only has to be "reasonable" in its assessment of whether your claim is covered under your policy with them. The insurer, under California law, does not have to be correct in its assessment. An insurer has a financial incentive to determine the reasonableness of coverage of your claim in favor of lack of coverage. Thus denial letters are often the beginning of the discussion of what is reasonable, not the last word. Don't give up too soon.
Is This an Emergency?
In the situation of a health care crisis, an expedited review of coverage (an appeal) may be sought through the California Department of Managed Health Care. Other coverage disputes may take awhile as the parties argue over coverage. Applicable statutes of limitations (the time in which to sue) are generous to allow for this discourse, but a good rule of thumb is to seek formal legal recourse if necessary within a year. However, if up to four years has gone by, don't assume you don't have a case. The law permits bad faith insurance claims as late as four years after the denial of coverage. Of course, if there is ongoing harm due to the denial of coverage, be sure to inform the insurer of this. The insurer may ultimately be responsible for this additional damage. Putting the insurer on notice of ongoing harm can bolster your claim.
Write and Send Your Response Letter
You may write and send the letter contesting the insurer's denial yourself, or have an attorney do it for you. Be sure to keep copies of all letters to and from your insurer as they create an important paper trail of early events in a claim. The response letter challenging a determination of coverage should include as much information as possible to justify your claim. Providing enough factual information is key. Insurers must consider this information and are bound to make a reasonable decision in light of the new information. A fact you consider inconsequential may be just the thing to trigger coverage. Refer to the entire policy, and highlight some of the policy terms if you think they are particularly relevant.
Consider Other Remedies if The Insurer Still Denies Coverage
If you still receive a negative response, perhaps it's time to consult an attorney. An attorney's signature at the end of the letter is one way of conveying the seriousness of your conviction and intent. It may be necessary to withstand several rounds of internal review by the insurer, and multiple denial letters or determinations, before it is possible to exit from the biased environment of the internal review to the review of a neutral third party. Challenging an insurer's decision can take determination and patience. If an administrative remedy, such as an appeal to the Department of Managed Health Care is available, it will probably be necessary to complete this process before proceeding to arbitration or to filing a complaint in court. With health care issues, relief may be limited to binding arbitration. It will depend on the terms of the policy. With other types of insurance it is easier to move quickly to seek relief before the superior courts of California
Additional resources provided by the author
United Policyholders www.unitedpolicyholders.org, also a useful book is "Making Them Pay: How to Get the Most from Health Insurance and Managed Care" by Rhonda Orin (2001) St. Martin's Griffin