October 22, 2017

Expert Witness Report 

 

This is an actual bad faith claims handling report that was put together as part of a litigation consultation that we performed (redacted for HIPAA). The case was settled very favorably for the plaintiff. If you're an attorney or insured person with a similar grievance - or an insurer being sued - and you need an impartial thorough evaluation such as the one below, please contact us. 

 
 
 
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Expert Witness Report of Patrick Shea

_______________

Vs.

______________, Inc., D/B/A __________ Blue Shield

I. Qualifications

My name is Patrick Shea. For the past 20 years, I have performed a wide range of tasks directly related to medical claims processing. From 1994 through 2006, I worked for American Medical Security (AMS) of Green Bay, WI, as a customer service specialist, claims analyst and regulatory compliance specialist. In 2007, United Healthcare (UHC) of Minnetonka, MN, purchased AMS, and I was assigned the job of claims adjuster followed by the job of transaction analyst before retiring in 2009. I then founded MedicalClaimsHelp (MedicalClaimsHelp.org), a non-profit claims advocacy organization for which I presently serve as director. The purpose of MedicalClaimsHelp is to assist people with claims denial issues. We attempt to get them resolved fairly either by giving clients a direction or advocating for them with insurance providers to achieve that result.

II. Claims Practices

I have been asked by Mr. _____________ one of the attorneys for _______________, to review Highmark’s handling of _______________’s claims and the level to which they conform to acceptable medical claims processing practices and whether the insurer breached its duty of good faith and fair dealing through some motive of self-interest or ill will.

The relationship between an insurance company and its policy holder is unique unlike the relationship between parties to other types of contracts. Policy holders purchase a company’s promise to pay in the event of a covered loss and that this promise to pay will be honored in good faith since the policyholder cannot replace the company’s duty to pay on the open market if the company breaches the agreement. In this way, a fiduciary relationship is created between the company and the policy holder.

Every insurance company has its own written and unwritten practices and guidelines because they all have differently structured coverage schemes. However, all companies must follow what are minimal and basic claims procedures that allow payment of claims covered by a policy which is the result of a fair and honest assessment of any coverage questions in light of policy language. All insurance contracts contain a covenant of good faith and fair dealing. The claims department must honor the company’s obligations under this implied covenant. The insurance company may not place its interest above that of the insured. The task of the insurance coverage is to seek coverage for its insured under the terms of the policy and not to seek coverage controversies or ambiguities to deny or dispute coverage. This is not an adversarial process. The company should assist the policy holder with the claim and must disclose to its insured all benefits and coverage under the policy. A company may not deny a claim based upon insufficient information, speculation or biased information. Insurance companies should pay claims unless there is a good reason not to pay the claim.

Certain practices are considered to be fair and accurate claims processing and customer service procedures, and denials of claims must be supported by evidence after an adequate attempt to gain the information needed to issue a medical claim denial. My evaluation is based on my knowledge, experience, and expertise in matters related to health insurance claims processing.

Further, when a policy holder submits a claim for payment of a medical expense either by himself or through the medical provider, the insurance company is duty bound to use all available information that becomes known to it in processing the claim and approach the claim presuming that it is covered but reviews all information available that may indicate it is not covered. The insurance company should have a system and protocol by which all the correct information can be obtained. 

 
  
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The above representation is the simplest model of claims processing. It’s a closed system designed to ensure the greatest probability of timely and accurate claims payment. Claims are not supposed to “slip through the cracks” under this arrangement; after the Healthcare Encounter, the claim is sent electronically to the insurance company (or a clearing house) that scans it for complete and accurate information on the insured individual (middle column). If any information is missing, the claim is rejected and sent back to the provider with a reason code in order to Capture (missing) Data. When everything seems to be in order, it is resubmitted to the insurer for payment (or denial). Customer Service follow-up may be needed if the provider or member feels that it was mispaid (right column). For the system to work, each piece has to be effectively implemented and administered by the insurer. If this is not done, then claims processing and customer service suffer and the member receives poor service from the health insurance company such as delayed and wrongly denied claims as well as false customer service advice. 

III. Summary and Overview

After reviewing the documents supplied to me which include the complaint, depositions of ______________ and Lou Ann DelVecchio, and the exhibits, I have concluded that, following his 2007 automobile accident, the timely and accurate payment of _______________’s claims by Highmark was impeded by and then eventually denied as a result of both technological and human deficiencies. Then, even as the deficiencies in the system became apparent, the customer service personnel used information that supported denial that it knew to be incorrect due to the company system. There were alternative and accurate outcomes available for these claims which I will illustrate with first hand examples of similar claims handling done during my tenure with American Medical Security and United Healthcare.

 
 
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A. Computer System Weaknesses - _______________ had coverage under two separate policies, but they were through the same company, Highmark. In 1990, he chose coverage, which consisted of a Traditional Blue Shield plan that covered certain benefits as well as a Major Medical policy that covered the other areas. This bifurcated arrangement assessed claims using a remark code that was so ambiguous that a processor could conclude that it should not be paid. Had the system been set up in a simpler, clearer and more efficient fashion, these claims would have been allowed the first time that they were submitted.

B. Claimant Education Deficiencies - Company-provided literature and instructions such as booklets and EOB remark codes lacked clarity. When a claim denial or rejection took place, _______________ was provided no way for his eligible claims to be paid. Neither his insurance booklet or EOB or any other piece of literature made available would enable the average person to know how to have his claims submitted correctly so they would be paid.

C. Customer Service Lack of Help – When _______________ took steps by contacting a service representative, the service rep not only did not investigate or attempt to correct coding information that was known to be incorrect when provided by the medical provider, but relied upon incorrect information to deny the claims.

IV. Deposition of Lou Ann Delvecchio

Ms. Lou Ann Delvecchio’s deposition provides an illuminating view into what took place inside her company vis-à-vis his claims.

The complaint cites the claims of ten providers, facilities or groups. Ms. Delvecchio met with _______________ on two occasions in a walk-in center where he came with a number of outstanding bills and explanations of benefits (EOB) in order to get guidance in what to do to get his claims paid correctly. She had access to his claims history on her computer and attempted to go through each item, determine its status or what may have happened to cause a denial and consider a plan of what to do next, if anything.

This process is repeated countless times every day in insurance call centers across the globe. Based on my knowledge and experience, its success is determined in part by the “user friendliness” of the computer platform on which the representative relies to get clear answers to the member’s questions and also upon the skill, knowledge and ability or willingness to be helpful of the representative. Below are examples of claim handling of each provider listed in the complaint. It is not all inclusive, but provides a look into the sheer volume and variety of ways that _______________ was systematically ill-served by his policy and systematically denied coverage by the company that administers it.

 
 
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1. Hopkin’s Chiropractic – Ms. Delvecchio reviews claims from Hodkins Chiropractic. They were originally filed timely but were missing his date of birth and rejected for that reason. By the time Hopkins gets around to refilling with correct information, the “timely filing clock” has been ticking from the date of service and has now expired. The claims are denied for that reason. She states that he “may or may not have gotten an EOB.” This is plausible since rejections do not generate them normally. However, _______________ should not be billed for a rejection that is the provider’s fault (Sou Chon Young, “Rejection or Denial? Term Confusion in the Revenue Cycle”, HayesManagement.com, Jan 31, 2012), and Ms. Delvecchio neglected to inform him of this. Had she done so, armed with this information, he could have called the provider and had the billing stopped. (Delvecchio dep., pp 92 – 110)

2. University Surgical – This varicose vein office visit claim was filed incorrectly under Blue Shield instead of Major Medical and denied with remark code B500A that reads, “The patient’s coverage does not provide for home, office or outpatient visit service. Therefore, no payments can be made.” Highmark’s claims processing system should be programmed in a fashion that automatically routes the claims of members that have both Traditional Blue Shield and Major Medical to the correct coverage and not simply deny it as not covered and make no payment. In my experience, this system glitch is handled in a large company like UHC by filling out a “heat ticket” and routing it to Information Technology (I.T.) to consider implementing the change. In a small company like AMS, we could call I.T. and tell them about the glitch.

Even if the claims routing was not adjusted, the remark code should have been changed because it is misleading, vague and, frankly, incorrect. A second line that provides clear instructions to the member that the claim needs to be submitted to the Major Medical coverage should have been added. Otherwise, the member would reasonably conclude that it is simply not covered.

Large companies have a whole department whose sole purpose is to tweak or make up new remark codes and “sunset” the obsolete ones once they are alerted by a heat ticket. In small companies like AMS two people could handle this task. This should have been the case with Highmark and B500A as it applied to Mr. _________     s coverage. The company is duty bound to eliminate those remark code problems.

One other issue of note is that the responsibility for refiling a form to get a denied claim reconsidered should not fall to the member as it did with Highmark’s arrangement with _______________. It conflicts with the “closed” nature of the above diagram because it introduces another variable into the system and another opportunity to make an error on the claim (Exhibit 6)

 
 
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3. Allegheny General Hospital_______________ visited the emergency room with chest pains, and Highmark’s computer denied the claim because the cpt code 99291-“Critical care, evaluation and management of the critically ill or critically injured patient, first 30-74 minutes- did not match the place of service. In other words, it is asserting that 99291 is not a correct procedure code for an emergency room visit. In fact, 99291 is one of the most commonly billed – and paid on - codes for the treatment that Mr. -___________   received (“Principles for Emergency Department Coding Guidelines”, Lojewski, Tedi , http://library.ahima.org/). Ms. Delvecchio attempted to have the hospital change 99291 to another code which the computer would recognize and pay on. However, the hospital representative, Mindy, refused to do so because she knew that 99291 was the correct code. Though it was the right code and Ms. Delvecchio should have known so, the claim remained denied. (Delvecchio dep., pp 92 – 110). This is clearly not a reasonable basis for denying coverage and Highmark knew or, at the very least, recklessly disregarded its lack of a reasonable basis to any payment.

4. Urology Institute of Pittsburgh – These office visit charges for $390.00 were filed incorrectly under Blue Shield instead of Major Medical and denied with remark code B500A similarly to example 2. Mr. Fabiano questioned where in the insurance company provided literature would _______________ be able to find out what to do with a B500A denial and Ms. Delvecchio was unable to find it. The solutions are also those of example 2 (system programming changes, remark code updates along with clearer instructions in the insurance company provided literature for handling denials). Meanwhile, _______________ was forced to pay the outstanding charges himself before he could continue to be treated by Dr. Costa. He was reimbursed over a year later when the provider was paid by Highmark (Delvecchio dep., pp 145 - 163)

5. UPMC-Shadyside – Ms. Delvecchio is asked to look in claims history to find out why a February 5, 2010 date of service with this provider for $210.00 remains unpaid. She is unable to locate any documentation regarding the services and doesn’t “know if it was paid.” (Delvecchio dep., pp 180 - 183)

6. Van Edward Scott, MD – Bills in the amount of $2000.00 for foot care by this provider were submitted to Highmark. Ms. Delvecchio observed that the charges were not able to be processed because they were not itemized (”lumped together”). She looked in claims history for any references to the charges and was unable to find anything. Asked if they were denied by Highmark, she stated that she did not know. Later, an EOB from Blue Shield was found denying the charges with remark code U5004A that states: “The patient’s coverage does not provide for this coverage in the place of service reported. Therefore, no payment can be made.” This indicates that, as with a number of the other examples, this should have been submitted (or routed by the computer system, if that were possible which it was not) to Major Medical. Therefore, it has the same deficiencies (and solutions) as those other examples – computer system routing errors along with an ambiguous remark code. (Delvecchio dep., pp 183 - 188)

7. General Vascular Surgery Associates – A $140.00 charge is denied with remark code U5004A that states: “The patient’s coverage does not provide for this coverage in the place of service reported. Therefore, no payment can be made,” which is the same type of denial as the previous one. It belonged under Major Medical. (Delvecchio dep., p 189)

8. Quest Diagnostics – Charges of $60.40 and 256.30 should have been submitted to Medicare for which the plaintiff was newly eligible. (Delvecchio dep., p 189)

9. Vujevich Dermatology – Once again, the claim was filed incorrectly under Blue Shield instead of Major Medical and denied with remark code B500A: “The patient’s coverage does not provide for home, office or outpatient visit service. Therefore, no payments can be made.” With this claim, documentation in the system shows that a claims service person considered it as “misdirected” and attempted to have it routed directly to the correct claims processor, only to be informed that the claim will have to be resubmitted by the member on the Major Medical form. (Delvecchio dep., p 195). Yet, how would or should the member know.

10. Allegheny Orthopedics - Dr. Schmidt provided services that were once again filed with and submitted to Blue Shield instead of major medical with the same type of denial. (Delvecchio dep., p 203)

 
 
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V. Conclusion

_______________ purchased his health insurance in 1990, choosing a mix of coverage with Tradition Blue Shield and Major Medical pieces. When he was involved in an auto accident in 2007 and started to incur more claims, the system of Highmark failed to provide reasonable evaluation of the claims and used known incorrect information resulting in wrongly denied claims. The denials and failure to pay the claims were unreasonable under the circumstances and the conduct embodied a reckless disregard for its insured. When _______________ attempted to have his denied claims paid correctly by calling customer service, sending certified letters and visiting a walk-in center, the system again was unable to rectify the situation to any significant degree because it did not have steps and procedures that discovered the nature of the errors or any way for the “system” to pay a known covered claim. In his deposition, _______________ indicates that as a self-pay member with a premium of over $700.00 - $800.00 per month (                             dep., p. 19), he reasonably wanted and expected the policy to perform seamlessly. When it did not – and began to deny many payable claims as not covered - he described the process as “torture.” He took many steps and measures such as telephone calls to customer service, visiting the walk-in center, resubmitting claims by certified mail, to no avail. Claims remained denied or were delayed resulting in collections actions by his creditors.

Highmark had a larger responsibility to ______________ other than to say, “This service isn’t covered” when it actually was covered under another part of the plan. When a covered loss occurred, it was Highmark’s obligation to pay the loss. Good faith claims handling required Highmark to give a prompt and forthright explanation as to the company’s position with respect to the claim. Highmark’s obligation through its claim department was to seek and find coverage and not misrepresent the coverage available to _______________. Informing Mr.                         that the service was not covered was a purposeful or, at least, reckless misrepresentation since it is the company’s obligation to point out policy benefits to policy holders if the insured does not recognize they are entitled to a benefit. Conveying this idea to a member is not hard. It is my opinion and experience that if an insurance provider such as Highmark sells this confusing hybrid policy and collects his premium every month, Highmark was required, by known acceptable practices, to maintain a system by coding, computers and human representatives that, barring the rare occasion of an aberrant processing, valid claims would be paid. Further, when claims were submitted with reasonably accurate description of the service provided, Highmark should have had a system that did not reject claims based on an ambiguous remark code, or because the provider submits a claim under one part of a policy coverage rather than another, and to clearly inform him of his options regarding a denied claim, meaning more than the appeal option on the back of the EOB and code B500A. Failing those, a customer service experience that could provide him with enough information to make an informed decision on what steps to take in order to get his claims paid correctly was a minimum level of duty. In his case, Highmark was unable to do this due to very avoidable and correctable system and protocol deficiencies.

Highmark’s system was not only woefully inadequate, but egregiously designed to avoid consideration of paying a claim when technical coding information was not 100% accurate, and further knew or should have known that its system allowed claims to “fall through the cracks”.

The actions and systematic deficiencies of Highmark import a dishonest purpose and demonstrate a motive of self-interest and ill will. The process/procedures set up by Highmark was calculated to frustrate a policy holder like _______________ in accepting the denials of coverage and simply paying the medical bills himself which it appears _______________ actually did pay. In this case, none of the medical billing was particularly large and, again, policyholders such as _______________might very well believe the explanation of Highmark that the service simply was not covered under the policy or determine that pursuit of the coverage and payment by Highmark was not worth the time or effort.

The opinions expressed are within a reasonable degree of professional certainty with respect to medical claims processing and generally insurance practice.

Sincerely,

Patrick C. Shea