Couple's huge medical bill rejected by travel insurance company

An Alberta pair is on the hook for about $114,000 Cdn ($105,000 US) for a five-day hospital stay in Arizona, after their travel medical insurance policy was cancelled for what they say was a mistake in filling out their insurance forms.

“It means two or three years of living,” John McShane said. “We can’t pay it.”

“I’m devastated,” Donna McShane said. “I had a terrible cry over it.”

The couple spends half the year travelling and staying in the U.S. in a motorhome.The rest of the time they live near Tofield, Alta. 

They say they have purchased travel medical insurance from the Alberta Motor Association (AMA) for years, but an error interpreting a question about prescription drugs was enough to render their coverage void.

The McShanes say they filled out the insurance declaration as truthfully as they could, but an honest mistake left them without medical insurance after the expense had already been incurred.

The two accuse AMA Insurance and Manulife Financial of raking through a decade of Donna McShane’s medical records, looking for a reason to deny their claim.

“I’m sure whoever found it got a raise in pay,” John McShane said.

“They wanted to go through everything to see if there was any place we were mistaken, that we had lied about. We didn’t lie about anything,” he said.

“We wouldn’t put out $3,000 and lie on the application, because at some point we may need that insurance. So why would we lie? Mistake, yes. Lie, no.”

Cough leads to hospital stay

In December 2012, Donna McShane developed a severe cough while the couple was staying in Arizona.

A local doctor recommended she be admitted to hospital pending approval from the McShanes’ insurer.

The approval was granted for an emergency room visit and Donna spent five days in the Western Arizona Regional Medical Center (WARMC) in Bullhead City.

Doctors conducted a variety of tests but were unable to arrive at a diagnosis.

McShane said she even spent two days in an isolation room because they suspected she had tuberculosis.

The bill for the five-day stay was $104,758.97US.

She was discharged on New Year’s Eve 2012 with a prescription for steroids.

Her condition didn’t improve but the McShanes said the insurance company wouldn’t authorize another hospital visit.

Two of  Donna McShane's daughters flew to Arizona to accompany her back to Sherwood Park, Alta., where she says she was diagnosed as having a hiatus hernia, a stomach condition common in people over 50, that can cause severe irritation of the larynx.

“Down there I never heard anything about that,” she said. “All I ever heard was TB.”

Medical records show 9 prescriptions

After the McShanes filed a claim for the expenses, they received a request for Donna's medical records, including office and physicians' notes, tests results, consultant notes, admitting histories and physical examinations, emergency department records, and hospitalization and discharge summaries going back to 2007.

In January 2014, a letter on AMA letterhead told her that her claim was rejected. It said she had answered “no” when asked if she had “taken and/or been prescribed six or more prescription medications” in the last four months.

The letter said her medical records showed nine prescriptions, not the four McShane counted.

The letter said McShane would be refunded $953.26 Cdn for the premiums she had paid.

The cheque was issued by Manulife Financial, the policy's underwriter.

McShane, who was a nurse before she retired, says she believes she had answered truthfully, because some of the prescriptions had been written but never filled, two were for drugs she hadn’t taken in months, and another was for an antibiotic prescribed by her Canadian doctor in case she contracted an infection while travelling, and that she never took.

However, a large red “STOP” sign on the first page of the application warns any errors will void the policy, and that even unfilled or unused prescriptions would be considered used.

Donna McShane says she never saw that page.

Her husband says regardless, none of the prescriptions had anything to do with the reasons Donna was hospitalized.

“What does it matter if she had three prescriptions or 12 prescriptions? I really don’t understand why that’s there, other than [something] they can nail you on,” John McShane said.

Reviewing medical history appropriate AMA says

Although AMA sold the insurance policy and letters sent to the McShanes were written on its letterhead, the company denies it was they who reviewed and rejected the claim. AMA says it was the underwriter Manulife which rejected the claim and that AMA had no access to the file during the claim process

Manulife’s director of media relations, Rebecca Freiburger, said the company wouldn’t discuss the McShanes' case, which it considers to be private, but said the company reviews each case in detail and that there is an appeal process for each decision.

Mathew Wesolowski, AMA’s vice-president and general counsel, said an insurance application is a “contract of utmost good faith.”

In such a contract, he said, because it’s not possible for the insurance company to review the medical records in advance, it’s appropriate to review several years worth of records when the claim is made.

“It’s not in any way to try and find a reason to reason to deny a claim,” Wesolowski said.  “The purpose is to determine whether or not the individual, with the information they provided, were indeed eligible to purchase the insurance they asked for.”

Wesolowski says the insurance application form is neither too stringent nor confusing. He suggested some people’s medication histories can be complex, in which case they should get their doctor’s help filling out the application.

“There’s no pressure to on anybody to fill it out at the counter, and the practical reality is that if people want coverage ... they do have to be able to provide full, truthful and accurate information to the insurers.”

He said Donna McShane would not have been eligible for the insurance with the number of prescriptions she had.

Insurers work hard to avoid paying, lawyer says

Customers are often shocked by an insurer’s change in tone when they have to file a claim, said Paul Auerbach, an injury lawyer in Ottawa.

Applicants "generally see the insurer as someone who’s selling a product that’s going to provide them with peace of mind,” he said.

“The application process is rather casual and friendly and the claims process is rather less casual and less friendly. They’re looking for inconsistencies that might provide the basis upon which to deny the claim.”

Auerbach said insurance companies will spend a considerable amount of time, energy and money scrutinizing claims over $20,000.

He said travel insurance applications ask questions people would be hard-pressed to answer accurately from memory and very few people take the time to review their medical records before signing.

“A relatively innocent mistake can cause significant problems. And it’s understandable that [those mistakes] are made in a lot of cases.”

Auerbach said courts generally side with the insurance company even if errors aren’t deliberately deceptive, or directly relate to the medical condition in the claim.

The McShanes had a temporary agreement with WARMC to pay $50 a month, but that agreement has expired and they expect to hear from the hospital or a collection agency soon.

John McShane says his advice to anyone buying travel insurance is to take the application home and read it carefully.

“Don’t sit in front of the (travel) agent and go click, click click,” he said.

“If need-be take the policy to the doctor and have the doctor go through it with you to make sure there are no errors.”