Another Insurance Practice Shot Down in Court


The Colorado Court of Appeals put a stop to another money-making tactic by State Farm Mutual Insurance Company. It reversed a trial-court ruling that said the insurance behemoth could unilaterally reduce payments to patients and doctors based on information in its computer database.

In an effort to keep its profits growing, State Farm began processing its payments through Sloans Lake Auto Injury Management, a medical database that claims to compare physician charges against “same or like services” in a geographic region. The problem is: is there any such thing as “same or like services” when dealing with an individual involved in an accident completely unlike any other accident?

This case turned on exactly this issue. A woman was involved in an auto accident in 2001, then was treated by the only orthopedic surgeon in the area. She dutifully submitted the legitimate claim to her insurance company, expecting it to be paid, but, instead, the insurance company decided the services were not worth what she had been charged. In other words, they didn’t want to pay that much for her care because their database said the doctor should charge less.

However, lawyers for doctor and patient argued that the database had made a mistake because it had not considered that the doctor was the only one capable of performing the procedure, and that complications made his charges reasonable.

Judges ruled the database was incapable of accurately assessing the “reasonableness” of a doctor’s charges, a victory for doctors and patients. Doctors, because it means they will not have to worry that their expert judgment will be overruled by an ignorant database. Patients because it ensures that doctors will not be afraid of taking on insurance cases for fear of being lowballed.

This database represents another example of insurance companies trying to improve their profits at the expense of policy holders. I guarantee they never follow-up if the database shows they should have been charged more. This case also shows how individual lawsuits can lead to the common good. If you or a loved one has suffered unfair treatment at the hands of an insurance company devoted to profit, contact today to fight back.