Louisiana Insurance Commissioner Jim Donelon defends Hurricane Isaac emergency rule
Sep 19, 2012
The following article was published in the Louisiana Times-Picayune on September 19, 2012:
Above: Louisiana Insurance Commissioner Jim Donelon
Insurance Commissioner Defends Hurricane Isaac Emergency Rule
By Ed Anderson
BATON ROUGE — State Insurance Commissioner Jim Donelon said Tuesday he was within his rights to issue emergency rules during Hurricane Isaac’s aftermath to help storm victims temporarily get cheaper emergency medical coverage. Donelon’s comments came in response to a lawsuit filed late Monday by two heavyweight health care organizations, the Louisiana State Medical Society and the Louisiana Hospital Association. The lawsuit, filed in state court in Baton Rouge, challenges Donelon’s authority to issue the emergency rules the way he did.
“This sets a dangerous precedent,” said medical society legal affairs director Greg Waddell, who alleged Donelon was legislating new law through the emergency order. “Where are the limitations set?”
In a news release issued Sept. 4, Donelon said the emergency rules applied statewide to all forms of insurance.
“The emergency rule will enable policyholders who were displaced by Isaac to have access to coverages provided by their health policies for emergency treatment, even if they are forced by circumstances to go to an out-of-network provider,” Donelon said when the rule was issued.
The order also dealt with prohibitions against insurers dropping coverage or not renewing coverage during the storm or allowing consumers to pay premiums late without having to pay fees or penalties.
Those parts of the rules were not challenged by the two groups. The entire emergency rule issued by Donelon is scheduled to expire Sept. 25.
The two groups alleged that Donelon’s emergency rule was in place statewide from Aug. 26 through Sept. 8, then was modified to affect only residents of the 23 parishes affected by Isaac.
“The emergency rule goes well beyond regulating the administration of insurance and suspension of notice provisions and legal deadlines” for various types of insurance, the lawsuit said.
It said that parts of Donelon’s emergency action “directly interfered with and impeded the practices and contractural relationships of health care providers and health care professionals and limits their ability to enforce their contracts and recoup full payments for services rendered.”
The rule required that emergency “out-of-network” medical care be treated like a policyholder’s “in-network” claim, and eliminated higher charges for patients who were getting treatment outside of their health care network. The lawsuit alleged that had the effect of voiding existing contracts between health care providers and insurance companies that determine reimbursement rates and what procedures and conditions are covered.
“I would hope the court would come down on the side of the consumer,” Donelon said. “I think these people deserve a break.”
He said he took similar steps after Hurricanes Katrina and Rita in 2005 and Gustav in 2008 and the rules did not draw a court challenge.
“I think we are on solid ground in doing this,” Donelon said. “This is a smaller (hurricane) event, a better opportunity … to raise a challenge in a less hostile environment” than after Katrina, Rita or Gustav.
“That doesn’t make it any more legal today” even if it has been done in then past, Waddell said. “It is a dangerous precedent, and we can’t live with that. It starts a dangerous precedent for all insurance commissioners to create a new law” through an executive order.
The lawsuit said the governor cannot transfer to Donelon the power to issue emergency orders. Even if he could, the lawsuit claimed, state law does not give the governor or any other executive the authority to “unilaterally promulgate new substantive legislation” in an emergency rule.
The lawsuit said the rules are “unconstitutional and unenforceable because the commissioner lacked the authority under the Louisiana Constitution” or state law to issue the rules as they were written.
“The Louisiana Department of Insurance in unilaterally promulgating regulations which affect the rights, operations and recovery of health care providers and health care professionals, usurps the authority of the legislative branch of government and violates the separation of powers provision” of the state charter, the lawsuit said.
The litigation names the state and the Department of Insurance as defendants as well as Donelon.
The lawsuit was allotted to 19th Judicial District Court Judge Janice Clark. No hearing dates have been set on the plaintiffs’ request to have parts of the emergency rules issued by Donelon held unconstitutional and seeking orders to prevent them from being enforced.
Ed Anderson can be reached at eanderson@timespicayune.com or 225.342.5810.
View the original article here: http://www.nola.com/hurricane/index.ssf/2012/09/louisiana_insurance_commission.html