In Bad Faith

Article excerpt


I've read accounts of former health plan medical directors who have confessed the sins they've committed while working for health insurance companies, but I never thought I'd count myself among them. During the time I worked in the managed care industry (1991 to 2001), I believed I was guarding the healthcare system against soaring costs resulting from unnecessary and excessive treatment I deluded myself into thinking medical gatekeepers had a noble mission. I drank the Kool-Aid.

So consider this article a mea culpa of sorts, my repentance for working in the health insurance industry for 10 years and denying medical care to thousands of patients, not to mention saying no repeatedly to my fellow physicians- "No, I can't approve your treatment request;" "No, I can't certify additional outpatient therapy;" and "No, I can't grant more time in the hospital for your patient."

But my story has an ironic twist. I testified as an expert witness against my former employer, a health insurance company that allegedly acted in bad faith by allowing its medical directors to deny necessary treatment to one of the company's insured patients. Even more amazing is the fact that I played a significant role in the outcome of the litigation, but not for the reasons you might think.


The case revolved around a patient I'll call Mr. A. It is undisputed that he had Lyme disease with neurologic and ophthalmologic complications. Over the course of several years, the health plan had twice approved iv antibiotic therapy for Mr. A and twice denied it Mr. A's physicians opined that the lack of timely treatment resulted in the deterioration of his eyesight and overall health.

In my report to Mr. A's attorney, as a managed care expert rather than a clinical expert, I stated that the inter-rater reliability of the health plan's medical directors in terms of their decisions to approve and deny treatment benefits for Mr. A was no better than a decision made by chance alone. Such arbitrary decision-making was unfair to patients such as Mr. A who depend on health plan medical directors to be consistent with each other and with their disease management guidelines. A 2011 audit of a sample of claims by the U.S. Government Accountability Office found that insurers reversed their initial decisions half the time, providing further evidence of inconsistent decision-making among health plans.

In addition, I stated that utilization management guidelines should respect diverse medical views and should not be confined to narrowly interpreted scientific data. Experts generally agree that guidelines should be transparent to physicians and subscribers, free of conflicts of interest, and fully vetted by the medical community before they are implemented. They should be used to advance medical practice and aid clinical decision-making, not replace it.

In Mr. A's case, however, the Lyme disease guidelines used by his health plan were very restrictive. They were based on controversial national guidelines modified by the health plan's internal medical policy committee, published online only, and silent as to the management of ophthalmologic complications.


In my report to Mr. A's lawyer, I discussed additional disturbing issues such as the ill-defined concept of "medical necessity," the confusing and cumbersome process for filing appeals, and the fact that Mr. A's health plan profited by avoiding costs associated with treatment had it been approved.

I criticized the conduct of the medical directors who worked for Mr. A's health plan. Physicians engaged in utilization review- so-called "physician advisers"- tend to become fixated on denying treatment, and they may become numb to the plight of patients such as Mr. A. Only one medical director involved in Mr. A's case expressed sympathy for him, going so far as to embellish his medical history to ensure he would receive treatment. …