TIME FOR INSURANCE CLAIM REFORMS

                By: Mark Wolfe, partner Moore & Wolfe Attorneys at Law. I have been practicing law for 21 years. Most of my legal career has been spent representing injury victims in auto-negligence claims and cases. At no point in my career has it been more difficult for motor vehicle collision victims to receive fair and just compensation for their damages. More and more, claimants are finding themselves in long and protracted lawsuits simply to recover benefits they are legally owed. What follows are just a few examples of difficulties faced by injury victims in Alabama.

            Problem: Unregulated Use of Computer Assisted Claim Evaluation Programs. Insurance companies have instituted complex computer assisted claim evaluation programs that contain a variety of default devaluation codes resulting in medical bills and lost wages being unrealistically discounted.  These same computer programs have allowed companies to streamline their claim adjusting staffs resulting in overworked and underpaid claims adjusters who have little or no latitude in claim resolution. “Sorry the computer says you should’ve only been off work for 3 days and not the 10 days recommended by your doctor.” Solution: If an insurance company is using a computer assisted claim evaluation program, then the claimant should be given information about the program and guidelines to be used when submitting the claim. I.e., “if your doctor keeps you off of work more than 3 days, you will need a note with specific physical limitations otherwise the computer program will only authorize payment for 3 days of lost wages.” In Florida, the State’s Attorney General recently determined that Allstate had improperly reduced benefit payment of medical bills by 20% via its computer assisted claims program.  

            Problem: Coordination of Benefits. A client received terrible injuries when another driver swerved into his lane of travel and hit him head-on. His left hip socket was smashed into several pieces and his right knee cap was practically torn off. He received a severe laceration to his face requiring 300 stitches. He had health insurance with Capital Blue Cross Blue Shield and med-pay benefits with his own auto-insurer for up to $5000.00. He has a clear liability claim against the at-fault driver but because of the extensive nature of his injuries, it could be months and maybe even years before the liability insurance carrier is willing to discuss settlement. (Remember in Alabama in a liability claim the insurance company for the at-fault driver gets to hold the money they may owe for medical bills, lost wages, etc. until the claimant is willing to sign a release of all claims.) For the last several months, his health insurer has not been paying any of his medical bills because they claim to be “secondary” to the med-pay benefits. His auto-insurer refused to pay because they needed a specific form for their computer program. The hospital would not provide the form until the bill was paid. We were finally able to get this mater resolved but it took weeks of letters and follow-up phone calls. This is not the only time we have seen this type of delay because of “too much insurance.” We’ve seen health insurance companies refuse or reject payment because the claim “may be covered by a liability claim.” We’ve seen med-pay carriers refuse payment because the health insurance coverage should be primary. Solution: We need a realistic Coordination of Benefits regulation that prohibits health insurance companies from refusing to pay a legitimate claim simply because of questions about primary and secondary coverage. As it currently stands more and more companies are writing themselves into “secondary payee” status and it’s not going to be too much longer before every insurance policy will claim to be “secondary.” We also need guidelines on what “documentation” is necessary for med-pay carriers for benefit payments. The insurance industry already has in place an intra-company arbitration policy to resolve disputes. If a company pays a direct claim that they believe should’ve been paid first by another insurance company, they can go to arbitration and resolve the dispute. Right now, health insurance carriers and med-pay carriers would rather just not pay and tell the claimant that the other company should pay.

            Problem: Insurance Claim Regulations are “Not for Consumers.” This one takes the cake!  The Alabama Department of Insurance does have rules and regulations for Insurance Companies regarding first party claims. There is even a really nice sounding section titled: Standards for Prompt, Fair and Equitable Settlements…  This section would be great for consumers except: It’s not for consumers. Alabama Insurance Regulation Chapter 482-1-125.02 states: “Evidence of violation [of these standards] shall be utilized for the purpose of administrative and regulatory proceedings conducted by the Department of Insurance and shall not be utilized for any other purpose or admissible as evidence for any purpose in any civil court proceeding.” So there you go. The Alabama Department of Insurance, a lapdog agency of the insurance industry, has rules and regulations for fair and equitable payment of claims, but those rules are not for the claimants use. That’s the same as having a law against shoplifting but then telling the shop owners that they can’t seek to prosecute shoplifters. Solution: We need to expand the Rules and Regulations for fair claim resolution to include third party liability claims and then give claimants a right to bring a cause of action against the insurance company if it the break the rules.