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Texas' insurance commissioner forbids insurers' provisions that allowed them to interpret policies | News for Dallas, Texas | Dallas Morning News | Texas Politics | The Dallas Morning News
AUSTIN – Health, life and disability insurers will no longer have blanket authority to decide what their policies do and don't cover in Texas, under rules approved Monday by Insurance Commissioner Mike Geeslin.
The decision, which was sought by the state consumer advocate for insurance, ends long-standing provisions in most health and disability plans – called discretionary clauses – that give insurers the right to interpret their policies and decide what benefits must be paid.
In formally adopting the new rules, Geeslin wrote that the discretionary powers of companies "are unjust, encourage misrepresentation and are deceptive because they mislead consumers regarding the terms of coverage" in their policies.
Prohibiting those provisions, the commissioner said, will protect consumers from "incorrect and unfair coverage determinations by insurers and HMOs without a subsequent opportunity for a full and independent review" of their claims.
As an example, he cited one policy under which the health insurance company stated that it had "complete discretionary authority" to review all denied claims and determine whether its policyholders were entitled to any of the benefits being sought.
The result is that consumers will be able to challenge what they consider unfair denial of benefits, either by complaining to state regulators or by filing a lawsuit against the company. Currently, discretionary clauses make it virtually impossible for many consumers to contest adverse decisions by the insurer.
Public Insurance Counsel Deeia Beck, who proposed the change, called the new rules "a huge step forward for consumers in Texas."
Beck said the rules will assure that health insurance benefits are guaranteed and "avoid the conflict of interest that occurs when the carrier responsible for providing benefits has discretionary authority to decide what benefits are due."
Also applauding the new rules was AARP, which lobbied for the change.
"Texans deserve a level playing field when challenging insurance companies that have denied them coverage," said Bob Jackson, the group's Texas director. "This is a great step forward for people 50-plus and all Texans who count on their insurance being there when they need it."
The new rules will take effect Feb. 1 for disability policies and June 1 for health and life policies. Similar bans on discretionary clauses have been enacted in 22 other states.
Insurers had opposed the prohibition in Texas, arguing that discretionary clauses have been used for several years in the state without an adverse effect on consumers. They contended that the rules would lead to more lawsuits and increase the cost of insurance.
Consumer advocates said disagreements typically arise between insurance companies and consumers over such things as cancer drugs, mental-illness coverage and home-based diabetes treatment. Right now, insurers have the final say, and costs often figure into their decisions.
Consumers unhappy with their insurer's decision can go to court, but to overturn a decision the consumer must prove the insurer acted unreasonably – a legal standard that strongly favors the insurer. That requirement stacks the deck in favor of insurance companies and allows them to reject claims without worry, Beck said.
Elimination of discretionary clauses will remove that advantage and force insurers to be even-handed in deciding whether to pay medical and disability claims, she said.
AUSTIN – Health, life and disability insurers will no longer have blanket authority to decide what their policies do and don't cover in Texas, under rules approved Monday by Insurance Commissioner Mike Geeslin.
The decision, which was sought by the state consumer advocate for insurance, ends long-standing provisions in most health and disability plans – called discretionary clauses – that give insurers the right to interpret their policies and decide what benefits must be paid.
In formally adopting the new rules, Geeslin wrote that the discretionary powers of companies "are unjust, encourage misrepresentation and are deceptive because they mislead consumers regarding the terms of coverage" in their policies.
Prohibiting those provisions, the commissioner said, will protect consumers from "incorrect and unfair coverage determinations by insurers and HMOs without a subsequent opportunity for a full and independent review" of their claims.
As an example, he cited one policy under which the health insurance company stated that it had "complete discretionary authority" to review all denied claims and determine whether its policyholders were entitled to any of the benefits being sought.
The result is that consumers will be able to challenge what they consider unfair denial of benefits, either by complaining to state regulators or by filing a lawsuit against the company. Currently, discretionary clauses make it virtually impossible for many consumers to contest adverse decisions by the insurer.
Public Insurance Counsel Deeia Beck, who proposed the change, called the new rules "a huge step forward for consumers in Texas."
Beck said the rules will assure that health insurance benefits are guaranteed and "avoid the conflict of interest that occurs when the carrier responsible for providing benefits has discretionary authority to decide what benefits are due."
Also applauding the new rules was AARP, which lobbied for the change.
"Texans deserve a level playing field when challenging insurance companies that have denied them coverage," said Bob Jackson, the group's Texas director. "This is a great step forward for people 50-plus and all Texans who count on their insurance being there when they need it."
The new rules will take effect Feb. 1 for disability policies and June 1 for health and life policies. Similar bans on discretionary clauses have been enacted in 22 other states.
Insurers had opposed the prohibition in Texas, arguing that discretionary clauses have been used for several years in the state without an adverse effect on consumers. They contended that the rules would lead to more lawsuits and increase the cost of insurance.
Consumer advocates said disagreements typically arise between insurance companies and consumers over such things as cancer drugs, mental-illness coverage and home-based diabetes treatment. Right now, insurers have the final say, and costs often figure into their decisions.
Consumers unhappy with their insurer's decision can go to court, but to overturn a decision the consumer must prove the insurer acted unreasonably – a legal standard that strongly favors the insurer. That requirement stacks the deck in favor of insurance companies and allows them to reject claims without worry, Beck said.
Elimination of discretionary clauses will remove that advantage and force insurers to be even-handed in deciding whether to pay medical and disability claims, she said.
