“Insurance is the business of collecting premiums.”

Jorge was explaining to me why he needed to file bankruptcy.  Lots of medical debts, about $50,000 in total.  Most of it came from a heart attack he suffered a year ago.  The odd thing was, he had health insurance through his employer but his claim was denied because he was treated at a Norfolk, Nebraska hospital that was out of his insurer network.  But how could an emergency visit for a heart attack not be covered?

The truth was, his policy did cover the emergency visit.  Under the Prudent Layperson Standard of the Affordable Care Act/ObamaCare, all health insurance policies must cover medical emergencies.  A “medical emergency” is defined as “a condition with acute symptoms of sufficient severity (including severe pain) that a person who possesses an average knowledge of health and medicine could reasonably expect the absence of immediate medical attention to result in—(i) placing the health of the individual (or an unborn child) in serious jeopardy, (ii) serious impairment of bodily functions, or (iii) serious dysfunction of any bodily organ or part.”  Jorge’s claim should have been paid.


  1. File a Written Response to the Lawsuit.  Over ninety percent of all collection lawsuits result in a Default Judgment because the debtor failed to file a response to the lawsuit.  The response must be in writing and must be filed with the Clerk of the Court within 30 days of receiving the court summons.  Read this article to learn how to file a response to a lawsuit.
  2. Contact your Health Insurance Company.  Did they receive an insurance claim from the hospital?  Was the claim denied?  Did they send you an Explanation of Benefits to state how much of the claim would be paid?  It’s time to get organized.  Pull out the three-ring binder and organize all medical bills and Explanations of Benefits.
  3. Contact your doctor.  Did your doctor file a claim?  Can they send you a copy of the claim they filed?  Was the claim properly coded to ensure payment?  Lots of medical claims are denied because the paperwork is completed incorrectly.  Your doctor wants to get paid and they can help determine why a claim was not paid.  Show them the denial of claim coverage and ask for help.
  4. Appeal the Claim Denial.  You have the right to appeal the denial of your medical claim, although few people take this sensible step. It costs nothing to appeal a claim denial.  Your health insurer has an appeal form that is generally available on their website to protest a claim wrongfully denied.  Your doctor’s office may be able to help with the appeal.
  5. Sue the Health Insurance Company.  If you were sued for a medical debt that your health insurance company  wrongly denied, consider suing your insurance company.  You may need to appeal the claim denial with the insurer first, but if that result is unsatisfactory you have to right to sue them for payment.
  6. Negotiate the Debt.  Contact the attorney suing for the debt and ask if they would reduce the debt in exchange for a quick lump-sum settlement.  Keep in mind that most collection attorneys are in court much of the week and you may need to speak through their paralegal about the settlement.  Also, remember that you should never send money to the collection company until you have a settlement letter in hand.
  7. File Bankruptcy.  According to a Harvard study, medical bills account for nearly 62% of all bankruptcies filed.

The insurance industry is experienced in denying claims.  Sometimes they only pay claims when they perceive that they will be sued if they don’t honer their contract.  Demand that they fully explain why your claim is being denied and if their answer seems like nonsense, it probably is. Fight back.  Get educated. Get help.

Image courtesy of Flickr and daleonsouth.