Insurance Company filed Bankruptcy

[B.H. Taffer]

located in utah, two summers ago my wife had some surgery done. since that time the insurance company has went bankrupt, however my wife's health insurance has made two seperate settlements to the the doctor's office. now the doctor is insisting that we pay them the difference. during my wife's time of employement, she was paying her insurance provider, so they (the insurance company) were getting their money. how should my wife and I handle this.

 

[cbg]

Was the policy in force at the time of the surgery? Is this the difference between the amount of the bill and the amount the insurance paid, or is it a new bill for follow up work? If for followup, was the policy in force on those dates? Was this a managed care plan (HMO, PPO, POS)? If so, was the doctor in network? All of these questions need to be answered for me to give you an accurate answer.

 

[B.H. Taffer]

yes, the policy was in force. the difference is the amount between the settlement and the original bill amount for the surgery, there was no additional surgery done. As far as I know, it was managed care and the doctor was on the network.

The way my wife explained it was that there was a list of specific doctors on the list that she could choose from. This particular doctor wasn't my wife's first choice. However, he was the first surgeon that was both taking new patients and on the list my wife could select from. So, he became the preferred surgeon. Also she mentioned that there were two places in town where she could have gotten the surgery done (Intermountain Health Care & Western Orthopedic). When we got pre authorization from the insurance company, they said they would pay so long as my wife had her surgery done at Western Orthopedic, which was where her surgery was done.

 

[cbg]

Okay, that's the easy part. However, here is the hard part.

The likelihood is that you are not responsible for the majority of these balances. (You may be responsible for any items that were not covered at all under the plan.) In the large majority of managed care plans, the fees are negotiated between the doctor and the insurance carrier, and, except for any co-pays you pay up front, this negotiated rate becomes the entire fee. The doctor and/or hospital are not supposed to charge you for the balance, because their contract with the insurance carrier states that they must accept the negotiated fee as the entire charge.

However, generally the insurance carrier needs to be involved in sorting this out, since you are not a party to the contract. What is the status of the bankrupcy? Is the insurance company still in operation, or have they gone out of business completely? If they are still operating, call them and ask for someone in Provider Relations, or whatever department is responsible for provider balance billing. If the company has completely gone out of business, ask your state insurance commission for help.

 

[ALawyer]

You got an excellent answer, and all I want to do is sugest to you that you also contact the Life and Health Guarantee Association in your state, or the National Association of life and Health Guarantee Associations. EVERY state has one that provides some measure of protection to policyholders of an insolvent insurance company.

The critical issue may be was the policy issued by an insurance company authorized to do business in your state as only they are covered by the local state association. Otherwise youmay be stuck with dealing with the plan in the state of domicile (incorporation) of the insurer.

 

[B.H. Taffer]

Thank you both for your help. You have definately giving me something to work with, I'll do a little more research. Also, I found out that the university where my wife and I attend does have an attorney that will talk with students when legal situations arise. Perhaps it wouldn't hurt just to go in and talk with him.

One more thing I want to mention. On top of the outstanding medical bill, I know that this doctor's office is also trying to bill us for their legal fees in trying to collect this money. If we can show that we are not responsible for this doctor's bill, then will that help us to show also that we should not be responsible to for their legal fees? Likewise, if this does go to court, can my wife and I sue for our legal fees?

 

[cbg]

If you are not responsible for the medical bills, then they certainly can't charge you for the collection fees for the collection of monies they weren't owed to begin with. As to your ability to sue for your legal fees, I'll have to let ALawyer answer that one.

 

[B.H. Taffer]

that's fine cbg, you have already been a big help. it's all just so frustrating, i'm really hoping that we don't have to go to court. i would just like it to end. i just don't know why the doctor's office is being this way. the initial charge on the surgery was approximately 3,000. they settled with the insurance company's rep who was assisting in this whole bankruptcy by settling for .50 on the dollar. 1,500 left. we talked to the insurance rep after that (when we found out that the doctor was suing us for the remaining 1,500) and he consented to give the doctor an additional $500. that's not counting the $400 that we paid at the very beginning. so, in total the doctor's office has been paid $2400 on a $3000 bill. to me, collecting 80% from a bankruptcy seems pretty good. that leaves $600 + an additional $300 now for court costs. the whole thing just makes me want to scream.

oh, and i did find out that the insurance company did go completely bankrupt and that they only offered services within the sate of utah (so i guess that means that everything will be done in accordance with utah law).

 

[ALawyer]

MOST doctors agree with the insurance company to take a far reduced fee for services to patients it sends them

As most doctors get a reduced fee, from insurance companies and Medicare etc., you should argue that is their CUSTOMARY fee, and if not why would they take it. All a doctor is entitled to, unless a price was specifically agreed to, is a reasonable and customary fee.

Also, if he took ANY money from the insurance company I would argue that was a satisfaction, otherwise he should have billed you and you could have settled with the guarantee fund.
And, unfortunately, if you incur legal fees to defend, the other side does not reimburse you in most states unless the state has a law that says if there is a clause entitleing the claimant to attorney fees, then the victorous defendant is also entitled to fees.

 

[B.H. Taffer]

MOST doctors agree with the insurance company to take a far reduced fee for services to patients it sends them

As most doctors get a reduced fee, from insurance companies and Medicare etc., you should argue that is their CUSTOMARY fee, and if not why would they take it. All a doctor is entitled to, unless a price was specifically agreed to, is a reasonable and customary fee.

Also, if he took ANY money from the insurance company I would argue that was a satisfaction, otherwise he should have billed you and you could have settled with the guarantee fund.
And, unfortunately, if you incur legal fees to defend, the other side does not reimburse you in most states unless the state has a law that says if there is a clause entitleing the claimant to attorney fees, then the victorous defendant is also entitled to fees.

ALawyer,

first let me say thank you so much for your help.

next let me try and see if you and i are on the same page. all a doctor is entitled is his reasonable and customary fee. that is to say what he reasonably & customarily gets. in our case, the $2,000 dollars is customary. were the $2,000 less than what the doctor would reasonably and customarily get, then he could have just ignored the $2,000 because normally he gets a larger sum.

likewise, by accepting the $2000, the doctor's office showed that amount as satisfactory. were it not satisfactory, the doctor's office could have denied settlement with the insurance company and billed my wife and i the full $3,000. well was that close enough to what you were saying? yes or no, please let me know. thank you again.

 

[cbg]

I can't comment on ALawyer's answer specifically. However, based on having worked for five years for a national managed care insurance carrier, I can tell you that if this was an in-network doctor, he has signed a contract with the carrier to accept the negotiated rate as his entire fee. You become responsible only for any co-pays (generally somewhere between $5 and $25 - possibly higher for hospital, as opposed to physician or laboratory, bills) and for any items that were excluded by the carrier and thus not paid for at all. Balance billing is almost always specifically excluded as a permissible practice.

If he is a non-network doctor, then no contract exists with the insurance carrier he is entitled to collect the entire amount of his usual and customary fee, regardless of how much of it is paid by the insurance carrier. Balance billing is allowed, and you are responsible for any difference between what is charged and what the carrier pays.

It all hinges on whether or not the doctor was part of the network or not.

 

[B.H. Taffer]

so what you are telling me cgb that, if this was not managed health care, is that any agreements made between the doctor's office and the health insurance are irrealevant if it's not managed health care. likewise any "settlement" made by the insurance company with the doctor's office isn't really a settlement at all? that even if the insurance company was responsible for 99.99 of the bill and they go bankrupt they get off scott free. and my wife and i are just out of luck.

i'm still trying to verify as to whether or not this was managed health care, i think it is, but still not sure. but what your saying is if it's not my wife and i are stuck with the bills? thanks.

 

[cbg]

What I am saying is that if this is a managed care plan (and the very large majority of employer sponsored plans are managed care plans - indemnity plans are just too darned expensive) and you went to a network physician, then there is a contract between the doctor and the insurance carrier saying how much he will accept. The insurance carrier pays that amount, and with the exception of your copay and any non-covered benefits you are off the hook.

If it is not a managed care plan (VERY unlikely if it is employer sponsored) OR if it is a managed care plan but the doctor is not part of the network, then NO contract or agreement exists between the doctor and the insurance company as to the amount they will accept (If there were, then by definition they'd be a network provider!) and thus you become responsible for the balance.

From your description, I cannot imagine that this is not a managed care plan. Basically, if there's a network of doctors, it's managed care. It also sounds as if this doctor was part of the network (your mentioning that the doctor was on the list your wife could select from sounds pretty definite to me.) If this doctor was on the network, then he has a contractual obligation to accept the amount agreed on with the insurance carrier.

I'm only guessing here, but it may be that the doctor is taking the position that since the other party to the contract (the insurance carrier) is no longer viable, the contract is void and he is free to balance bill you. If that's the case, you may need legal assistance to make the point that since the contract was in effect at the time of the surgery, the terms of the contract still hold.

All of this assumes that before going bankrupt, the insurance carrier had already paid an amount equal to the negotiated rate. If that is NOT the case, then it MAY be, depending on how the bankrupcy ( a subject I am NOT qualified to discuss) was handled, that there is a balance owed by you.

 

[B.H. Taffer]

well, i found out exactly what's what with this account. i spoke w/ the insurance representative today and i think it is very near to resolution. part of the problem was that i was given misinformation or i misunderstood. but i asked him if the insurance company was a managed health care provider. he said no, they were a tpa. i asked him about the settlement. he said that the settlement that was reached with the doctor was only a settlement for what the insurance company owed as per the policy. it was not a settlement for those parts of the bill that were the responsiblity of the patient (the deductable, co-pay's, etc). all and all though it did work out to our advantage because of certain variables. i don't know what those variables were but, because of them, the insurance representative said that his company paid agressive. he then faxed a statement saying what we were responsible for then was $390.17. well, we have paid in access of $500.00. so, there is actually overpayment. so, just to be on the safe side, i have requested an itemized statement from the doctor from the time my wife first went in for a visit through today. when i get it, i'll compare it with our receipts. any left over, i think i'll just tell the office to apply those towards what they say we owe in legal fees.

thanks again, cbg & alawyer for your comments. they went along way in helping me know which questions to ask of the insurance company and the doctor's office. maybe now, some future person can benefit from my experiences.