The shooting death of the UnitedHealthcare CEO by a man with the apparent motive of retribution for the actions of the company in denying claims has prompted a heated discussion in the press and on social media, with some even expressing support for the killer. While I do not condone murder to solve the problem of unjust actions by large corporations, I hope that the attention this tragic case has brought to the problem may lead to some positive legislative and judicial actions.
An insurance policy is a contract—in exchange for payment of a premium, the company agrees to pay for expenses caused by unexpected and unfortunate events. But it places certain conditions on how much it will pay, and it often seems those conditions cause more claims to be denied than paid.
Theoretically, when a consumer applies for insurance the terms of the contract could be negotiated. For example, you and I might do this when we hire a contractor to repair our house. However, the insurance industry would not be able to serve the millions of people it does if companies had to negotiate each policy separately. Instead, policies are written with standardized language, and offered to consumers on a “take it or leave it” basis.
To protect consumers from completely one-sided policies, laws are passed requiring certain policy language or insurance company actions. Unfortunately, these laws do not protect consumers as well as many would like.
“While I do not condone murder to solve the problem of unjust actions by large corporations, I hope that the attention this tragic case has brought to the problem may lead to some positive legislative and judicial actions. ”
In New Hampshire, RSA Chapter 358-A, known as the Consumer Protection Act, does not apply to insurance companies. The rationale is that they are already overseen by regulators, the State Insurance Department.
Unfortunately, although the State Insurance Department does have the power to penalize deceptive insurance claim practices, such as those prohibited by the Consumer Protection Act, for whatever reason it rarely exercises that power.
In many states, insurance companies can be sued not just for breach of contract, but for the “tort.” Tort is the Latin word for a civil wrong, as opposed to a crime—of insurance bad faith. If an insurance company knows that the worst thing that can happen if it denies a claim is it may be told by a court that it was wrong and it must pay the bill, then it has lost little except what it may have paid its lawyers. The potential gains of denying a claim are great because most people do not challenge denials. Most people lack the resources to do so.
One major attempt to try to convince our state Supreme Court to recognize the tort of insurance bad faith occurred in Jarvis v. Prudential. Mr. Jarvis had a serious medical condition which required full-time nursing assistance in his home. Because he and his wife were unable to find a qualified male registered nurse, they wanted to hire an aide who was not a nurse but could provide equivalent care. After first agreeing to pay for the expenses, the health insurance company reversed its decision.
The Court held that the policyholders were limited to a breach of contract claim, that is, if they proved the insurance company incorrectly interpreted the policy to deny the claim, they could get the benefits payable under the policy. However, they could not get “tort” damages such as emotional distress, or even the costs of going into debt to try to pay bills that the insurance company should have paid.
That, I think, is the meaning of the words on the bullets left by the UnitedHealthcare CEO killer: “deny, delay, depose.” Lawyers who regularly deal with insurance companies are very familiar with those words. First, deny the claim and see if there is a challenge. Second, if there is an appeal, do everything possible to delay deciding it. Third, make that appeal as expensive and difficult as possible.
“Depose” is a reference to the tactic of lawyers who try to wear down the other side by conducting lengthy depositions—the process in pretrial discovery when you are allowed to ask questions of the other side’s witnesses. Although this is a legitimate method of getting information, it can be abused. A company which has the resources to pay skilled lawyers to spend hours conducting such depositions is clearly at an advantage.
That advantage would not be so great if a policyholder could, in a bad faith claim, recover punitive damages in addition to unpaid bills. Insurance companies would have a greater incentive to pay claims promptly rather than deny them.
These injustices are not limited to insurance company denials of medical claims. And it is certainly true that most denials are legitimate. But when they are not, under current New Hampshire law, even a policyholder who sues and wins gets far from full justice. Our legislators and courts need to be made aware of these stories and persuaded to change our laws.
