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Getting it in writing avoids insurance disputes

Published Oct. 13, 2005

Numerous articles bemoan employers' high health insurance costs. And there is good reason to do so. But an important part of the equation has been overlooked. Attempts to control insurance costs affect the individual group member or employee. Health insurance provides the average person's single most important work benefit. Whether a particular condition or procedure is covered can literally mean tens of thousands of dollars.

In a recent Florida case, a female state employee was expecting a child. She did not have a copy of her health insurance policy because her employer distributed only a summary of the benefits. The summary instructed employees to ask a designated representative any questions about coverage.

The employee wanted to know what she had to do to insure her unborn child. The representative told her she could apply and convert her individual coverage to family coverage any time within 30 days after the birth.

The insurance policy actually required that family coverage had to begin before acquiring any dependents. And it had two other requirements: The request for such coverage had to be made prior to the month in which the dependent was born, and the first premium had to be paid the prior month.

The employee waited to apply until after the birth. The insurer told her she could not then cover her child under the terms of the policy. She sued and lost. She then appealed.

The appellate court said she might be able to recover insurance. Normally, the court said, a person is bound by the language of the policy. But here the employee did not have the policy. And the court noted she relied on the advice of the employer's representative.

But the appellate court said it could not tell whether she was entitled to recover insurance. That would depend on exactly when she got the incorrect advice form the representative. If she still would have been able to buy the insurance for her unborn child the month before birth, then she was harmed by the advice and should be covered. If it was already too late to buy the insurance, then the bad advice didn't make any difference.

This may seem complicated, but it is actually a fairly straight-forward coverage dispute. Pre-existing conditions, exclusions and other limitations present numerous potential issues for coverage disputes.

One more interesting fact about the recent case is that both the employee and her husband were lawyers, yet they were entitled to rely on what the representative told the employee.

The case emphasizes the importance of making an early evaluation of one's insurance coverage. It also highlights the need for a review of the policy by a knowledgeable person to determine rights before incurring medical expenses. If the insurance company representative tells you what your coverage is for a particular procedure, have him confirm it in writing. That will avoid disputes later about what was actually said.

In another recent situation, an employee's group health insurer was questioning whether it would pay for more than $10,000 in medical expenses. The insurer said the condition might have been pre-existing and therefore excluded under the policy.

The employee had been "pre-approved" for the surgery, but the insurer initially took the position that this was simply a cost-containment requirement and did not mean the operation was covered. To the insurer's credit, it ultimately determined it would pay the claims in full.

This potential dispute could have been avoided altogether if there had been written confirmation by the insurer that the operation was covered. Otherwise the employee could have waited until the time period on "pre-existing conditions" under the policy before having the elective surgery.

Health insurers that do not already have a pre-approval procedure that specifically informs employees whether and how much of a major medical expense will be covered should institute one. Employees who are not required to obtain "true" written pre-approval still should make the effort to "get it in writing."

Raymond T. Elligett Jr. is a lawyer working in Tampa.