The Problem is ERISA

The Problem is ERISA

I have clients cheated by their insurers. "It's fraud!" they say. "It sure is," I tell them. "What can we do about it?" they ask. "Not much," I say, "the problem is ERISA."

ERISA is the federal law governing employee benefits, like your health insurance. If you get your insurance through your employment, and if you think "insurance" is an enforceable contract that the insurer will cover what it says it will, then you don't have insurance at all -- you only think you do.

Wednesday, November 18, 2009

“Independent” medical exams and “reasonable” grounds for denying your claim

As we’ve seen when an insurance company has managed to grant itself “discretion” it gets the benefit of the most absurd judicial deference known to the law. The courts make no bones about it: a decision to deny benefits, even if the court agrees it is wrong, will nonetheless be upheld so long as the court concludes it was “reasonable” (not reasonable, “reasonable”).

So what does it take for a wrong decision to be “reasonable”? One way is for the insurance company to say hey, it wasn’t our decision, we hired an independent doctor to review all the files and we just abided by this fine fellow’s impartial and fair opinion. And the judge says, well, they did have someone with “M.D.” after his name say the claim was bogus, and who am I, a mere federal district court judge, to disagree with such a learned and considered opinion? (and the champagne and caviar doesn't affect my decision at all!).

Of course, as in all things ERISA, the books are cooked here. These so-called “independent” medical examiners are very, very frequently beholden to the insurance companies who hire them and pay the freight. These doctors are very handsomely contemplated for their time, and that gravy train stops abruptly if the insurance company sees they are issuing too many opinions which don't allow the insurer to deny a claim. So to all too many of these “independent” doctors, no one is ever disabled, and no medical treatment ever qualifies as “medically necessary.”

My colleague Michael Quiat, on his excellent disability law blawg, addressed this issue recently. You should read the whole thing, but here’s a taste:

To construct the façade of “impartiality”, insurance companies hire doctor “agencies” which hire physicians to do what are facetiously called Independent Medical Examinations, purportedly because the insurance company wants to catch malingerers. These doctor agencies scout out MDs, many of whom do not practice medicine as a vocation, but stick strictly to IME exams. These exams provide most, if not all of their income.

These physicians are paid to be highly skeptical of disability claim and claimants. Most of their exams are based on the written reports of claimants’ doctors, but yet they are supposedly able to determine that a claimant is not in pain or restricted in movement or otherwise afflicted, even though they never see the claimant! ...