Health Insurance

Private Health Insurance

Group Health Insurance

There are primarily two types of health insurance available in today’s market: private health insurance purchased by you directly from the health insurer, and group insurance purchased for you by your employer or union. In addition, you can be insured either privately or through a group policy with either “full coverage,” or some form of “managed care.” The old “full coverage” policies where you could pick your physician, your specialist, and your hospital are rare at this time, although they still exist. More and more, health insurance falls into what is called “managed care,” either purchased privately or through a group, where the insurer dictates choice of physicians, covered services and possibly frequency of visits. These plans often require primary physicians and written referrals to specialists or medical tests.

Private Health Insurance

Private health insurance is unusual in today’s high-cost environment. You have more rights available to you than do those whose health insurance falls under a group policy. You may be able to bring an action against an insurance company for bad faith, whether or not the insurance you purchased privately was “full coverage” or a form of managed care; i.e., an HMO or PPO. Your health insurer is permitted to make administrative decisions, not medical decisions. Decisions concerning your health and need for care and treatment should be determined by your personal physician. Decisions concerning your eligibility for care and treatment under the terms of your contract would be determined by the administrator of the insurance company. Our firm once represented a man with a history of heart attacks and stroke, who was being treated by his physician for high blood pressure. This client was on a blood thinner to reduce the possibility of recurrent stroke. He needed surgery for an orthopedic problem separate and distinct from his other problems. The orthopedic surgeon decided that it would be necessary to eliminate the blood thinner for several days before surgery to prevent complications from bleeding during and after surgery. Knowing the man’s medical history, the surgeon chose to use an alternative blood thinner which would have limited the bleeding, but the health insurer refused to provide the alternative blood thinner. The man suffered a stroke. The stroke was directly attributable to the failure to provide the alternative blood thinner. In this case, we have the decision being made by the health insurer on a medical issue against the advice of the surgeon. Your health insurer is not permitted to engage in the practice of medicine. If the insurer crosses the line and makes medical decisions and those decisions amount to medical malpractice, the health insurer can be sued. It would be necessary to show that the insurance company made a decision against generally accepted medical theory, and that the inappropriate decision resulted in harm to the patient. In that situation, the insurance company would be responsible for the harm.

Group Health Insurance

Most group insurance policies are issued by employers, unions or trade organizations and are covered by the Employee Retirement Income Security Act, or “ERISA.” Under these policies, the rights of the insured are significantly limited by federal statute. If, however, your group policy was purchased by you privately through an affinity group such as a local small business organization, your policy would fall under the category of “Private Insurance” covered above.

In general, the damages available to someone who has been denied treatment under ERISA is merely the restitution of the care that was denied. This does not compensate the injured individual for any damages which have been incurred as a result of the denied care.

There are two major exceptions to the ERISA standard. If an insurer involves itself in a medical decision, it can be held responsible for medical malpractice. Also, when a patient is enrolled in an HMO through Medicare or Medicaid, the restrictions of ERISA do not apply because the government has created the coverage. In this instance, there is no need to protect the employer or union since the insurer is acting as the administrator of a government program. Nonetheless, a bad faith lawsuit would be unlikely to be supported by the courts since the patient is not the person who actually purchased the insurance. A “bad faith” or “insurance malpractice” case generally requires a direct contractual relationship between the insured individual and the insurance company. There are exceptions to this, however. We handled a case where a young man was insured through Medicaid because of a social security disability. Through Medicaid, he was assigned to an HMO. The HMO required approval from a primary physician before the HMO participant could be seen in the emergency room. When the young man became ill on a weekend, his mother called the primary physician and was connected with one of the doctors on call. The doctor diagnosed the young man over the telephone and decided that it was not necessary for him to go to the emergency room. When the young man’s condition worsened, his mother called again and was told that if he were brought to the emergency room, he would simply be sent home. The following day, the young man was taken to the hospital by ambulance, where he died as a result of septic shock. He had been misdiagnosed by the doctor over the telephone as having flu. In addition to the medical malpractice case brought against the physician who diagnosed this young man over the telephone, the boy’s family secured a recovery against the HMO, which had created a pattern and practice of refusing access to emergency rooms on behalf of those people who were covered by the HMO.