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Texas ERISA And Bad Faith Insurance Law Blog

Bad faith lawsuit dismissed following provider reimbursement

Many in San Antonio likely understand that coverage limits from an insurance policy may leave them owing some expenses out pocket. Thus, they may plan accordingly by purchasing or securing supplemental insurance in order to account for those potential coverage gaps. Insurance is one of those rare commodities that most recognize the need to have yet hope that they never have to use. Yet when the time does come to use it, they certainly expect that if they have kept up on their premium payments (or had no reason to suspect that another party was not doing so), then benefits will be extended. 

For that not to happen can come as quite a shock. Just ask the California woman who found herself facing a coverage gap of $150,000 after she and her company were sued following a car accident she was involved in. Her personal insurance covered a majority of the $1.25 million settlement she reached in the case, yet she still was left owing the amount from the gap. After paying those expenses out of her own pocket, she then sued the provider of her business' auto insurance policy (the accident occurred at the end of her work day), claiming, among other things, breach of duty of good faith and fair dealing. Her lawsuit was dismissed, however, when the district court hearing the case learned that the insurer had reimbursed her for the $150,000, plus interest. A federal appeals court recently upheld that ruling. 

The effects of ERISA on disability claims

If you have a job in a private or publicly traded company, and insurance programs supplied by your employer, then you should be familiar with the Employee Retirement Income Security Act, more commonly known by the acronym ERISA. This act was put in place to help regulate the benefits offered by private employers. 

Bad faith insurance laws outline insurer duties to policyholders

One thing that is surely on all Texans' minds is the devastation that Mother Nature can cause. Early damage estimates from Hurricanes Harvey and Irma are between $150 billion and $200 billion, according to ABC News. Millions of people have been affected in a variety of ways, including loss of homes, businesses and jobs. Now that immediate danger is past, homeowners and business owners are looking ahead to recovery. Along with government aid, insurance money is an important resource in helping recovery efforts.

According to online legal resource FindLaw, insurers are bound by law to fulfill certain duties to policyholders, including prompt and fair processing of claims. If a claim denial is unreasonable, the insurer may be acting in bad faith, which can lead the policyholder to seek legal remedy under bad faith insurance laws. Important duties for insurers include:

  • Indemnification: This is essentially a promise or guarantee by the insurer to pay the coverage amount in settlement of a third-party lawsuit against the policyholder, usually in response to an accident or injury. If the insurer does not pay, it may be considered bad faith.
  • Investigation: An insurer must present its findings to support a claim denial. To offer valid findings, the insurer must appropriately investigate the claim and include a value estimate of the damage. Along with an improper investigation, drawing out the claims process for an unreasonable length of time may be bad faith.
  • Defense: The insurer must defend the policyholder against claims, regardless of whether or not the circumstances involved in a third-party lawsuit are covered under the policy. Failure to do so may also be bad faith.

A homeowner can avoid low-ball insurance settlement and bad faith

In Texas, an insurance company can deny a property claim inappropriately and be accountable for its bad faith. There are other versions of actionable bad faith, including the scenario when the carrier does not deny the claim, but disputes the value of the claim. The insurance company offers a settlement that is unreasonably low relative to the damages, that should be more fully covered under the policy.

A low-ball offer, however, is not always a matter for the courts. It may also be simply a beginning to a later, higher offer to settle. A homeowner can take some steps to get to that higher amount, if possible.

ERISA law and gender-identity discrimination

The Employee Retirement Income Security Act of 1974 (commonly known as ERISA), is a federal law centering around the topics of tax and labor in the private industry. Since its establishment, ERISA has assisted employees across the country with pension and health plans. Similar to other employee benefit plans, this law equips employees with plan summaries, including fiduciary plans. While the law itself sets out to protect employees around the country, a recent incident in Texas pointed toward issues underlying these plans and how they may be more exclusive than once thought.

Bloomberg BNA produced an article earlier this year on the topic of an ERISA bias claim that stirred controversy on how the law protects certain individuals. The incident involved Aetna Life Insurance Company and an L-3 Communications Integrated Systems transgender employee who accused the the insurance company of gender-identity discrimination. Aetna allegedly denied the employee's disability benefits. Bloomberg points out that ERISA does not recognize such bias claims, but that the employee may choose to move forward with the claim to recover her benefits. The article also reveals that transgender issues have been a recent point of focus in the realm of insurance plans, and that the American Civil Liberties Union has had a hand in protecting transgender individuals in these situations. 

COBRA benefits can come at a high cost to employee

Many Texas employees enjoy employer-provided group health insurance coverage. The allowed coverage may also include coverage for spouses and other family members. The value of such health insurance can be invaluable. However, grave concern can arise about loss of coverage when an employee is no longer covered by the employment related health insurance.

The federal law known as ERISA provides for the basic rights and responsibilities required for employees and employers when an employer provided health insurance policy benefits an employee. A related law known as Consolidated Omnibus Budget Reconciliation Act, takes ERISA protections further.

Harvey's aftermath and insurance claims

Just weeks ago, millions of Texans experienced the most devastating hurricane the country has seen in over a century. The aftermath that ensued is more than overwhelming, as the storm cost the state -- and surrounding states affected by the storm -- billions of dollars in federal relief. On top of the traumatic events that took place as a result of the disaster, many are concerned about impending insurance complications. How many families had preexisting hurricane coverage, and what are the stakes for those that had no protection? 

With Hurricane Harvey's aftermath came the inevitable swarm of media attention, including news that urged victims of the storm to take advantage of insurance claims before those disaster claims expired. Yet contrary to widespread belief, CNBC News alerted its readers that such reports on hurricane claim deadlines were false. And while CNBC acknowledged that a mere 12 percent of homeowners nationwide have flood insurance, the Texas law that went into effect on September 1 applied to lawsuits and not claims. The news outlet also advises victims to prioritize safety over insurance concerns, and to eventually take the following steps:

  • Communicate with insurers regarding storm damage
  • Look to other types of preexisting coverage, such as the National Flood Insurance Program
  • Document any communication with insurers for best accuracy
  • Check for eligible resources from the Federal Emergency Management Agency  

What if my insurer will not pay for damages to my home?

In the aftermath of Hurricane Harvey, many people's homes are damaged or destroyed. Not every area of the state was hit, but Texans are no strangers to storms.

Sadly, it is quite common for insurance companies to wrongly deny claims, delay payment or offer a lower settlement than they should when people's homes are wrecked by storms and other natural causes.

Here are some common illegal behaviors from insurers and what you can do about them.

Understanding bad faith insurance practices

Insurance is a benefit that most in San Antonio likely recognize the need for yet hope they never have to take advantage of. That feeling likely arises from the assumption many may have that insurers are difficult to work with. It may be understood that insurance companies do not stay in business by paying out on every single claim they receive, yet most policyholders expect that as long as they remain current on their premium payments, benefits will be extended when they need them. When they are not, policyholders rightfully want to know why

Claims are not simply paid at an insurer's discretion. Guidelines are in place to keep them from negotiating in bad faith. Those guidelines (specific to claim settlements) can be found in Section 541.060 of the Texas Insurance code. This law states that it is unlawful for insurers to: 

  • Misrepresent facts or policy provisions related to coverage to a claimant
  • Fail to act in good faith to fairly, equitably and promptly settle a claim
  • Fail to affirm or deny coverage within a reasonable amount of time
  • Unreasonably delay dealing with a claim applicable to first party coverage by claiming that third parties are instead responsible 
  • Refuse to pay a claim without first investigating it
  • Fail to provide a reason for denying coverage

Understanding local coverage determinations

As a healthcare provider in San Antonio, your primary concern is the health and well-being of your patients. It is difficult to manage that, however, if you are not getting reimbursed for the services that you perfom. Many practitioners in your position have come to us here at The Law Office of Jessica Taylor PLLC wondering what they can do to avoid having to deal with the hassle that comes with claim denials. Given that your expertise likely does not lie in medical coding and reimbursement, you may have no idea exactly what insurers want to see on claims. That is where understanding local coverage determinations comes in handy. 

According to information shared by the American Physical Therapy Association, LCDs are coverage guidelines created by your local Medicare administrator (in Texas, ours is Novitas Solutions). A coverage determination details the documentation and coding requirements of a procedure. If your claim does not meet the guidelines set by an LCD, it will likely be denied. There are three different types of LCDs: 

  • Final: These have an effective date and a specified coverage area
  • Draft: These are updates to existing final LCDs
  • Retired: These are achived guidelines that are no longer active
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