“We have the best system of justice that money can buy. How much justice can you afford?”
I was over at Ian Welsh’s blog reading Recissions and Denial of Care Under Obamacare when I saw this:
‘‘SEC. 2712. PROHIBITION ON RESCISSIONS.
‘‘A group health plan and a health insurance issuer offering group or individual health insurance coverage shall not rescind such plan or coverage with respect to an enrollee once the enrollee is covered under such plan or coverage involved, except that this section shall not apply to a covered individual who has performed an act or practice that constitutes fraud or makes an intentional misrepresentation of material fact as prohibited by the terms of the plan or coverage. Such plan or coverage may not be cancelled except with prior notice to the enrollee,
What’s the most important word in that long-ass sentence? I’ll give you a hint: It starts with an “e” and ends in a “t” with “xcep” in between. That’s what known in legal terminology as a “big fucking loophole” and it’s one of the reasons people despise lawyers.
Now before I go any farther I want to correct a mistake many people (including Ian) make. Rescission is not the canceling of a contract, it is the legal term for the unmaking of a contract. When a contract is rescinded the parties are supposed to be returned to the positions they were in as if the contract was never made. In the case of an medical insurance contract that means the insured is entitled to a refund of all premiums paid and the insurance company gets back whatever benefits it paid out.
So now let me drop a hypothetical on you:
So let’s say your employer provides you with medical insurance through Heartless Bastards of California. You have had your share of the premiums deducted from your weakly paycheck for the past five years but other than a few routine check-ups you didn’t see your doctor.
You hadn’t been feeling well so you went to the doctor and he/she ordered tests which confirmed that you have cancer. The good news is that it’s treatable, but you will need surgery and a year of chemotherapy and you will be unable to work until the treatment is completed.
Left untreated the prognosis is bleak and time is of the essence so the doctor recommends the surgery take place as soon as he obtains pre-approval from Heartless Bastards.
Your doctor promptly sends the bean counters at Heartless Bastards the two reams of paperwork they require for pre-approval and the estimated cost of your treatment is over $100,000 even if everything goes right. This causes an immediate review of your account by the legal department at Heartless Bastards. The review includes comparing the answers on your original application to the ones you gave your doctor (he sent them a copy of your entire medical file) and there are some discrepancies between the two sets of answers.
Two days later you get a certified letter from Heartless Bastards stating that they have reviewed your account and are rescinding your coverage based on fraud and/or material misrepresentation. They have enclosed a $10,000 check for the refund of your premiums, and the small print on the back just above the place for your endorsement states that signing and cashing the check constitutes a waiver of all claims against them.
What would you do?
Depending on the discrepancies in your answers Heartless Bastards may or may not be able to justify rescission and they gave you prior notice as section 2712 requires. But what if they just ignored the law?
Let’s say you had a stroke that put you in the hospital for over a month and left you permanently disabled.
Your medical bills for just the first month after the stroke total over $100,000 and the meter is still running. You didn’t have the foresight to purchase a private disability policy and you only have modest savings so you have to rely on Social Security Disability. This means you will suffer a big drop in income even though your rent/mortgage won’t change and your creditors will still expect payment each month.
Then you get that certified letter from Heartless Bastards saying that they are rescinding your policy based on fraud because you got the dates slightly wrong about some minor illness you had two decades ago. You didn’t get prior notice and their reasons for rescission are specious, but they do it anyway.
Then you begin receiving bills from every doctor, hospital, lab, ambulance company, pharmacy and/or other medical service provider that participated in your care and treatment. Each of those bills states that your insurance company has rejected the provider’s claim for services rendered and refused payment and therefore you are liable and they want their money right fucking now.
You’re broke and disabled. Any attorney willing to represent you will want a hefty retainer up front – they don’t take contingency fees on cases like this.
What are you gonna do about it?
Many people will give up, which is what those Heartless Bastards are counting on. Oh, they don’t really want to see you die, they just don’t want to pay your medical bills. It’s nothing personal, they are only fucking you over because their incomes go up if they do.
The bean counters and shysters receive raises and bonuses based on how many claims they successfully avoid paying. There is no incentive for them to do what is just and moral. They tell their feeble consciences that you will qualify for Medicaid or that you can file bankruptcy or something.
If your bills do get picked up by Medicaid then the taxpayers will pay for your treatment. This is commonly called “socialized medicine” everywhere except for all the rest of the countries in the world.
If you successfully discharge your medical bills through bankruptcy or by dying then the cost of your treatment gets passed on to the patients who have money in the form of increased fees.
Until we are willing to treat health care as a privilege for those who can afford it the poor will keep incurring costs that they cannot afford to pay. Whether we pay via taxes or by increased fees, one way or the other society foots the bill.
Obamacare forces people to purchase medical insurance through private insurance companies. It doesn’t provide them with any assistance if they need to fight those companies in court. Most people don’t have a lawyer on retainer but every insurance companies has a whole bunch of them sleazebags on their payroll.
They know most people won’t hire an attorney and file suit. They use legal terminology in their paperwork that is intended to intimidate people and convince them they can’t win. It’s often a bluff – in many cases just a letter from an attorney can get them to reverse course and pay the claims. But how many people have an attorney to write that letter for them? How many will simply give up without a fight?
The insurance companies are gaming the system in order to maximize their profits. Bad faith rescission and denial of claims are two of the tactics that they use. They will keep using those tactics as long as they are effective, and they will only act morally if is more profitable than acting immorally.
We cannot rely on regulatory agencies because that merely encourages regulatory capture and/or bribery. As we already see with numerous government agencies the enforcement departments are underfunded and they are managed by former employees/agents of the companies being regulated. It doesn’t matter what laws and regulations are on the books if they are not enforced.
The best way to disincentivize bad-faith rescission and denial of claims is to fight fire with fire. Since we privatized the payment of health care we should privatize the enforcement of the laws and regulations governing health care insurance. What do health insurance company bean counters fear most?
Lawyers (aka “ambulance chasers”)
More specifically, lawyers who will collect their fees and/or exemplary (punitive) damages directly from the insurance companies if they win their cases.
Right now there is every incentive for the insurance companies to cheat and few negative consequences if they get caught.
In my original hypothetical the insurance company wanted to avoid paying $100,000 in claims so they returned $10,000 in premiums and rescinded the contract. Technically you could say the net to them is zero – they got nothing and paid nothing.
But they avoided losing $90,000 which is a lot more than zero. If they are unsuccessful in their attempt at rescission they are still no worse off than they were originally. IOW – they have nothing to lose and something to gain by cheating.
What if the insurance company was subject to punitive damages and would have to pay the attorney’s fees of the people unsuccessfully tried to fuck over? In that scenario if the insurance company acted in bad faith and was unsuccessful they would not only have to pay the $100,000 in medical claims but also as much or more again in attorney fees and possibly several times that amount as exemplary damages.
IOW – they have a little to gain but a lot to lose by cheating.
Attorney fee awards are a way to finance legal representation for those people whose cause is just but whose wallet is empty. They also force the bean counters to increase the weight of the “risk” portion of their “risk/benefit analysis.”
Exemplary damages are intended to punish civil wrongs, such as where an auto manufacturer discovers a dangerous defect in one of their cars but does not issue a recall notice because they calculated it would be cheaper to pay off the dead and injured victims than it would be to fix the defect.
I realize that this is all pie-in-the-sky dreaming on my part and it will never happen. We all know there is no way that Obama and the Democratic Congress are gonna bite the hands that feed them. The health insurance companies bought them fair and square and like all honest politicians they will stay bought.
Besides, nobody likes lawyers anyway.
But since I’m day-dreaming about wild and crazy ideas to solve our health care problems, let me tell you of one idea that’s even wilder and crazier.
It’s “single-payer,” or as some people call it “Medicare for all.”
Single-payer is health insurance for everyone through a single government run insurance pool out of which the fees for medical services and cost of drugs are paid.
Single-payer health insurance collects all medical premiums/taxes and then pays for all services through a single government agency. It IS NOT socialized medicine – health care providers and pharmaceutical companies remain private rather than public.
Crazy stuff, huh? That’s the kind of bizarre and twisted ideas you come up with when you have a cannabis card and use it regularly.
Unfortunately, single payer was taken off the table by the Democrats at the beginning of the health care reform process and the A-list bloggers sat silently when it happened.
The Democrats and their A-list shills decided to use the “public option” as a negotiating ploy and by doing so they were successful in passing an old Republican plan with zero Republican votes.
But old things are historic, right?