Can You Sue Your Health Insurance Company for Bad Faith in Illinois?

Overview

Have you ever submitted a completely valid medical claim, only to have your insurance company drag their feet for months, demand irrelevant documentation, or deny the claim for a completely baseless reason? If you have been forced into debt or had your health put at risk because your insurer refused to honor their end of the contract, you are not alone—and you may have a high-value legal claim against them - please contact us ASAP..

Health insurance companies owe their policyholders a duty of good faith and fair dealing. When you pay your monthly premiums, you are entering into a contract with the expectation that they will cover your eligible medical bills. However, some insurers use deceptive tactics, unreasonable delays, or automated denial software to avoid paying out valid claims, hoping that sick and exhausted patients will simply give up.

When a standard denial crosses the line from a simple contractual dispute into intentional deception or stonewalling, it becomes "bad faith." The State of Illinois has specific statutory mechanisms to severely penalize insurance companies that engage in these practices.

WAS YOUR CLAIM DENIED? If your health insurance company refused to pay for a prescribed treatment, surgery, or medication, you have a limited window of time to fight back. Click here to talk with an attorney today.

When Does a Denial Become "Bad Faith"?

In Illinois, you cannot sue an insurance company for bad faith just because they made a simple administrative error or because you disagree with their coverage decision. The insurer's conduct must rise to the level of being "vexatious and unreasonable."

Under Section 155 of the Illinois Insurance Code (215 ILCS 5/155), an insurance company may be acting in bad faith if they:

Refuse to pay a claim without conducting a reasonable and objective investigation.
Intentionally delay the claims process by repeatedly asking for duplicative or irrelevant medical records.
Offer a settlement that is outrageously lower than the actual value of the medical bills.
Rely on algorithmic software to mass-deny claims without having a qualified medical professional review the patient's actual file.
Fail to provide a prompt, reasonable, and factual explanation for why the claim was denied.

Statutory Penalties and Damages Under Section 155

Before Section 155 was enacted, a policyholder who sued their insurance company and won would only recover the original amount the insurer owed them. There was no financial deterrent to stop insurers from denying claims just to see if the patient would actually sue.

Now, Section 155 serves as a powerful weapon. If a court finds that your health insurance company acted vexatiously and unreasonably, you can recover far more than just the cost of your medical procedure. You may be awarded:

The Full Claim Amount: The original cost of the medical treatment or benefits owed under your policy.
Attorney Fees and Court Costs: The insurance company is forced to pay your legal bills, meaning you are not penalized financially for having to hire a lawyer to get what is rightfully yours.
Statutory Penalties: An additional punitive award which can be up to 60% of the amount owed, up to $60,000, or the difference between the judgment and the insurer's initial settlement offer.

High-Value Individual Claims and Class Actions

Bad faith litigation generally takes two forms:

High-Value Individual Lawsuits: If you were denied a highly expensive, life-saving treatment (such as a complex surgery or specialty cancer medication) and the insurer employed deceptive tactics to delay your care, the financial damages and statutory penalties under Section 155 can be substantial.
Systemic Class Actions: Often, an insurer's bad faith is not isolated to one patient. If a company is using a flawed internal policy or an AI algorithm to systematically deny a specific type of necessary treatment for thousands of policyholders, those individual breach of contract claims can be aggregated. A class action lawsuit can force the insurer to overhaul their claims processing system and compensate all affected patients.

Speak to a Chicago Insurance Appeals Lawyer

Insurance companies have teams of lawyers dedicated to protecting their profit margins. You need an aggressive advocate to protect your health and your finances. If your insurer has intentionally delayed or wrongfully denied your valid medical claims, you have the right to fight back and demand the coverage you paid for.

Click here to talk with an attorney today to share your experience with our legal team and find out if your case qualifies for a bad faith lawsuit.