When Health Coverage Doesn't Hold Up

CBS News Investigates How Individual Health Insurance Providers Can Deny Big Claims

(CBS)  As more Americans are unable to get health insurance through their work, they often turn to the individual insurance market. Last night we told you how difficult it can be to get individual insurance, with companies turning down people with the most minor of medical problems. CBS News chief investigative correspondent Armen Keteyian takes a closer look at what happens when some people who actually have individual insurance try to collect on an expensive claim.

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Walking along a stretch of road last summer, 54-year-old Tod Smith felt an intense burning in his chest and tightness in his arm — signs of a heart attack he never saw coming.

"I was in good health," Smith said. "No major health problems or conditions."

For Smith, an illustrator of children's books, his heart attack was the first shock. The second: more than $40,000 in medical bills his insurance company refused to cover — after he figured the company, Assurant, would pay.

"I certainly figured that a heart attack was a catastrophic event. So I figured I was covered," Smith said.

A two-month CBS News investigation of the individual insurance market found that Smith's experience was far from unique. Because it was expensive, his claim was investigated for fraud by Assurant Health, his insurance company.

After examining his medical records, the company refused to pay based on a 3-year old-reference to an "angina episode." Assurant said those words proved his condition was pre-existing, despite the fact that follow-up tests in the same file diagnose his "episode" as a case of acid reflux and ruled out a heart condition.

"The claim about these pre-existing conditions was absolutely preposterous," Connecticut Attorney General Richard Blumenthal said.

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Check out our individual insurance resource page
Watch Keteyian’s interview with Maria Locker, who was given the health-care run-around when diagnosed with lymphoma
Watch Keteyian's piece on "The Uninsurables"

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Blumenthal's office has investigated dozens of the more than 500 complaints nationwide against Assurant, a Milwaukee-based company that specializes in individual policies. Blumenthal charges Assurant has a pattern of "bad faith" when it comes to its customers.

"What this company did was create the illusion of coverage, when in reality, it would challenge almost any expensive procedure as a pre-existing condition," he said.

CBS' investigation of Assurant found a pattern of questionably denied claims and cancelled policies — and what a South Carolina judge called a culture of "secrecy, concealment … and shredded documents."

A video deposition from another court case describes what may have been cash incentives to the company’s medical director to deny claims after the fact.

Diane Winkowski, a former unit supervisor of Assurant, said she was part of a unit at Assurant that searched for reasons not to pay claims. She told us she quit because, she believed, many of the investigations were unfounded — and unjust.

"A lot of time we felt that we had it all, and to try and keep looking was frustrating," she said.

Assurant refused to discuss its denials of claims on camera, but it issued a statement saying it continually evaluates its claims process "to ensure it is fair, equitable and consistent with state laws and industry standards."

However, at least 15 states have investigated Assurant's practices, forcing the company to pay millions of dollars in fines. The company now faces dozens of customer lawsuits, with another on the way — from Tod Smith.

"It's about money," Smith said. "That's the bottom line."

Smith hopes his legal action will cover that $40,000 bill he felt assured his insurance company would pay.

[cbsossur]

cookiemom:
I was not pointing my frustration at you

This country is becoming another third world *** hole and I do blame it on all those who claim how great Bush is, and how he is the right man for the job back in the last two elections. Their ignorance and stupidity is costing us big time. Who says ignorance isn't expensive!
Too many people are willing to sell their soul and the sovereignty of this nation for the all mighty dollar.

[gumballl]

I agree with you! It should not be "Your money or your life". There should be no discrimination in quality of care based on your income. I am not a sheep and I am not afraid of taking on this system and I believe it can and must be fixed. I think most people believe this but are afraid of the mess that congressional leaders can make of everything. Keep it simple. Remove the greed factor. If healthcare is not your problem, it will be the problem of your children or other family members in the close years to come. Why wait? Let's fix it now. Start with ideas. Take it to congress. Let them find out who the true power brokers are. I am not going to vote for anyone who does not have healthcare as one of the very top priorities and who does not have a decent, fair, plan. I will not support any politician who accepts money from the insurance companies or the drug companies (another topic for another day).Healthcare has become an unstoppable merry-go-round and it is time for all factors to take their hit and stop the ride and give the consumer a break. I am not asking for "free". I am demanding fair.

[cbsossur]

This countries health system is a joke. No politician is willing to come up with a solution in fear of not getting their campaign funding.
Here is a idea. Why not combine L&I / Medicare and a national health care program together to streamline costs. Why pay 2 or 3 times for the same thing. I am not against health insurance companies per say I just don't want to be forced to rely on their greedy *****. This country has become too corrupt to ever solve any of our social needs without mass demonstration of the American people. I am however, afraid that the American people are too well trained as sheep to ever do that.

[gumballl]

I have never sued anyone in my life. I hope I never have to. But if insurance companies can enter into a contract, take your money and not pay, then what is your recourse? I wish my brother did not have to worry about this so he could focus on becoming healthy. The stress this creates when your ill is cruel.I hope everyone takes on the insurance companies for the lack of ethics they have perpetrated on the American public. They have bought this on themselves. Thank God for people like my brother and the gentlemen this CBS article was about because when it's your turn, or my turn, it may not happen to us. If a car windshield is broken, one can see it. If someone develops cancer or heart disease are they supposed to know it if a Dr did not diagnose it? People are not cars. The metaphor do not wash.

[greyfrog3]

Do you all realize its your bickering and sueing that make the health care costs what they are in this country? Perhaps if doctors and insurance companies did not have to worry about getting sued by people like you costs for malpractice and lawyers would be cheaper?

Does a car insurance company insure a cars windsheild if its already broken? so why would a health insurance company insure a persons back that is broken?

Common sense people.

[gumballl]

I found out my brother is another assurant victim. He thought he was covered. He was about 38 or 39 when he had a colonoscopy for bleeding. He was working about 18 hours a day trying to run several businesses and he was becoming concerned that he ruptured something on a construction project or that he had developed celiac disease like I have. It was cancer. Most people don't even have their first colonoscopy until they are 50. Colon cancer is called the silent killer. He was somehow supposed to self diagnose and know he had cancer. If a company accepts your application, accepts your premium, are they then supposed to follow the terms of the contract and pay per that contract? Had he been diagnosed with cancer, I could understand the denial. No one would have looked at this man and said "he has cancer". He is still alive inspite of this denial and has never been able to get chemo and radiation. He went homeopathic. The cruelist thing is stress from the hospital bills that totaled way over 30,000 dollars. But my baby brother is alive and fighting the Insurance Company. They did not take him down yet!

[bradkc2]

I am certainly glad to see Assurant get a bit of the major bad press it deserves. The employees are treated even worse for a claim issue than just a customer off of the street. Thank you for exposing just a tiny piece of a rotten egg! They are very uncaring of humans with health issues.

[Ann S]

(2) %u201CDuring my career, I have never seen someone declined coverage for routine acne or athletes foot from a reputable health insurance company. Posted by CNGreenII %u201D

Uh huh%u2026..and just how did you miss all the DOCUMENTED instances of the 4 major California Health insurers turning people down for exactly those conditions or the cases settled by the same insurers for dropping coverage of non-group policies when the person later became seriously ill? (Give you a hint: the CA Atty General was prosecuting the cases.)

Denial of reality ecause of ignoranace is just that - ignorance. Denial of reality because it contradicts your set beliefs is bad for your mental health.

[Ann S]

(1) %u201Cnever smoked or drank, I am a 49 yr old "white woman" that has been a 5 ft, 100 lbs., size 0 for years.

I was just declined coverage because I gained to 130 lbs., size 6!!! height/weight variance. Posted by pmcalifornia

Oh please%u2026. 30 years go there was no such thing as a Size 0. That is an invention of the last 3-5 years. What is now called a Size 0 was a Size 6 only 8 %u201310 years ago. I have a closet full of Brooks Brothers, Talbots and Lilly Pulitzer (uber-expensive stuff) that I bought over the years that is all marked Size 6. Now according to the clothing manufacturers who lie through their teeth, I am a Size 0 %u20132. Right %u2013 and the current Size 0-2 clothing measures exactly the same as the current Size 0 %u2013 2. You are not a Size 6 darling %u2013 you are what we used to call a SIZE 10-12 which was a huge size for someone who is short!

Take from a 53 year old 5%u20192%u201D woman who wears a current Size 0-2 and weighs 100 lbs, you have blown up to be fat as a tick and suddenly put on over 30% of your body weight. That signals a problem %u2013 either a medical condition or one with your elbow (as in bending it too much.) Definitely a health risk with diabetes and coronary disease in the offing.



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[manner6]

My daughter became ill while we were in Belgium.
We went to a clinic--no waiting--no paperwork--no charge. A diagnosis--a prescription ($2.50).
When will we have government sponsored universal health care like that?

[trixie8476]

People forget one critical thing...insurance companies are BUSINESSES. Why in the world would they want to insure anyone with an expensive health problem, or an older person who is likely to develop one?

This is exactly why government needs to be in charge of health insurance...insurance companies are not a charity...they are not there to HELP you...they are there to make $$$$!

[enriquecaliente]

Insurance Company = License to steal.

[gumballl]

What about selling Medicaid coverage to everyone?Even if it is not a panacea, it would at least make sure that people would not do without overage.Make it an option. Do not use the bureaucratic sliding scales that have hog tied most governmental programs. Why do we live in a world that is deciding who gets help and who gets neglected? I would never take away Medicaid from someone who was disabled or require them to pay.But why can't others be allowed to Opt in to a program that would make our nation a healthier place to live? It is not socialized medicine if it is not required. This type of program might serve to make our country again competeitve on an international scale because we are competing with other countries that have lower health care cost and do not rely on employers. Why do you think so many manufacturing jobs have left and gone overseas? They can not even afford the high cost of health care here.

[pmcalifornia]

After nearly 20 years with a California HMO, I applied for individual coverage. They had overcharged my "government employer for this coverage for years". At times my spouse & I was paying dual coverage premiums to them. Now that I am an independant contractor the "cherry-picking" begins.

I never smoked or drank, I am a 49 yr old "white woman" that has been a 5 ft, 100 lbs., size 0 for years.

I was just declined coverage because I gained to 130 lbs., size 6!!! height/weight variance. I have had controlled seizures for 25 yrs. since I was 24 yrs. old. They forced me the whole time,to take the drugs as just an protective medication to drive. This time it is mutated into a pre-existing condition since they can't jack-up the premium.

[pvb44]

Insurance companies get their ratings based on financial strength and financial outlook. It has nothing to do with paying claims. Just thought you should know.

[xxjayajxx]

I'm not as knowledgeable about health insurance or any other insurance but I do understand insurance is bought in case something happens, not for something that has already happened. Now, if you want insurance companies to pay for your fees, go complain to the health industries. My god, they are the ones who are charging extreme prices for a minor checkup or procedure that may take a mere 10 minutes. Hospitals are charging for any bogus item they can claim. I heard they're even charging up to a dollar for a band-aid so don't take it out on the insurance companies, at least some of the better ones. Think about it. Medicare and Medicaid should be able to cover your medical expenses. Due to increasing prices and the increased number of clients, they're not able to fulfill all the demands.

[reader321]

You buy insurance to cover the unseen health conditions/events not the ones that have been diagnosed! It is pretty obvious that the Angina had to do with this mans heart being that he had a HEART ATTACK! Assurant is an A rated company and they have that rating because they pay their claims!
I guess this this what happens in an election year!!!

[southmsdixon]

Hospitals and medical providers have to charge much more than is really nesseccary in order to offset their loses for providing for those who do not have insurance. This in turn makes insurance premiums continue to rise. I think that insurance companies do the best they can with what they have to work with.
And smokers are NOT the downfall of humanity, regardless of what Uncle Sam wants you to believe.

[cathaleen]

Yeah, no one smokes or drinks. Sure. Everyone is a health nut. Give me a break.

[tlkwitherick]

As a health agent, I always find that the health market is constantly changing. For instance Assurant has already changed their name twice in the past to avoid this publicity, and even the BlueCross in this state has been under investigation, and recently changed their name to BlueCross Anthem. I am a broker and have every company under the sun to sell, and I can tell you that Assurant is not a bad company. Every company has horror stories. It's an insurance companies job to look for reasons to not pay claims, and therefore, increase profits. You just have to be dilligent and have an agent that will fight with you and not against you.

If anyone is interested in getting a quote on insurance, I am licensed in all 50 states and would be more than glad to help any of you guys out. Check out my website at www.besthealthquote.net/talkwitherick

I recommend taking a look at Best Insurance. They have an A rating and currently don't have a single complaint in my homestate. Feel free to check out the other companies I carry, but Best Insurance is probably the lesser of the evils when it comes to Health Insurance.