When a victim suffers an injury in a car accident, his or her health and car insurance often provide overlapping coverage. Unfortunately, overlaps in coverage sometimes result in one or both insurers denying payment for medical costs. Insurance companies are driven by profit. If there is ever any ambiguity as to the extent of coverage, it is economically incentivized to deny, contest, or reduce payments for claims. In these situations, health insurers can and do deny coverage if a car insurer is already liable.
Health vs. Car Accident Insurance
Health and car insurance operate differently. While there are different types of car insurance, the most commonly used and understood is liability insurance. Liability car insurance is designed to protect other people, not the holder of the insurance. In standard practice when a collision occurs, the injured party files a claim with the responsible party’s insurer. The insurer assesses the accident and either pays the claim, contests it, or negotiates a settlement.
However, the exception is in states who provide no-fault insurance. No-fault insurance means that each respective driver files a claim with his or her own insurance company. The insurance companies pay out to the drivers, and the insurers then determine between them who is liable and remit payment accordingly. Illinois follows the “fault” model of insurance. Therefore, the injured party only files a claim with the insurer of the at-fault driver.
Conversely, health insurance primarily protects the policyholder. The policyholder’s policy will detail what procedures, examinations, tests, and medications are covered and to what extent. The policy also lists the hospitals and doctors who are in the “network” of covered health care providers. The policyholder then solicits services from the “in network” health care providers. The policyholder pays the upfront cost (i.e. the amounts not covered by insurance such as a co-pay for a doctor visit), and the healthcare provider files a claim with the insurer for the difference. Health insurance protects the policyholder and shields them from the majority of the process.
Car insurance companies carefully analyze each coverage event to determine if it falls within the limitations of the policy. Health insurance users typically already know if coverage is available for the services they need but in some cases, the policyholder is told by the healthcare provider. Health insurance policyholders should rarely be surprised by a coverage denial letter.
When Health Insurance Companies Deny Claims
Typically, health insurers are obligated to pay for the costs of healthcare related to an accident in Illinois – just as if it were any other normal insurance claim. People who seek medical care at a hospital or doctor’s office are not asked to provide the details of how they got sick or injured as part of the assessment if insurance covers the event. Healthcare providers simply need the policyholder insurance information to verify coverage. There is no “coverage event” assessment like in a car insurance claim. However, health insurers are entitled to reimbursement for the costs expended if the injured party receives a settlement or judgment from the at-fault insured’s insurance company.
When the car insurer decides to deny a claim or fails to investigate the extent of coverage, the health insurer may deny future coverage for related treatment or request reimbursement from the policyholder. This situation arises in the following fashion:
- A collision occurs;
- Claims are filed with the car insurer, and the injured party receives medical care that is covered by his or her health insurance company;
- The auto insurer investigates the accident and concludes either (a) injuries were not sustained in the accident or were due to a prior condition, or (b) contests fault;
- At which point the auto insurer may deny payment of medical claims;
- Now the health insurance company, who is rightfully entitled to reimbursement, may refuse to provide additional coverage because it is not receiving reimbursement.
This situation often results in a dispute between the car insurer, the health insurer, and the injured party. Ultimately, some victims are denied coverage by both insurers, and the at-fault party can be held liable for all medical expenses incurred.
Solutions and Contesting the Decision
The single greatest weapon a policyholder has to contest a denial of coverage is his or her insurance policy. This policy denotes the contours of coverage, including specific situations in which it can be denied. Many insurance companies rely on bullying and scare tactics to frighten their policyholders into accepting low-ball settlement offers that include releases of liability. However, there is usually room in the policy that allows policyholders to contest denials or reduction in benefits decisions by insurers. Moreover, if the denial of coverage is found to be wrongful, the victim may be entitled to additional compensation as a result of the bad faith insurance practices.