A Tennessee health insurer denies a claim, citing an exclusion its adjusters located after a thorough, prompt review of the policy and the claim file, and explains the basis in writing. A second insurer denies a similar claim after no review at all. Under T.C.A. § 56-8-105, which statement is correct?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
T.C.A. § 56-8-105 regulates the claims process, not the outcome: a denial supported by a prompt, reasonable investigation and an explanation of the basis is proper claims handling, while denying a claim without conducting a reasonable investigation is one of the enumerated unfair claims settlement practices. The statute thereby separates insurers that reach unfavorable but honest results from insurers that decide first and investigate later, and the Tennessee Department of Commerce & Insurance disciplines the process failure regardless of whether the claim might have been denied anyway.
Why the other options are wrong
- A) The statute targets deficient process, not denials as such; an investigated, well-founded denial is not an unfair practice.
- C) A written explanation of an investigated denial is required transparency, not intimidation; the prohibited conduct is the absence of investigation.
- D) Claims handling is expressly regulated under T.C.A. § 56-8-105 and Tennessee Department of Commerce & Insurance rules, so outcomes reached through the required process are not exempt from oversight.
Memory hook
Same denial, different paths: investigated = lawful, uninvestigated = unfair claims practice.