HealthLawProf Blog

Editor: Katharine Van Tassel
Concordia University School of Law

Monday, March 26, 2007

Long Term Care Insurance Problems

The New York Times reports today on problems faced by the elderly receiving insurance coverage for long-term health care - insurance coverage that they had paid for over many years.  I know that some people oppose government regulation but this article suggests strongly that stronger controls are needed on these policies.

Tens of thousands of elderly Americans have received life-prolonging care as a result of their long-term-care policies. With more than eight million customers, such insurance is one of the many products that companies are pitching to older Americans reaching retirement.

Yet thousands of policyholders say they have received only excuses about why insurers will not pay. Interviews by The New York Times and confidential depositions indicate that some long-term-care insurers have developed procedures that make it difficult — if not impossible — for policyholders to get paid. A review of more than 400 of the thousands of grievances and lawsuits filed in recent years shows elderly policyholders confronting unnecessary delays and overwhelming bureaucracies. In California alone, nearly one in every four long-term-care claims was denied in 2005, according to the state (my emphasis).

“The bottom line is that insurance companies make money when they don’t pay claims,” said Mary Beth Senkewicz, who resigned last year as a senior executive at the National Association of Insurance Commissioners. “They’ll do anything to avoid paying, because if they wait long enough, they know the policyholders will die.”

In 2003, a subsidiary of Conseco, Bankers Life and Casualty, sent an 85-year-old woman suffering from dementia the wrong form to fill out, according to a lawsuit, then denied her claim because of improper paperwork. Last year, according to another pending suit, the insurer Penn Treaty American decided that a 92-year-old man had so improved that he should leave his nursing home despite his forgetfulness, anxiety and doctor’s orders to seek continued care. Another suit contended that a company owned by the John Hancock Insurance Company had tried to rescind the coverage of a 72-year-old man when he was diagnosed with Alzheimer’s disease four years after buying the policy.

Firedoglake reports further on these developments and whether such behavior by insurance companies meets the definition of "bad faith."  Long term care policies are extremely expensive and are supposed to provide peace of mind to elderly individuals who fear being unable to afford nursing home care and fear being a burden to relatives.  Grrr - this was not a great way to start off my day - then, of course, I had to read the New York Times article about increased behavioral problems of children who attend daycare -- grrrr again!!

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Penn Treaty and Conseco, which owns Banker's Life, are the bad boys when it comes to denying valid long-term care insurance claims. Conseco just agreed to a $10 million fine for its unfair claims practices.

My experience is that the other companies pay over 95% of claims in a timely manner.

The New York Times looks for dirt, and they can find it in any industry.

By the way, what is a nursing home? We don't have any in Tucson, Arizona. The closest thing we have to such a place is a skilled nursing facility.

Posted by: Bill Kazaros | Sep 14, 2008 10:02:52 AM

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