Health groups sue Insurance Commissioner over Isaac action

Published: Sep. 18, 2012 at 5:30 PM CDT|Updated: Sep. 29, 2012 at 10:25 PM CDT
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Insurance Commissioner Jim Donelon
Insurance Commissioner Jim Donelon

BATON ROUGE, La. (AP) - Two health care groups are suing Insurance Commissioner Jim Donelon, claiming he exceeded his authority with emergency insurance coverage changes made after Hurricane Isaac.

The lawsuit by the Louisiana State Medical Society and the Louisiana Hospital Association was filed in Baton Rouge district court late Monday. It says an emergency rule that affected health insurance policies was unconstitutional and unenforceable.

The rule issued by Donelon on Sept. 4 required that emergency out-of-network medical care be treated like an in-network claim. The move eliminated higher charges for patients who were getting care outside of their health care network and sidestepped existing contracts between health providers and insurers that determine reimbursement rates and covered charges.

The medical society said Donelon improperly tried to create new law with the emergency rule and wrongly restricted the rights of doctors to bill their patients under existing contracts. The lawsuit seeks to have those portions of the rule dealing with payments for health services thrown out and declared unenforceable.

"Certain provisions of the emergency rule directly interfere with and impede the practices and contractual relationships of health care providers and health care professionals and limit their ability to enforce their contracts and recoup full payment for services rendered," the lawsuit says.

The rule covered activity from Aug. 26 through Sept. 25, affecting the entire state through Sept. 8 and then 23 parishes after that.

Donelon said Tuesday that he was enacting protections for insurance customers affected by Isaac. He said he wanted to ensure people forced from their homes by the storm wouldn't have to pay higher costs for emergency treatment even if they had to see an out-of-network doctor.

The commissioner said similar emergency rules were issued by the insurance department after hurricanes Katrina, Rita and Gustav in recent years, and he said the agency has the legal authority to issue such rules.

"What I'm trying to do, as I've done now four times, is protect evacuees," Donelon said.

Gov. Bobby Jindal gave Donelon the ability to issue limited emergency rules related to Isaac, through an executive order. The lawsuit says that although the governor can suspend regulatory provisions during a declared emergency, the governor's authority wasn't transferable to Donelon.

The lawsuit also says despite the emergency, neither Jindal nor Donelon has the ability to substantially change existing law, as the health care organizations claim Donelon did with his emergency rule.

"We will not sit idly by while Commissioner Donelon attempts to restrict the rights of physicians without any authority to do so," Jeff Williams, executive vice president of the medical society, said in a prepared statement.

Named as defendants are Donelon, the state and the Louisiana Department of Insurance.

Donelon's rule covered more than just health insurance, also barring property insurance companies from canceling policies because of an Isaac claim and giving extensions for people to pay their insurance premiums without late fees or penalties.

The lawsuit, however, isn't seeking to declare those parts of the rule invalidated.

(Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)