insurance industry tactics

Allstate to pay policyholders, reduce rates

The Texas Department of Insurance and Allstate entered into an agreement whereby the insurance giant will refund some money to policyholders and reduce their rates.

The Fort Worth Star-Telegram reports that Allstate must pay $36.8 million in refunds for new and renewal policies written between Dec. 1, 2004 and April 23, 2006; give credits or refunds that amount to 3 percent of premiums for most policies written between Aug. 20, 2007 and June 1, 2008; cut homeowners rates by 3 percent on average statewide for most policies written between June 2, 2008 and at least June 1, 2009; and not increase rates between June 2, 2008 and June 1, 2009.

I’m skeptical of any agreements reached by Big Insurance and the lapdog TDI, particularly knowing how the insurance companies fight meaningful regulation tooth-and-nail. This could be good for consumers or it could just be window dressing (like when TMLTdoubled medical malpractice insurance premiums prior to the “tort deform” debacle of 2003 and then hailed an 11% reduction a year later – yipee).

With all these “reductions,” consumers can go broke saving money.

Even the Insured Feel Strain of Health Costs

The New York Times reports that since 2001, employees’ average cost of an annual health care premiums for family coverage has nearly doubled – to $3,300, up from $1,800 – while incomes have come nowhere close to keeping up. Factor in other out-of-pocket medical costs, and the portion of the average American household’s income that goes toward health care has risen about 12 percent, according to the consulting and accounting firm Deloitte, and is now approaching one-fifth of the average household’s spending.

But I thought health care would become more affordable once we passed tort reform…wasn’t that one of the promises the insurance and medical lobbies made when they bought the Legislature and sold our rights?

Op/Ed on the problem of health insurance subrogation

Judy Kostura, an Austin lawyer with a wealth of expertise in insurance subrogation matters, has a good op/ed in today’s Austin American-Statesman:

Why you should always read the fine print

Judy Kostura, LOCAL CONTRIBUTOR, Thursday, April 17, 2008

Wal-Mart’s recent efforts to deprive an employee of her injury settlement highlight an unfair advantage insurance companies enjoy in the legal arena. Unfortunately, the Wal-Mart example is not an isolated incident. The legal tactic Wal-Mart used against the policyholder has recently been endorsed by the Texas Supreme Court and is being used daily against injured Texans.

Deborah Shank, an employee who was covered under Wal-Mart’s group health plan, was catastrophically injured in a wreck caused by an 18-wheeler. Wal-Mart’s employee health policy paid the medical expenses and the Shank family looked to the justice system to hold the trucking company accountable. A settlement from the trucking company was put in a trust account to help fund the round-the-clock care that Shank’s severe brain injury requires.

Wal-Mart attempted to raid the trust account to recover the money it spent, relying on a subrogation clause in the health policy fine print. Wal-Mart backed off on its demand only after being vilified in the court of public opinion.

You never heard of subrogation? Look closely at your health insurance policy. After the pages promising benefits in exchange for your premiums, you’ll find a section demanding reimbursement from you if you are hurt because of someone else’s negligence.

Texas has allowed insurance companies to include subrogation clauses for years, but the insurers were reimbursed only after the injured policyholder was paid for lost wages, scarring, future medical expenses, pain and other damages. Putting the policyholder first is known as the “made whole” doctrine and required courts to interpret the fine print fairly. Allow me to use a real Austin example.

For privacy, let’s call this client “Mary.” One morning, Mary kissed her toddler son goodbye as she dropped him off at day care on her way to work. Minutes later, a car crossed the center stripe and smashed into Mary head-on, breaking her neck and trapping her inside a burning vehicle. Brave bystanders pulled her from the flames. Rendered a quadriplegic by the wreck and burned on her arms and legs, Mary lost her job, was divorced by her husband and spent months in a hospital.

The other driver’s insurance company paid Mary $100,000, which was all of the coverage available. It was not much for a 34-year-old divorced mother who would never walk or work again, but it would help. Mary’s health insurer, armed with a subrogation clause, demanded that Mary hand over the entire proceeds of the settlement. Because of the “made whole” doctrine, the legal system required Mary’s health insurer to waive its subrogation interest, allowing her to keep the recovery.

Vanessa Cantu, like “Mary,” was rendered a quadriplegic in a collision and was able to secure a settlement from the insurance company of those responsible for her injuries. Her settlement didn’t compensate her fully for her terrible injury, but it helped. Cantu’s insurer, Fortis, sued her to recover the money it had paid under the policy. The case found its way to the Texas Supreme Court. The court sided with the insurance company and wrote an opinion that eviscerated the 92-year-old “made whole” doctrine in Texas law. Cantu was the first person hurt by this wrong-headed decision, but she won’t be the last. The Fortis v. Cantu case gives insurance companies a free rein to write deceptive and onerous health insurance policies, promising benefits on one page and taking them away in the fine print on another.

Insurance companies should be treated fairly, but they shouldn’t be able to jump to the front of the line when settlements are paid for serious injuries. Public outcry saved Shank in the Wal-Mart case. The Texas “made whole” doctrine saved Mary, but the Texas Supreme Court has taken that away.

We need a legislative solution. Congress and the Texas Legislature should enact a strong and unambiguous “made whole” doctrine that puts Texas families first.

The Pillaging Continues

State Farm boosting home rates again, especially on coast, the Fort Worth Star-Telegram reports today.

“State Farm blamed the increase along the coast on the increased cost of reinsurance, which insurance companies buy to guard against the huge losses associated with hurricanes.

Galveston County residents who have both home and auto insurance through State Farm will see their rates go up by 7.9 percent, according to the Texas Department of Insurance. Those residents who have home insurance only will see their rates go up by more than 20 percent, according to the department.  The department says State Farm will take in $42 million more statewide annually because of the adjustments. By contrast, the company estimates increased revenue at $35 million to $40 million.

State Farm has 29.3 percent of the home-insurance market in Texas.

In 2003, regulators ordered the company to roll back home rates by 12 percent, but it has refused and is fighting the order in court.”

Medicare won’t pay for hospital-caused injuries after October 1

Medicare, soon to be followed by private health insurers, will no longer pay for medical treatment of preventable injuries caused by medical errors. Medicare lists eight “hospital-caused preventable injuries,” including urinary tract infections from catheters, falls, pressure sores, and embolism. After October 1st, if a Medicare patient develops one of these eight injuries, Medicare won’t pay for treatment. Apparently under this plan, hospitals cannot bill the patient, either.

I don’t know what to think about this. On one hand, if it truly becomes a matter of economic incentive for the hospitals, perhaps they will take more precautions to avoid these problems. On the other hand, this could lead to decreased quality of care for those patients who end up with these preventable injuries which no one is paying to treat. The number-crunchers in hospital administration might try to cut their loses by withholding appropriate and expensive care. It also seems that the patient could be caught in a tug-of-war between the hospitals and the insurers over whether or not something was preventable in the first place.

Bottom line, patients will end up getting screwed by this. Woe be to those in Texas, where the tort-deform insurance lobbyists and many of your elected representatives have just about driven the last nails into injured consumers’ coffins.

 

Allstate’s Arrogance Is Gonna Get Expensive

Allstate refuses to turn over documents in a Missouri lawsuit which pertain to company policies “allegedly” designed to shortchange clients while earning itself huge profits. Even the Missouri Supreme Court, not exactly known as a hot bed of liberal judicial activism, orders Allstate to turn over the documents. They still refuse. So the trial judge fines Allstate $25,000 per day until the turn them over. They still refuse. This has been going on since September.

The fine currently exceeds $2.4 million. Yet Allstate’s lawyers say the company will not produce these records for public view no matter how much the court fines them.

This display of arrogance and contempt towards courts and the rule of law is just mind-boggling. But perhaps most disturbing is how Allsnake will stop at nothing to screw their own insureds.