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Appealing Life, Health, Long Term Care, and Disability Claim Denials Under Individual Insurance Policies

Individual Insurance Policies: Typically, an individual insurance policy is subject to the laws of the state where it was issued and delivered (unless the policy itself specifies a different state). New York and other states generally treat individual insurance policies as private contracts, subject only to such review procedures as are spelled out in the policy itself. If a review procedure is prescribed, the policyholder should be careful to meet all requirements for submission of notice, proof of loss, and appeals, as failure to meet such deadlines may constitute a “brea­ch of contract” and lead to automatic disqualification for benefits.

* There are two major exceptions to the above. First, if you are receiving health care coverage through a managed care organization (an “MCO” is any plan where primary care providers are drawn from a specific list of participating providers), New York state law mandates a uniform “grievance procedure” for reviewing claims that have been denied (except in the circumstances described in the following paragraph). The MCO must provide a telephone number for initiating a grievance. Once a grievance has been init­iated, the MCO must generally make a determination with­in either 48 hours (if it is indicated that a delay would significantly increase the risk to the patient’s health) or 30 days (where no such risk is present). A grievance determination must be in writing, and a policyholder is entitled to appeal that determination within 60 days. The appeal must be in writing, and a decision should be rendered by the MCO, depending on the danger of delay to the patient’s health (as above), within either 48 hours (risk) or 30 days (no risk). The decision should be reduced to writing, called an “appeals notice,” and provided to the policyholder

* The second exception applies to all individual policies, whether an MCO or any other type of health plan, when a medical claim is denied specifically because the proposed care is deemed either “not medically necessary” or “experimental/investigational.” New York state law mandates a uniform “utilization review” procedure.

  • An initial request for medical necessity determination can be made by tele­phone, and must be answered within 1 business day (for services a patient is already receiving and wishes to continue), 3 business days (for services not yet provided, and requiring pre-approval), or 30 days (for services already provided).
  • If coverage is denied, called an “adverse determination,” this determination must be communicated to the patient in writing, and must contain directions how to pursue reconsideration by the health plan, as well as instructions for initiating an “external review” (see the discussion of external reviews, below).
  • If a policyholder chooses to pursue internal reconsideration by the health plan (which can be simultaneous with an external review), an expedited appeal may be sought (for continuing service, or where there is risk to the patient’s health), or a standard appeal. Appeals must generally be filed in writing within 45 days. The health plan is required to determine expedited appeals within 2 business days, while it must determine standard appeals within 60 days. It must issue a final decision in writing.

In addition to the internal appeal and external review procedures, a policyholder can commence a lawsuit to enforce his or her rights under an insurance policy. There is generally no legal requirement that a policyholder first exhaust the internal appeal procedures (unless an exhaustion requirement is clearly specified in the policy) or external review procedures before a lawsuit is commenced. However, it is frequently worthwhile to pursue such non-legal strategies, because litigation is a far more costly remedy. The policyholder should be mindful of any applicable time limit (or “statute of limitat­ions”) that might bar a lawsuit. A lawsuit must be commenced within 6 years of the period for which benefits are sought, unless the policy specifies a shorter period of time (in which case, the shorter period applies). If litigation is being considered, a policy­holder should seek legal assistance well in advance of any potential statute of limitation to allow counsel ample opportunity to review the client’s papers, obtain additional documentation, research legal issues, and draft the papers necessary for commencing a lawsuit.

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