What Legal Steps Can You Take for Delays in Medical Reimbursements?

When an insurer delays or denies medical reimbursements, it can create significant financial strain for policyholders who are already facing medical bills. Fortunately, there are legal steps that policyholders can take to address these delays and ensure timely reimbursement, including internal appeals, complaints to regulatory bodies, and potential lawsuits for bad faith practices.

Legal Steps for Delays in Medical Reimbursements

1. Review the Policy and Claim Documents: Before taking legal action, review your health insurance policy to understand the terms of coverage, reimbursement procedures, and timelines for claim processing. Be sure to verify that you have met all the requirements for submitting claims and that all necessary documentation (such as medical bills, receipts, and doctor’s notes) has been provided to the insurer. Insurers often have specific deadlines for submitting claims, and failure to comply with these deadlines could result in a delay or denial of reimbursement.
2. Contact the Insurance Company for Clarification: If your medical reimbursement has been delayed, the first step is to contact the insurer directly to inquire about the status of your claim. Request a clear explanation for the delay or the reason for any potential denial. It's important to keep a record of all communications, including emails, phone calls, and letters, as this will be helpful in case you need to escalate the matter.
3. File an Internal Appeal: If the insurance company has delayed or denied reimbursement, you may be entitled to appeal the decision under your insurer’s internal appeals process. Most health insurers have an established procedure for appealing denied or delayed claims, which typically includes submitting additional documentation or clarifications. The appeal should be made in writing, and you should include all relevant medical records, receipts, and correspondence to support your case. You also have the right to request that the insurer conduct a full review of the claim under its contractual obligations.
4. File a Complaint with the State Insurance Department: If the insurance company fails to respond promptly to your appeal or continues to delay reimbursements without justification, you can file a complaint with your state’s insurance department or state insurance regulator. State insurance commissioners oversee the conduct of insurers in their respective states and can investigate delays, improper denials, and unfair claim practices. Most state insurance departments have an online portal where you can file complaints, and they will generally investigate your claim and potentially take enforcement actions against the insurer if there’s evidence of unfair treatment.
5. Request External Review (If Applicable): If your insurance policy is governed by the Employee Retirement Income Security Act (ERISA), you may be entitled to an external review of your claim denial or delay. ERISA governs most employer-sponsored health plans, and under this law, insurers must offer an independent external review process for certain types of claim disputes. This external reviewer is typically an independent third party who can determine whether the insurer’s decision was reasonable based on the policy terms and applicable law. If the external reviewer rules in your favor, the insurer is generally required to pay the claim.
6. Contact the Consumer Financial Protection Bureau (CFPB): If the insurer continues to delay or deny your medical reimbursement, you can also file a complaint with the Consumer Financial Protection Bureau (CFPB). While the CFPB primarily deals with financial institutions, it can help resolve issues related to health insurance, particularly if your insurer is engaging in unfair practices, such as unreasonable delays or failure to comply with federal regulations. The CFPB can help mediate between consumers and insurers and may refer your case to the appropriate enforcement agency.
7. Consider Legal Action for Bad Faith: If the insurer’s delay in reimbursement is excessive or seems to be a tactic to avoid payment, you may have grounds for a bad faith lawsuit. Bad faith occurs when an insurer deliberately delays or denies a legitimate claim without reasonable justification. In cases of bad faith, the policyholder may be entitled to compensatory damages (for financial losses incurred due to the delay), as well as punitive damages (to punish the insurer for malicious behavior). Bad faith actions can be particularly relevant if the insurer has failed to comply with established timeframes or has unjustifiably delayed payment despite clear evidence that reimbursement is owed.
8. Seek Legal Representation: If the delay or denial of medical reimbursements is severe or persists for a long time, it may be beneficial to consult with an attorney who specializes in insurance law. An attorney can help you navigate the appeals process, assess whether the insurer's delay is a violation of contractual or legal obligations, and determine whether pursuing legal action for bad faith or breach of contract is a viable option.
9. File a Civil Lawsuit: If all other avenues have been exhausted and the insurer still refuses to reimburse medical expenses, you may need to file a civil lawsuit. Depending on the situation, the lawsuit could be based on a breach of contract (failure to honor the terms of the insurance policy) or bad faith (failure to process the claim in good faith). A lawsuit could potentially result in a judgment against the insurer requiring them to pay the claim plus any additional damages.

Example

Imagine you undergo surgery, and your insurer initially approves the procedure, but reimbursement for your medical expenses is delayed for several months. You’ve provided all the necessary paperwork, but the insurer continues to stall without providing a valid reason.

• Step 1: Contact the insurer to inquire about the delay and request a timeline for when you can expect reimbursement.
• Step 2: If no response is forthcoming, file an internal appeal with the insurer, submitting any additional documents needed to support your claim.
• Step 3: If the insurer’s appeal decision is unfavorable or the delay continues, file a complaint with the state insurance department and ask for an external review if applicable.
• Step 4: If the situation does not resolve, consult with an attorney to assess your options for pursuing a bad faith lawsuit against the insurer for failing to timely reimburse the claim.

Conclusion

If an insurer delays medical reimbursements, policyholders have several legal avenues to pursue, including appealing the denial, filing complaints with regulatory bodies, and, in some cases, suing the insurer for bad faith practices. It’s important to act promptly, keep detailed records, and seek legal help when necessary to ensure your rights are protected and that reimbursement is made in a timely manner.