INSURANCE CLAIMS, DENIALS & BAD-FAITH ACCOUNTABILITY
Insurance Claims and Bad-Faith Accountability
Insurance Companies Must Honor Covered Claims
Consumers pay premiums in exchange for coverage.
Insurance companies should investigate and pay valid covered claims in a timely manner.
Claim Deadlines
Insurers should operate under defined deadlines to:
acknowledge a claim;
request necessary information;
investigate;
approve or deny;
pay approved amounts.
Delays should require legitimate documented reasons.
Written Denials
A denial should clearly identify:
the specific policy language relied upon;
factual basis;
evidence considered;
reason coverage does not apply;
appeal procedure.
Generic or unexplained denials should not be sufficient.
Pay Undisputed Amounts
Where only part of a claim is disputed, the insurer should generally pay the clearly undisputed portion rather than withholding the entire claim.
Independent Appeals
Consumers should have access to meaningful independent review of serious claim disputes.
Healthcare disputes should include appropriate clinical review.
Property, casualty, disability, and other insurance disputes should have qualified independent review mechanisms where appropriate.
Bad-Faith Conduct
Reasonable disagreement over a genuinely uncertain claim should not automatically create liability.
However, enhanced penalties may apply where an insurer knowingly:
denies clearly covered claims;
intentionally delays payment without legitimate reason;
materially misrepresents policy language;
alters or suppresses claim evidence;
systematically underpays valid claims;
uses knowingly unreasonable claims practices.
Interest on Wrongfully Withheld Payments
Where an insurer improperly withholds money that should have been paid, interest should accrue from the date payment reasonably should have occurred.
Repeat Offenders
Regulators should track patterns of substantiated bad-faith claims handling.
Repeated violations may result in:
enhanced penalties;
market-conduct investigations;
licensing consequences;
mandated corrective action.
Insurance Claims
An insurer must acknowledge a claim within five business days, identify missing information promptly, and decide a complete ordinary claim within 15 business days. One documented 15-day extension may be used for a genuinely complex claim. Emergency health and safety claims require expedited handling. Approved amounts must be paid within five business days, and undisputed portions may not be withheld because another part remains disputed.
Healthcare Insurance Denials and Prior Authorization
An insurer must acknowledge a complete prior-authorization request within one business day.
Urgent requests involving a serious risk to life, health, function, or uncontrolled pain must receive a decision within 24 hours. Standard requests must receive a decision within three business days.
If information is missing, the insurer must identify the missing item within one business day. The clock pauses only for information reasonably necessary to decide the request.
A denial must identify the controlling policy provision, clinical rationale, evidence reviewed, reviewer credentials, and exact appeal procedure.
A medical-necessity denial requires review by a licensed clinician with relevant specialty experience. An algorithm may assist but may not issue the final denial without accountable human review.
Failure to decide within the deadline results in provisional approval, subject to later review for fraud or material omission.
An urgent external appeal must be decided within 24 hours and a standard external appeal within five business days. Patients already receiving treatment receive at least 90 days of continuity during a plan or authorization transition unless continuing treatment would create a documented serious safety risk.
Repeated unlawful denials, missed deadlines, falsified rationales, or interference with independent review may result in restitution, interest, civil penalties, corrective-action plans, and licensing consequences.
Life-Saving Treatment Must Proceed
When a licensed treating physician certifies that delay would create a substantial risk of death or permanent serious harm, an insurer may not deny, delay, interrupt, or condition treatment on prior authorization, network status, paperwork, internal review, or a payment dispute.
Treatment proceeds immediately. Coverage and medical-necessity disputes are resolved afterward through expedited independent clinical review. Knowing or intentional violations may result in payment of the claim, restitution, civil penalties, licensing consequences, and liability for resulting injury or death.
UNIVERSAL PAYER COVERAGE
The life-saving-treatment rule applies to every health insurer, plan administrator, utilization-review entity, pharmacy-benefit manager, Medicare Advantage organization, Medicaid or CHIP contractor, federally regulated plan, and self-funded employer health plan. A payer may not avoid the rule by delegating the decision to another company, using an automated system, changing the label applied to the request, or relying on a state-law gap.
IMMEDIATE AUTHORIZATION AND PATIENT PROTECTION
A licensed treating physician’s written or electronically authenticated certification that delay creates a substantial risk of death or permanent serious harm authorizes treatment to proceed immediately. When time does not permit advance writing, the physician may document the certification as soon as reasonably possible after treatment begins.
A payer’s failure to answer, unavailable system, paperwork request, internal escalation, network dispute, or demand for additional review may not delay treatment.
The patient may not be balance billed, sent to collection, denied continuing medically necessary treatment, or held financially responsible beyond ordinary lawful cost sharing while the payer and provider resolve coverage or medical-necessity questions.
A later payment dispute remains between the payer and provider unless the patient knowingly participated in fraud. An innocent patient does not become financially responsible because the payer later disagrees with the physician’s emergency judgment.
24-HOUR ENFORCEMENT AND INDEPENDENT REVIEW
Federal and state regulators must maintain a continuously available enforcement channel capable of issuing an immediate temporary coverage order when a payer obstructs treatment.
Any post-treatment medical-necessity review must be performed by an independent physician with appropriate training in the relevant specialty who was not involved in the original denial and is not paid based on denial volume or savings.
The independent decision is due within 24 hours after the reviewer receives the complete record. Necessary treatment continues while review is pending.
The payer bears the burden of showing that the treating physician’s certification was knowingly false, fraudulent, or outside any reasonable professional judgment. A difference of reasonable medical opinion is resolved in favor of protecting life and preventing permanent serious harm.
ENFORCEMENT AND CONSEQUENCES
A payer that knowingly denies, delays, interrupts, or conditions covered treatment in violation of this rule must pay the claim, interest, proven damages, reasonable attorney fees, and a civil penalty equal to the greater of $50,000 or three times the allowed amount for the treatment. After written or recorded notice of the physician’s certification, each additional hour of knowing noncompliance carries an additional $25,000 penalty, subject to a $20,000,000 statutory-penalty maximum for the affected patient. Proven compensatory damages are not capped by that maximum.
Repeated or systematic violations may result in a corrective-action plan, independent monitoring, executive accountability, exclusion from public programs, suspension, or loss of authority to sell or administer health coverage. Falsified records, intentional obstruction, retaliation, or conduct causing serious injury or death must be referred for any applicable criminal investigation.
A patient, treating professional, employee, reviewer, or whistleblower who invokes or reports this protection may not be fired, removed from a network, threatened, harassed, blacklisted, or otherwise retaliated against. Retaliation creates a separate claim for reinstatement, restitution, damages, attorney fees, and regulatory penalties.
An intentional systemic violation by a for-profit insurer, plan administrator, utilization-review entity, pharmacy-benefit manager, or other covered commercial payer is also subject to the controlling Systemic Corporate Civil Penalty Standard in Corporate Crime & Executive Accountability. Claim payment, interest, patient compensation, hourly penalties, attorney fees, licensing consequences, and liability for resulting injury or death remain available and are not replaced by that standard.
MEASUREMENT
Public reporting should show immediate-treatment certifications, payer response times, treatment interruptions, independent-review outcomes, overturned decisions, patient billing during disputes, penalties, repeat offenders, resulting injury or death, and retaliation findings. Patient identities and protected medical information must remain private.
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Status: Proposed / Draft — not yet formally adopted.
Originally published: August 15, 2026.
Last updated: October 18, 2026.
Version: Draft 0.4.