Insurance Company Slow Paying Claim

Someone in Weatherford, Mineral Wells, Aledo, Hudson Oaks, Willow Park, Brock, Millsap, Peaster, Azle, Cool, Cresson, or anywhere else in Parker or Palo Pinto Counties might wonder – How long do I have to give an insurance to pay a claim before I can do something about it? The lawyerly answer to that is – It depends.
First, if an insurance company is being too slow in paying a claim, a person should not have any hesitation in approaching an experienced Insurance Law Attorney.
Second, there is a section of the Texas Insurance Code titled the “Prompt Payment of Claims Act” which gives guidance to the question, – When is too long – too long?
Third, there is case law that gives guidance to specific facts situations to help someone understand when a payment should be made and the rules governing different situations. One of these cases was issued by the Texas Court of Appeals, Houston, (14th District) on May 17, 2011. The style of the case is, Christus Health Gulf Coast, Christus Health Southeast Texas, Gulf Coast Division, Inc., Memorial Hermann Hospital System and Baptist Hospitals of Southeast Texas v. Aetna, Inc. and Aetna Health, Inc.
Here is some background:
The hospitals filed a lawsuit suing the above HMO’s for violating the Texas Insurance Code, Prompt Pay Statute. The hospitals alleged that the HMO’s failed to timely pay claims for healthcare services provided to Aetna’s Medicare HMO enrollees under agreements between the hospitals and an intermediary that failed to pay the hospitals. The trial court held in favor of the insurance company and this appeals court upheld that decision saying that under the Prompt Pay Statute there must be a contract between the insurance company and the health care provider. That in the absence of a contractual relationship between any of the hospitals and Aetna, the trial court did not err by denying the hospitals’ lawsuit.
In discussion of this case the court recognized the hospitals contention that Aetna’s refusal to pay them for services provided to Aetna’s insureds violates the Texas Prompt Pay Statute. Under the applicable version of the Texas Insurance Code’s HMO Act, the Prompt Pay Statute at issue provided as follows:
(c) Not later than the 45th day after the date that the health maintenance organization receives a clean claim from a physician or provider, the health maintenance organization shall:
(1) pay the total amount of the claim in accordance with the contract between the physician or provider and the health maintenance organization;
(2) pay the portion of the claim that is not in dispute and notify the physician or provider in writing why the remaining portion of the claim will not be paid; or
(3) notify the physician or provider in writing why the claim will not be paid.
The hospitals acknowledged that they have no contracts with Aetna, but contended the Prompt Pay Statute does not require contractual privity. In making this argument the hospitals looked to only portions of the statute rather than reading the statute as a whole. The Texas Supreme Court has made it clear that statutes have to be read in their entirety in order to be given their legislative intent.
In explaining its’ decision the court stated, “We conclude that subsection (n) enables a provider to bring an action for violation of the Prompt Pay Statute against a “person” with whom the provider has contracted to process claims or to obtain the provider’s services for the HMO’s enrollees. Effectively, article 20A.18B would be read to substitute the “person” with whom the provider contracts for “HMO,” and would enable providers like the hospitals to recover under the Prompt Pay Statute when that “person” violates the statute. This conclusion is consistent with the statute’s imposition of deadlines upon the “receipt” of a claim “from a physician or provider.” If the provider’s contract is with an intermediary (which also contracted with the HMO), it follows that this intermediary would be the “person” actually receiving the claims from the physician or provider for purposes of the Prompt Pay Statute, and therefore would be the person on whom the statute imposes liability. In this case, the hospitals’ contracts were with the Management Services or NAMM, not Aetna. Accordingly, Management Services or NAMM – not Aetna – would be the proper defendant in a Prompt Pay Statute suit.
The court also pointed out that their reasoning in this case was sound because the legislature subsequently enacted an amendment to the HMO Act to provide an avenue for recovery against an HMO intermediary’s violation of the Prompt Pay Statute even when the HMO is not contractually liable.
It is important to realize that in this case the patient was not receiving the payment to then reimburse the hospital for their services, rather the payments for services were suppose to be sent to an intermediary who was suppose to then pay the hospital. If the payments were coming straight to the insured who had received services, then the insured would have a claim against the insurance company if it did not promptly pay the bill.