Fix Insurance by Allowing Lawsuits

Robert E.L. Bonaparte and Stephen D. Leggatt’s Letter to the Editor of The Oregonian:

We are lawyers who represent homeowners shortchanged by property insurers after disasters like fires, treefalls, or burst pipes. If our cases don’t settle, they proceed to jury trial to hold insurers accountable. Lawyers often take such cases on contingency, because under Oregon law a recovery in any amount obliges insurers to pay policyholders’ attorney fees.

Much ink has been spilled about Luigi Mangione, whose manifesto savages health insurers and their unfair coverage denials. But the debate omits a key issue.

The problem is: you can’t sue [the bastards]. Most Americans get health insurance through their job, meaning their health insurance plans are subject to the federal ERISA statute. Under ERISA, health insurers cannot be sued in state court. And before they can sue an ERISA health insurer in federal court, consumers must first “exhaust” all “administrative remedies” available from the same health insurer that denied their claims. This process is a minefield of arcane rules calculated to extinguish the insured’s right to sue.

Even if consumers clear that hurdle, their claims will be decided, not by a jury, but by a federal judge whose only function is to determine whether the insurer’s denial was “rationally based” – a very low threshold. If there was any rational basis for the insurer’s decision, the consumer’s claims will be dismissed.

The remedy: scrap ERISA and allow consumers to take lawsuits against health insurers to a jury. Consumers’ lawyers will function as a legion of private attorneys general, and bring recalcitrant health insurers to heel.