DCBS Media Release
August 22, 1996
Health insurer fined $15,000 for improper claims denials
(Salem) The Oregon Department of Consumer &Business Services' Insurance Division has issued a $15,000 civil penalty against Qual-Med of Oregon because of improper claims denials. A routine market conduct examination and subsequent investigation by the Insurance Division uncovered a pattern of denying payment of emergency room claims without a full investigation into the validity of those claims. Qual-Med subsequently agreed to pay the penalty and to improve its claims handling process.
Oregon law requires insurance companies to conduct a reasonable investigation based on all available information before denying a claim. The Insurance Division's examination found that Qual-Med's investigations were routinely limited to emergency room records, which did not contain sufficient information on the relevant circumstances to assess the validity of claims.
"We found, for example, that the emergency room records failed to disclose whether the claimant had been referred to the emergency room by a doctor," Oregon Insurance Commissioner Kerry Barnett said. "In three cases cited in our order, Qual-Med denied emergency room claims only to find out later that the claimants had been referred to the emergency room by a doctor with responsibility for making such referrals under Qual-Med's health plan."
To avoid similar problems in the future, Qual-Med has agreed to revise its claims handling procedures to include contacting the claimant before an emergency room claim is denied. "The critical question with emergency room claims is whether claimants acted reasonably in treating their situations as emergencies," Barnett observed. "Medical records are important in providing after-the-fact diagnoses, but they aren't necessarily reliable when it comes to determining whether claimants acted reasonably based on what they knew at the time they went to the emergency room."
Qual-Med also was cited for deficiencies in its record-keeping practices that prevented investigators from determining, in some cases, whether policyholders were treated fairly under the state's insurance code.
The Insurance Division plans to re-examine the company in 1997 to ensure that the violations have been corrected.
Earlier this year, the division levied a $20,000 penalty against PacifiCare for improper emergency room claims denials and inadequate record-keeping. Both the Qual-Med penalty and the PacifiCare penalty reflect an Insurance Divison focus on closer scrutiny of health insurers' market practices.