Health insurers don't exactly enjoy a reputation for timely payouts when people submit claims. They've been known to make policyholders jump through all sorts of hoops before coming across with a little cash.
But when you owe them money, that's another story.
Karen Fairbank, 60, of Pacific Palisades discovered this recently when Blue Shield of California sent her a letter demanding that she return a payment of more than $2,400, and that she do it pronto.
Plus $4.70 in interest.
"I didn't know whether I actually owed them money or not," Fairbank told me. "But the fact that they wanted interest on a payment they said they made by mistake — that's just astounding."
Equally astounding was Blue Shield's insistence that she pay up within 30 days or face the company's debt collectors and potentially have her credit score trashed.
What, did these guys take customer-service lessons from Tony Soprano?
"We have determined that an incorrect payment in the amount of $2,454.56 has been made," Blue Shield said in its letter to Fairbank. It said the money should have gone to Ronald Reagan UCLA Medical Center for cataract surgery she underwent in March and April last year.
"The payment was issued to you in error," Blue Shield said. It said it expected the full amount, including interest, returned within 30 working days.
"If payment is not received," the insurer noted, "the amount may be assigned for recovery."
OK, mistakes happen. Even an insurance giant like Blue Shield can mess things up and make an incorrect payment.
What's striking here, though, is the no-pussyfooting-around tone that the company adopted, in stark contrast to the runaround Fairbank said she received when she had her operations.
Blue Shield and UCLA were bickering at the time over reimbursement rates, and the insurer had announced that it wouldn't cover any treatment at the school's medical facilities, throwing thousands of patients into limbo.
At one point, Fairbank faced paying more than $12,000 in out-of-pocket costs because she couldn't get her insurer and the hospital to kiss and make up. She eventually got both sides to agree to a "continuity of care" agreement under which Blue Shield said it would keep covering her treatment.
During that episode, however, Fairbank said it was all but impossible to stay on top of who was owed what. UCLA, for example, kept sending her sky-high bills, prompting her to overpay the hospital. She received a $920 refund from UCLA in February.
She received the $2,454.56 check from Blue Shield in May. Fairbank assumed at the time that it was the insurer making good for her overpayments to the hospital.
After receiving Blue Shield's letter the other day, Fairbank contacted UCLA and was assured that no bills were outstanding. This confirmed that the insurer did indeed pay twice for part of the treatment — once to the hospital and once to Fairbank — and was due a refund.
But Blue Shield's letter was woefully short on details about how the mistake occurred or why it took almost a year to seek repayment.
Nor did it show the slightest flexibility in how the money should be paid back. You'd think they would at least be open to an installment plan, considering this was their screw-up.
And that business about wanting $4.70 in interest on the money? Seriously?
On the other hand, this was the same company that state Insurance Commissioner Dave Jones recently said was imposing an "unreasonable" rate hike of as much as 20% for about 268,000 individual policyholders.
And this is the same insurer that, when Jones asked for a smaller rate increase, told the commissioner to pound sand.
Blue Shield was considerably more contrite when I contacted the company on Fairbank's behalf.
"This was not the best-written attempt to communicate a complicated subject," said Steve Shivinsky, a spokesman for the insurer. "It's regrettable that this happened, and we're going to try to make some improvements."
He acknowledged that Fairbank wasn't alone in being hit up for an interest-inclusive refund. Dozens of other Blue Shield policyholders received similar letters as a result of the insurer's spat with UCLA, he said.
One problem, Shivinsky explained, was that Blue Shield didn't know how to proceed once it became aware of the double payments, so it did nothing. For months.
Another problem, he said, was that once the company decided to seek repayments from policyholders, it fell back on chilly, impersonal form letters that did nothing to explain what was actually going on.
Nor did the letters spell out that the interest being sought was money that had been included in the checks it sent to policyholders in the first place, meaning that the insurer was merely seeking repayment of the full amount it erroneously paid.
"None of that was clear in the letter," Shivinsky said.
So where are things now? Blue Shield has contacted Fairbank to apologize for the mess, and she's mailed them a check — for an amount that didn't include any interest.
"She can keep the $4," Shivinsky said.