**By Christine Mai-Duc**
Colleen Henderson faced an unimaginable ordeal when her 3-year-old daughter began experiencing painful bathroom visits; doctors dismissed these symptoms as typical urinary tract infections or constipation common in children learning to use the toilet. After being informed that an ultrasound, costing $6,000, wouldn’t be covered by her health insurance, Henderson resorted to putting the expense on her credit card. The shocking revelation soon followed: her daughter had a grapefruit-sized tumor in her bladder. This was in 2009.
What ensued over the next five years was a relentless struggle against her insurer, UnitedHealthcare. Henderson fought to have the medical expenses for specialists who finally identified and treated her daughter’s rare illness, inflammatory pseudotumor, covered. Despite her efforts to appeal the denials for hospital stays, surgeries, and medications recommended by doctors, she received little support from the insurer or state regulators. The result was a staggering $1 million in medical debt that ultimately led her family to declare bankruptcy. “If I had not fought tooth and nail every step of the way, my daughter would be dead,” Henderson remarked, noting that her daughter is now a thriving 20-year-old junior at Oregon State University. She lamented, “You pay a lot for health insurance, expecting it will prioritize your well-being, but that’s not the reality.”
The increasing frequency of insurance denials has been a growing concern, yet surveys indicate that only a small percentage of Americans choose to contest these denials. Analysis reveals that many who do pursue appeals with government oversight often succeed in overturning initial denials. This trend highlights the commonality of wrongful denials by insurers. In response, California lawmakers have introduced a proposal aimed at imposing penalties on insurance companies that frequently deny valid care claims.
The proposed bill, SB 363, while applicable to only about one-third of California’s insured populace, could represent a groundbreaking step toward curbing inappropriate denials of health insurance claims at both pre-treatment and post-treatment stages. It also aims to ensure that insurers disclose denial rates and the rationale behind them, information often kept secret. Additionally, the bill proposes hefty fines—up to $1 million per incident—if insurers’ denials are overturned more than half the time.
Recent data have shown that approximately 72% of appeals submitted to California’s Department of Managed Health Care were successful in reversing initial denials by insurers. “When you have health insurance, you should expect it to cover your healthcare needs,” asserted Sen. Scott Wiener, the measure’s author. “It is unacceptable for insurers to delay or deny medically necessary care.”
Stakeholders in the health insurance industry have been hesitant to comment on the bill, with some representatives still reviewing its content. Meanwhile, Governor Gavin Newsom’s office has maintained its policy of not commenting on pending legislation.
As healthcare costs continue to rise, lawmakers in various states are exploring ways to ensure insurance providers are treating claims fairly. In 2024, roughly 17 states passed laws concerning the prior authorization of care by private insurers, according to the National Conference of State Legislatures. Connecticut, which has robust disclosure laws about denial rates, publishes an annual report detailing each insurer’s denial statistics, while Oregon had similar reporting requirements that have recently lapsed.
California currently lacks transparency regarding denial rates, a troubling fact, especially as mental health issues among children and young adults worsen. Health policy expert Keith Humphreys from Stanford University noted that mental health care denials may often go unchecked due to the more subjective nature of these diagnoses when compared to physical ailments. Lishaun Francis, senior director of behavioral health for the advocacy group Children Now, supported the concerns about the state’s opacity around insurance denials.
Senator Wiener’s proposal mandates private insurers monitored by state authorities to provide comprehensive data concerning denials, including the reasoning behind these decisions and the outcomes of subsequent appeals. If an insurer has more than half of its appeals overturned in a year, severe penalties would ensue starting at $50,000 for the first instance, escalating with subsequent violations.
If enacted, this measure would encompass approximately 12.8 million Californians with private insurance, but it would not extend to individuals on Medi-Cal, the state’s Medicaid program, or Medicare, nor would it include self-insured plans governed by federal oversight.
In light of the frustrations associated with insurance denials, Sandra Maturino from Rialto expressed her hope that legislative changes would prevent others from experiencing the struggles she faced in securing treatment for her niece, whom she adopted after her sister’s passing. Maturino’s niece, now 13, battled self-harm and violent tendencies; however, her request for long-term inpatient care was limited to just 30 days by her insurer, Anthem Blue Cross.
Maturino endured frequent disruptions to her niece’s treatment because the insurer would not cover extended stays. After a year of navigating inconsistent care and ineffective treatment options, she ultimately secured her niece’s enrollment in a residential program in Utah, funded by an adoption agency, where she received a correct diagnosis and ongoing treatment for bipolar disorder.
“I wasn’t going to wait around for the insurance to kill her, or for her to hurt somebody,” Maturino stated, reiterating the urgency of reforming the insurance denial process.
KFF Health News is a national newsroom focusing on health issues, offering in-depth journalism as part of KFF, an independent organization dedicated to health policy research, polling, and journalism.
**USE OUR CONTENT** This article can be republished freely (details).
