Common Health Insurance Claim Denial Tactics Used by Major Insurers
Health insurance companies often describe claim denials as the result of objective medical reviews and careful application of policy language. In reality, many policyholders discover that obtaining coverage for medically necessary treatment can become a lengthy battle involving shifting explanations, administrative roadblocks, and repeated requests for additional information.
Not every denial is improper. Health insurers have a legitimate role in evaluating claims and determining whether requested services fall within the terms of a policy. However, when insurers use unreasonable tactics to delay, minimize, or avoid paying covered claims, they may cross the line into insurance bad faith.
At Gianelli & Morris, we have seen firsthand how major insurers can employ practices that make it difficult for policyholders to obtain the benefits they purchased. While the details vary from case to case, certain denial patterns appear repeatedly across the industry.
Labeling Treatment as “Experimental” or “Investigational”
One of the most common denial strategies is to characterize a treatment as experimental, investigational, or not generally accepted by the medical community. This tactic can be particularly frustrating when a patient’s treating physicians believe the treatment is medically necessary and when peer-reviewed medical literature supports its use. Insurers often rely on internal medical policies that may lag behind current medical practice or interpret the available evidence more narrowly than treating physicians.
A recent lawsuit filed by Gianelli & Morris illustrates this issue. The complaint alleges that Anthem Blue Cross wrongfully denied coverage for a hematopoietic stem cell transplantation (HSCT) recommended to treat a patient’s progressive multiple sclerosis. According to the lawsuit, Anthem repeatedly characterized the procedure as investigational despite medical evidence and policy provisions ostensibly supporting coverage. The plaintiffs contend that the insurer’s actions forced the patient to pay out of pocket for treatment in order to prevent further progression of the disease.
These disputes often center on complex medical evidence and competing interpretations of scientific literature. They frequently require extensive legal and expert analysis to challenge effectively.
Moving the Goalposts
Another common tactic involves changing the basis for denial as the claim progresses. A policyholder may address the insurer’s initial concerns only to receive a new denial based on a different rationale. What begins as a question about medical necessity may later become a dispute regarding provider qualifications, facility credentials, coding issues, or administrative requirements.
The Anthem multiple sclerosis lawsuit noted above alleges a variation of this problem. According to the complaint, the insurer denied coverage on multiple grounds, including assertions regarding the nature of the treatment and questions concerning the facility where it would be performed. The plaintiffs allege that as one issue was addressed, additional obstacles emerged.
For policyholders, this can create the impression that approval is perpetually out of reach, regardless of how much documentation is provided.
Relying on Internal Medical Policies Over Treating Physicians
Health insurers frequently employ physicians and nurses to conduct utilization reviews. In theory, these reviews should involve a fair assessment of the patient’s circumstances. In practice, policyholders often find that insurer-employed reviewers give greater weight to internal guidelines than to the recommendations of the doctors actually treating the patient. This conflict is particularly pronounced in cases involving emerging treatments, rare diseases, or complex medical conditions where individualized clinical judgment is essential. A treating physician may have years of experience managing a patient’s condition. Yet an insurer may rely on a reviewer who has never examined the patient and whose decision is based primarily on written records and internal criteria. When insurers elevate rigid guidelines above individualized medical judgment without a reasonable basis, they may expose themselves to bad faith liability.
Delaying Decisions Until Patients Give Up
Sometimes the denial tactic is not an outright denial at all. Many policyholders experience repeated requests for records, prolonged authorization reviews, multiple levels of internal appeal, and administrative delays that postpone treatment for weeks or months. The phrase “delay, deny, defend” has become a common criticism of insurance industry claims practices because delays can be almost as harmful as formal denials. A patient awaiting surgery, cancer treatment, or specialized therapy may suffer significant consequences while the insurer continues to evaluate the claim. In some situations, policyholders ultimately abandon the claim, pay for treatment themselves, or forego care entirely.
Misapplying the Insurer’s Own Coverage Criteria
Some disputes arise because the insurer appears to ignore or misapply its own policy language. The Anthem multiple sclerosis lawsuit mentioned earlier contains allegations that the patient satisfied the insurer’s own coverage requirements for treatment but was nevertheless denied approval. According to the complaint, the insurer’s interpretation of its criteria was inconsistent with the facts of the case and the available medical evidence.
When insurers fail to follow their own policies, courts often view that conduct critically. Insurance contracts are drafted by insurers, and policyholders are entitled to expect that coverage decisions will be made consistently with the terms of those contracts.
Blanket Denials Based on Corporate Policy
In some cases, policyholders allege that insurers maintain corporate policies that effectively result in automatic denials of certain procedures or devices. Gianelli & Morris has previously filed lawsuits challenging alleged blanket denial practices involving treatments for spinal conditions and chronic pain. These cases asserted that insurers improperly classified certain treatments as non-covered despite evidence supporting their medical necessity. When an insurer adopts a predetermined position against a category of treatment rather than evaluating claims individually, significant legal issues can arise.
Why These Cases Often Result in Significant Damages
Health insurance disputes differ from many other contractual disagreements because the stakes are extraordinarily high. A wrongful denial may affect access to life-changing surgery, cancer treatment, advanced neurological care, or other medically necessary services. The consequences can include worsening health, permanent disability, financial hardship, and emotional distress. For that reason, California law recognizes that an insurer’s unreasonable conduct may give rise to damages beyond the value of the denied benefit itself. In appropriate cases, policyholders may pursue compensation for emotional distress, as well as significant punitive damages designed to punish and deter misconduct.
The Importance of Experienced Legal Representation
Major insurers such as Anthem, HealthNet, Blue Shield, and others possess extensive resources, sophisticated claims departments, and teams of attorneys. Challenging a wrongful denial requires a detailed understanding of policy language, medical evidence, utilization review practices, regulatory requirements, and bad faith law.
The strongest cases are rarely simple. They involve careful review of medical records, internal insurer communications, denial letters, appeal histories, and applicable medical policies. At Gianelli & Morris, we represent policyholders throughout California who have been harmed by wrongful denials of health insurance benefits. We understand the tactics insurers use, and we know how to investigate whether a denial reflects a legitimate coverage dispute or something more troubling.
If your insurer has denied medically necessary treatment, do not assume the denial is final. You may have rights under your policy and California law, and an experienced insurance bad faith attorney can help you evaluate your options. Contact Gianelli & Morris today for a free consultation regarding your case.
