USAA Insurance's automated system ‘arbitrarily’ denies claims, alleges lawsuit
Instead of conducting an investigation into each bill for medical expenses submitted by insureds, the insurer employs a Medical Bill Audit system designed to reduce the amount USAA pays for health care claims.
USAA Casualty Insurance Co. and USAA General Indemnity Co. were hit with a consumer class action Thursday alleging they arbitrarily and wrongfully denied personal injury protection and/or medical payment insurance benefits by delegating adjustment claims to third parties.
In the complaint filed Nov. 16 in the Washington Superior Court for Clark County, plaintiffs Caryn Jennings and Tricia Harder, on behalf of themselves and others similarly situated, accused USAA of violating the Washington Consumer Protection Act, as well as breach of contract, and breach of the covenant of good faith and fair dealing. The plaintiffs claim that USAA denied their insureds’ personal injury protection (PIP) and/or medical payment insurance benefits because the company allegedly delegates its insurance claim adjustment to a third party’s computer program that arbitrarily reduces or denies these claims.
The plaintiffs seek declaratory relief as to PIP coverage, and they also seek injunctive relief enjoining USAA from continuing to handle claims as such, the complaint said.
According to plaintiffs, represented by counsel at Tousley Brain Stephens and Franklin D. Azar & Associates, USAA should be conducting an investigation into each bill for medical expenses submitted by insureds. Instead, they employ a Medical Bill Audit (MBA) system designed to reduce the amount USAA pays for health care claims.
Through PPO, PR, GR, RL, DOC and RF codes, and “without human input,” USAA has found a way to utilize the allowable lower billing rates under agreements between other insurers and preferred provider organizations, “even though USAA has no direct PPO or PPN agreements with its insureds’ health care providers,” plaintiffs argue.
The company also reportedly determines costs for Medicare patients based off an arbitrary threshold held in a database called the Milliman Database, which is composed of an “outdated” 5% nationwide sample of charge data from patients over 65 collected by the U.S. Department of Health and Human Services, the complaint said.
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“This Medicare patient sample has no bearing on the reasonableness of charges for the medical services provided to USAA’s insureds, does not reflect the entire range of fees charged in the geographic area where the medical services are provided, and is comprised of data not organized by a provider’s years of experience, background, or qualifications,” the complaint said.
“USAA denies or reduces payment of its insureds’ medical bills based only on AIS’s [Auto Injury Solutions] automated review process and does not conduct any independent or individualized review to assess whether the charge is a reasonable and necessary medical expense.”
Jennings and Harder were both injured in automobile accidents while covered under a USAA Casualty Insurance policy that included $10,000 in personal injury protection. Both claim USAA either denied or reduced reimbursement for their medical care.
Counsel has not yet appeared for the defendants. Neither attorney Franklin D. Azar nor Jason T. Dennett or Cecily B. Jordan of Tousley Brain Stephens could be reached for additional comment.