Can AI Help You Fight an Insurance Denial?

When your health insurance claim is denied, the appeals process can be daunting, to say the least. Knowing what to say and how to say it can be puzzling, and it comes at a time when you’re already stressed about your health. Recently, new AI-powered health advocate tools have emerged that promise to make this process easier: they can generate appeal letters automatically, tailored to your insurer’s requirements and the medical facts of your case. But while these tools offer exciting possibilities, they also raise important questions and have limits, and there’s still a crucial role for experienced human legal help, particularly when a claim is denied in bad faith. When that’s the case, contact Gianelli & Morris in Los Angeles for advice and representation from a skilled and experienced California insurance bad faith lawyer.

How People Are Using AI to Appeal Denials

AI health-advocacy platforms are being pitched as a way to level the playing field. Several companies have recently started up that help patients draft appeal letters for denied claims using generative AI. These tools typically ask you to upload your denial letter, policy documents, and any relevant medical information. Then the AI generates a draft appeal that you can review, edit, and send to your insurer.

The appeal generated by AI might include:

• A summary of the medical situation, grounded in your own notes and history.
• References to the relevant terms in your insurance policy (e.g., “medically necessary”).
• Clear formatting so that your request is understandable and conforms to insurer requirements.
• Arguments based on peer-reviewed literature or clinical guidelines, in some cases.

Anecdotal evidence of the benefits of these tools has been reported in the media. For example, an NBC News article published over the summer recounted a situation where a woman’s prescription was denied by her insurer as “experimental.” Her two appeals were turned down as well. It was only when the woman and her husband turned to AI to craft an appeal letter that the insurer reversed course and approved the medication. In that situation, a spokesperson for the insurer – a Blue Cross company operating in Washington state – cited a “processing error involving a misapplication of policy and assignment to an incorrect physician specialist” and offered that, “There was no intent to deny care.”

Why People Might Be Drawn to This Approach

There are several compelling reasons people are turning to AI to help with insurance appeals:

1. Accessibility and Efficiency: Rather than writing an appeal from scratch, AI can generate a first draft in minutes. That saves time and reduces the emotional burden.

2. Formatting Support: Insurers often deny appeals for technical or administrative reasons (missing language, improper formatting, or incomplete policy citations). AI can help structure the appeal correctly.

3. Scaling Help for Clinics: Some healthcare providers are integrating these AI tools into their practices, so they can help more patients without overburdening staff.

4. Overcoming Knowledge Gaps: Not everyone knows how to translate clinical details or policy language into persuasive legal arguments. AI can bridge some of that gap, though not all of it.

Important Cautions and Concerns

While AI tools are promising, there are valid concerns anyone considering them should keep in mind:

• Data privacy and security: Uploading sensitive medical records and policy documents to an AI platform raises serious questions about how that data is stored and protected. Not all tools may be fully HIPAA-compliant.

• Quality and nuance of output: AI may produce a letter that looks good on paper, but if it misinterprets medical facts or policy language, it could weaken the appeal.

• Over-reliance on AI: Automatically generated appeals should probably be treated as a draft, not the final product. Without human review, there’s a risk of missing critical legal or medical arguments.

• Accountability and oversight: As one report in The Guardian notes, using AI to fight algorithm-driven denials can feel like a “battle of the bots.” But the system itself needs reform; if the insurer relied on AI to deny the claim in the first instance, the problem is bigger than something that can be resolved with an AI-generated response.

• Limited scope: Some denials aren’t just about formatting or missing arguments. If a denial stems from poor documentation or a peer review that was handled improperly, an AI-generated letter may not be enough.

Reality Check: How Often Are Denials Overturned?

It’s important to ground this discussion in real-world data. Despite the rise of appeals tools, most denied claims never make it to an appeal. First of all, according to the health policy organization KFF, less than 1% of in-network denied claims in ACA marketplace plans are appealed. When appeals are submitted, insurers often uphold their original decision. The same KFF data shows that insurers upheld about 56% of internal appeals. Similarly, according to a California Department of Insurance (DOI) analysis, only about 43% of medical coverage denial appeals were overturned via independent medical review.

On the other hand, when properly supported appeals happen, success rates can be high. For prior authorization denials, the AMA reports that more than 80% of appeals are fully or partially overturned.

These statistics show a stark contrast: while many denials are reversed when appealed, most people never appeal. That gap is part of what makes AI appeal tools attractive, but also risky if they become a substitute for deeper legal action when needed.

Why a Human Connection and Legal Expertise Still Matter

AI tools can help you prepare an appeal, but they don’t replace the strategic insight that an experienced health insurance attorney brings. Here’s why the human element remains critical:

1. Complex Denials Require More Than a Letter

   Many denials occur because of flaws in the provider request or missing documentation from the patient’s medical history. In those scenarios, a successful appeal often requires gathering detailed medical records, obtaining a peer-to-peer review, or working with your providers to supplement your case. AI can’t gather this information or even know what’s needed; it can only put together a letter based on the information provided to it.

2. Insurance Bad Faith

   Sometimes a denied claim or a denied appeal may involve bad faith insurance practices. Simply getting the insurance company to reverse course and approve your request might not fully compensate you for the harm you suffered by going for months without care while you fight a denial. These cases can involve not just overturned appeal decisions but compensatory damages, and in some situations, punitive damages. Legal counsel is essential to evaluate whether there is a viable bad faith claim and pursue it accordingly.

3. Strategic Appeals & Escalation

   A lawyer can help you decide whether to start with an internal appeal, move to an external/independent review, or file a bad faith lawsuit. They can craft appeal language that aligns with legal standards, identify policy violations, and negotiate more effectively with insurers.

4. Accountability and Systemic Change

   When attorneys take on denial cases, they not only fight for individual clients. They can also expose patterns, hold insurers accountable, and drive reforms. That’s something AI alone can’t achieve.

Contact Gianelli & Morris for Help With Bad Faith Insurance Claim Denials in California

AI-powered health advocate tools are opening up a new way for patients to fight insurance denials more efficiently. They can help generate appeal letters, organize documentation, and reduce the burden of the administrative process. But they should be seen as a supplement, not a substitute, for legal expertise.

If your claim has been denied and you’re thinking about using AI to help write an appeal, consider pairing that technology with guidance from a seasoned insurance law attorney. That way, you maximize your chances not only of overturning the denial but of holding the insurer accountable if a larger bad faith issue is at play.

At Gianelli & Morris, we help policyholders evaluate denial and appeal processes, draft strong appeals (whether or not they’ve used AI), and take action when insurers act in bad faith. If you’ve received a denial and are considering how best to respond, contact us for a free consultation. We’re here to help you fight back and protect your rights.