HMO Bad Faith and Rescission
Author: Frank N Darras
In an attempt to make health care insurance more affordable to the masses, the US government in 1973 came up with a plan that included the development of Health Maintenance Organizations (HMOs). Members were to pay them a fixed monthly fee and in exchange they would work with a network of healthcare providers (hospitals, clinics and doctors) who they contracted with to keep healthcare costs controlled. The catch is that members had to use the providers that the HMO had under contract and no others.
“The individual health care plans most companies provided for their employees were getting too expensive,” says Frank N. Darras, the nation’s top insurance attorney who handles rescission cases. “The HMO idea appealed to companies who could provide this comprehensive service to their employees.” These plans were also subsidized by the government so they cost much less than the old medical plans the companies used to offer.
Doctors ended up joining HMOs because they felt the threat of having their customers taken away by doctors who did sign up with the HMOs. It seemed each time a doctor’s agreement came up for renewal the HMOs found a way to put new conditions into the agreement. As HMO memberships grew, doctors felt more pressure to join in order to keep their clientele. The new conditions included more stringent confidentiality agreements, seeing more patients, more pre-approvals. HMO contingencies began to conflict with doctor’s providing the best medical care they could for their patients. Unfortunately, in order to survive, the doctor had to see more patients in less time with a mountain of paperwork.
In addition, the 1980s saw a change in the climate towards HMOs. HMOs started denying claims. Insurance companies put too much money into the real estate boom, the S&L industry crashed; real estate values plummeted and insurance companies lost millions. As a result, their reserves for paying claims tanked as well.
Insurance companies argued medical charges where too expensive or that they were not necessary. Back then members and doctors didn’t fight the denials. Things went from bad to worse when people refused proper treatment were actually dying because HMOs where making the decisions as to what treatment they could have overriding what the physicians knew was right.
However, things have changed and now there are HMO laws to protect the members. Some of the actions that can be taken against HMOs include wrongful death, bad faith and medical malpractice. Beside federal law, many states are getting tougher on HMOs as well. HMOs also started cancelling coverage if they had to pay out too much to members even though their claims were valid.
“If you find yourself in a situation where your claim is being wrongfully delayed or your insurance company refuses to pay for a procedure your doctor recommends make sure you seek qualified legal counsel before proceeding,” recommends Darras.
Policy language and contractual timeframes in these policies are tricky and confusing. Carriers are hoping you go it alone and make a fatal mistake, uncorrectable by counsel in your later litigation.