Claim review procedures vary depending on the type of insurance policy or plan, and the interaction of contract law with state and federal statutes.  Most people with health, life or disability coverage have either purchased it on their own through an agent or broker (an “individual” policy), or have received it as a fringe benefit through their place of employment (an employer-sponsored “group” plan).  The claim review procedures applicable to these types of coverage are discussed more extensively below.  Other sources of coverage, such as that offered by unions, professional societies, and multiple-employer welfare associations (“MEWA’s”), may raise a variety of additional issues which cannot be adequately addressed within the scope of this website.   

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ERISA and Employer-Sponsored Group Plans:  Many individuals are covered under group insurance or welfare benefit plans provided through their own or a family member's employment.  Such coverage is governed by a federal law known as “ERISA” (the Employee Retirement Income Security Act).  Under ERISA, coverage is generally described as being provided through a "plan," and enrollees (whether the employee or a spouse or dependent family member) are generally referred to as "plan participants," or just simply "participants."  ERISA mandates certain minimum requirements with regard to disclosure of plan information and review procedures for denied claims.  Here are some do's and don'ts for taking full advantage of your ERISA rights: 

• Get All Relevant Plan Documents.  A participant in an employer-sponsored plan is entitled, under ERISA, to obtain relevant plan documents within 30 days of a request.  If you have questions about a given plan or its benefits, you should start your inquiry with such a request, which must be in writing, must be addressed to the “plan administrator,” and should state that the request is being made pursuant your rights under ERISA.  One good reason to request plan documents is that employees are typically given a summary plan description (or “SPD”) when they are first hired.  As the name suggests, an SPD contains only an abbreviated version of the plan and, therefore, may provide an incomplete picture of a participant’s rights.  Other plan documents to which you may be entitled are extended plan descriptions, master insurance policies, third-party administration ("TPA") agreements, an other such documents which set forth the benefits to which you are entitled, the applicable administrative and appeal procedures, and the persons or entities who are authorized to make decisions. 
  • NOTE:  Since the plan administrator can be either the employer or the insurer, it is usually safest to mail a  request for plan documents to both.  Requests to an employer can be addressed to the Plan Administrator, “care of” the employee in charge of personnel benefits or human resources.  Requests to the insurer can be addressed to the Plan Administrator, “care of” the person or department listed in the plan for filing a claim.  A plan administrator may have to pay penalties under ERISA if it fails to provide the requested plan documents within 30 days of a written request.  Therefore, to document a request, it is best to send it “return receipt requested” and to keep a file copy.
  • What Does it Mean if My Plan is "Self-Funded" or "Self-Insured"?   In providing coverage to its employees, an employer can do so through an insurance policy.  An employer can investigate a number of insurers who offer coverage, compare their rates and benefits, and then choose to purchase an insurance policy.  In exchange for premium payments from the employer, the insurance company then "bears the risk" for any benefits that become payable.  In other words, the insurer is responsible for paying claims out of its own assets, regardless of the total amount of "premium" payments made by the employer.  In contrast, a “self-insured” or "self-funded" plan is one where the employer instead bears the risk itself, setting up a fund of its own contributions from which claims are then paid.  Plan documents will usually identify whether a plan is self-funded or not.  Just because you are dealing with an insurance company doesn't mean your plan is insured.  Your employer may have hired an insurance company to receive and process claims.  Where the plan is self-funded, however, the insurer is acting solely as a third-party claim administrator.  You should be aware that self-funded plans occupy a special place under ERISA law.  Generally, ERISA exempts such plans from compliance with state insurance law.  Since state law provides substantive and procedural rights beyond those found in ERISA itself (for example, the right to an external review), employers with self-funded plans have the freedom to make those plans less favorable to participants .   
• Meet All Applicable Claim Requirements and Appeal Deadlines:  A participant should be careful to observe all notice, proof of loss, pre-authorization or other such requirements in making an initial claim.  Plan documents and claim denial notices should spell out the form, content and timing of a claim and any applicable appeal procedures.  Failure to observe these requirements on the part of a participant can lead to automatic rejection of a claim, or denial of an appeal.  It is also a good idea to keep track of the plan deadlines for the claim administrator to render an initial claim determination or a claim determination on review.  Polite inquiries may help to ensure that your claim is decided in a timely fashion.  Under ERISA law and regulations, a claim administrator's failure to meet its deadlines may permit you to treat your claim as having been denied (a "deemed denial"), freeing you to pursue other legal remedies (such as litigation).  
• Make Sure You Understand the Reason Your Claim was Denied.  ERISA requires that a denial notice describe the reasons for noncoverage, the plan provisions relied upon, any internal policies or guidelines relied upon, and the procedures for requesting review (often referred to as an “appeal” or as a “request for reconsideration”). 
• Get a Copy of Your Claim File.  Immediately after receiving a claim denial, a plan participant should first make a written request to the claim administrator - as authorized by ERISA regulations -requesting a copy of all materials pertinent to his or her appeal: (1) plan documents, (2) benefit policies and guidelines, (3) medical and/or employment records, (4) any analyses or reports prepared for or considered by the claim administrator, and (5) internal claim processing records (such as telephone logs, emails, data or other informational entries maintained on computer, etc.).  These materials (often referred to as the “administrative record”) typically provide invaluable insight into the claim administrator’s reasons for denying a claim and may reveal the existence of mistakes, missing records, or improper considerations - all of which generally allow the participant to prepare a more targeted and effective appeal. 
• NOTE:  If the claim administrator fails to provide the administrative record in time for the participant to incorporate it into his or her appeal, the appeal should nonetheless be submitted within the applicable deadline, but should include a statement that the participant is reserving his or her right to supplement the appeal once he or she has had an opportunity to review, and develop a response to, any information contained in the administrative record.
• Target Your Appeal.  You should carefully review the explanation contained in your benefit denial letter as well as any such explanations or reasoning contained in your claim file.  Once you have identified the key reasons your claim was denied, you should target your appeal to directly address these issues.  If a disability claim administrator doesn't understand the demands of your job, you may want to get a job description from your employer, or download reliable internet information describing your occupation. If a health claim administrator has denied your request for treatment because "not medically necessary," you may want to get a letter from your physician, provide articles from peer-reviewed medical journals, or undergo additional testing to show that you are an appropriate candidate for the treatment at issue.  
• Submit Comprehensive Medical Records, Occupational Information, and Other Relevant Evidence.  Throughout the initial claim and reconsideration process, the plan participant should develop, obtain and submit as much information supporting the claim - complete financial, employment and medical records; physician’s letters; statements of co-workers, colleagues and friends, etc. - as is possible. This is imperative because in the event the participant later brings a lawsuit, a court may refuse to look at any information other than that contained in the administrative record.
• Consider an External Appeal.  An “external review” may be available in certain ERISA plans for denials which were based on the ground that the subject health care was “not medically necessary” or that the care was “experimental” or “investigational” (see Requesting an External Review).  Unless the plan agrees to waive the appeal process, a participant is entitled to external review only after a request for reconsideration has been made and the plan issues its final denial.  If an external review is available, a participant may also nonetheless wish to initiate an internal review, as well.  Generally, the external review must be initiated first.  Although a claim administrator is likely to follow the determination of an external reviewer (and, indeed, must if the external review finds in favor of coverage), there may be some circumstances where an internal review leads to coverage despite a no-coverage determination by the external reviewer.  NOTE:  External review may not be available in self-funded ERISA plans (see above, What Does It Mean if My Plan is "Self-Funded" or "Self-Insured"?). 
• Consider a Lawsuit if You've Exhausted the Internal Appeal Procedure.  Once a participant has exhausted a plan’s internal appeal procedures, he or she is entitled to start a lawsuit in federal district court to claim plan benefits.  As with claims under individual policies, lawsuits must be filed, typically, within either 6 years or a lesser period of time, if specified in the plan documents.  A participant should be aware of this statute of limitations and be careful to engage counsel well before the deadline expires.

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Individual Insurance Policies:  Typically, an individual insurance policy is subject to the laws of the state where it was issued and delivered (unless the policy itself specifies a different state).  New York and other states generally treat individual insurance policies as private contracts, subject only to such review procedures as are spelled out in the policy itself.  If a review procedure is prescribed, the policyholder should be careful to meet all requirements for submission of notice, proof of loss, and appeals, as failure to meet such deadlines may constitute a “brea­ch of contract” and lead to automatic disqualification for benefits. 

• There are two major exceptions to the above.  First, if you are receiving health care coverage through a managed care organization (an “MCO” is any plan where primary care providers are drawn from a specific list of participating providers), New York state law mandates a uniform “grievance procedure” for reviewing claims that have been denied (except in the circumstances described in the following paragraph).  The MCO must provide a telephone number for initiating a grievance.  Once a grievance has been init­iated, the MCO must generally make a determination with­in either 48 hours (if it is indicated that a delay would significantly increase the risk to the patient’s health) or 30 days (where no such risk is present).  A grievance determination must be in writing, and a policyholder is entitled to appeal that determination within 60 days.  The appeal must be in writing, and a decision should be rendered by the MCO, depending on the danger of delay to the patient’s health (as above), within either 48 hours (risk) or 30 days (no risk).  The decision should be reduced to writing, called an “appeals notice,” and provided to the policyholder 
• The second exception applies to all individual policies, whether an MCO or any other type of health plan, when a medical claim is denied specifically because the proposed care is deemed either “not medically necessary” or “experimental/investigational.”  New York state law mandates a uniform “utilization review” procedure. 
• An initial request for medical necessity determination can be made by tele­phone, and must be answered within 1 business day (for services a patient is already receiving and wishes to continue), 3 business days (for services not yet provided, and requiring pre-approval), or 30 days (for services already provided). 
• If coverage is denied, called an “adverse determination,” this determination must be communicated to the patient in writing, and must contain directions how to pursue reconsideration by the health plan, as well as instructions for initiating an “external review” (see the discussion of external reviews, below). 
• If a policyholder chooses to pursue internal reconsideration by the health plan (which can be simultaneous with an external review), an expedited appeal may be sought (for continuing service, or where there is risk to the patient’s health), or a standard appeal.  Appeals must generally be filed in writing within 45 days. The health plan is required to determine expedited appeals within 2 business days, while it must determine standard appeals within 60 days.  It must issue a final decision in writing.
• In addition to the internal appeal and external review procedures, a policyholder can commence a lawsuit to enforce his or her rights under an insurance policy.  There is generally no legal requirement that a policyholder first exhaust the internal appeal procedures (unless an exhaustion requirement is clearly specified in the policy) or external review procedures before a lawsuit is commenced.  However, it is frequently worthwhile to pursue such non-legal strategies, because litigation is a far more costly remedy.  The policyholder should be mindful of any applicable time limit (or “statute of limitat­ions”) that might bar a lawsuit.  A lawsuit must be commenced  within 6 years of the period for which benefits are sought, unless the policy specifies a shorter period of time (in which case, the shorter period applies).  If litigation is being considered, a policy­holder should seek legal assistance well in advance of any potential statute of limitation to allow counsel ample opportunity to review the client’s papers, obtain additional documentation, research legal issues, and draft the papers necessary for commencing a lawsuit.