Insurance Lawyer Blog

Among the new laws passed in 2011 is a new California insurance law, SB 946, which aims to complement existing law that requires equal coverage of mental health conditions and medical conditions. The Mental Health Parity Law and a settlement agreement reached by insurance companies and the California Department of Managed Health Care provide for insurance coverage of mental health conditions, including the full spectrum of autism. Insurance companies must provide equal mental health coverage and maximum lifetime benefits at the same rates as medical coverage.

Existing regulations required that all treatment be provided by licensed professionals, such as psychologists, registered nurses, and social workers. However, this language excluded certified providers of “applied behavior analysis” (ABA,) a prevalent strategy meant to improve behavior and quality of life for families with autistic children. The distinction between a licensed profession and a certified one is made by how the profession is regulated. Licensed professions are regulated by the state while certified professions are regulated by non-governmental entities.

The new law has a great impact on families with autistic children attempting to obtain health insurance and make claims to pay for behavioral treatments. It requires insurance companies to cover mental health treatment such as applied behavior analysis as long as it is prescribed by a licensed professional. The mental health treatment itself may be carried out by professionals who are not regulated specifically by the State of California.

The California Association of Health Plans opposed the bill, stating an industry study that the bill would effectively raise insurance costs by $850 million. A similar study carried out by the California Health Review found that it would raise insurance costs by about $93 million and lower the costs of special education and social services, paid for by the taxpayer, by about $140 million.

Families affected by the bill should take some exceptions to coverage into consideration. Insurance plans provided by federal and state governments, such as ERISA, CalPERS, Medicare, and Medi-Cal, are excluded from the law’s requirements. Those plans have their own requirements regarding mental healthcare. Also, plans that are considered “self-funded” or paid for by an employer who did not purchase a fully funded plan from a third party are excepted from the bill’s regulations. It is difficult for insured employees to tell the difference and should call their employer’s human resources department to inquire.

Moreover, the bill is effective July 1, 2012, but it sunsets on July 1, 2014 only two years later. The federal healthcare plan is set to take effect at that time and SB 946 will have to be re-evaluated to comply with federal law. Therefore, families should look closely for deadlines and news updates to determine future pay outs for mental healthcare. In the meantime, Autism Speaks, a prominent autism advocacy organization, recommends that persons harmed by insurance companies violating this or other insurance laws contact an attorney to see if legal action is appropriate.

Besides the laws already mentioned, insurance companies doing business in California must adhere to the California Insurance Code. Insurance companies may not engage in tactics meant to delay payment or offer to pay out low amounts on claims in bad faith. Additionally, they must communicate promptly with the insured regarding their claims. The insurance company must tell you why they denied your claim.

Continue reading "New California Insurance Law Seeks to Broaden Parameters of Insurance Coverage for Autism" »

Our San Francisco insurance attorneys know how to deal with insurance companies who are wrongfully trying to deny consumer’s the benefits they paid for. We know how frightening it is to hear that an insurance claim is denied when you were counting on that money for critical expenses. But 2012 holds promise for a more fair insurance litigation environment when a company improperly denies a life insurance or disability claim thanks to a new law- California Insurance Code Section 10110.6. It is important to note this new law relates only to life insurance and disability insurance, and not other types of insurance. It was sponsored by Senator Ron Calderon with the support of California Insurance Commissioner Dave Jones, unanimously passed the Legislature and was signed by Governor Jerry Brown in October. A similar bill was vetoed by Governor Schwarzenegger in 2010.

As of January 1, insurance companies in California will no longer be able to reserve discretionary authority to the themselves to determine or interpret a policy and decide if a policyholder is entitled to benefits. It applies to all life and disability insurance policies that are issued, delivered, or renewed to a California resident starting in January. This gives discretion in these matters to judges, which is as it should be. Judges know the law and are impartial observers. It is common sense that it is unfair to have a party to the dispute- one who stands to earn money depending on the outcome- be the final arbitrator of that dispute. Insurance Commissioner Jones likened it to a “fox guarding a henhouse.” But that is exactly how these scenarios worked until the passing of this new law. Insurance companies used these discretionary clauses as a shield from liability for valid claims and therefore nullified bargained for benefits. Suing the insurance companies over inappropriately denied benefits was often useless. If the policy included a discretionary clause, the judge’s hands were tied and he or she had to assume the insurance companies acted correctly unless the policyholder could prove that the company’s denial of benefits was arbitrary or capricious. Even if a judge believed the policyholder should have received the denied benefits, unless the company was arbitrary or capricious the judge could offer no remedy to the policyholder, who was left disabled or grieving for a loved one often in dire financial straits.

As San Francisco insurance denial attorneys, we are thankful the new law addresses this obvious inequity and helps level the playing field for consumers. It stops the practice of biased insurance companies ignoring or overriding a doctor’s opinion about whether a policyholder qualifies for disability benefits based on their own greedy concerns for their profit margins.

Even with this new legal advancement, if you believe you were unfairly denied benefits by your insurance company you should contact an experienced San Francisco insurance lawyer in your area to discuss your case. These new laws and protections will not be useful to your situation if you do not have a legal representative in your corner to help you navigate the law and with the experience to see through insurance companies’ endless bag of tricks.

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California Insurance Law Fraud Basics

Helping Residents with California Insurance Law Issues