Tuesday, November 18, 2014

A Window Into Long-Term-Care-Insurance "Agency" and Coverage Issues

In Gunnarson v. Transamerica Life Insurance Company, a federal district court in the state of Washington issued a November 6, 2014 order remanding the case to state court on diversity grounds, rejecting the company's argument that joinder of an individual sales agent as a defendant in the case was merely a step to prevent the out-of-state corporate entity from removing the case to federal court.

In rejecting the fraudulent joinder argument, the federal district court outlined several pending factual and legal issues between the parties arising from the dispute over long-term care insurance (LTCI) coverage.  The issues include:

  • whether the defendant agent's relationship with the insurance company, Bankers United (Transamerica's predecessor), was "disclosed" to the purchasers, relevant because under Washington Law, joint and several liability applies to agents of undisclosed principals;
  • whether written promotional materials on LTCI provided by Bankers United barred a claim for misrepresentation in light of alleged oral misrepresentations by agent at the time of sale regarding dementia care; and
  • whether a claim of misrepresentation, for a policy of LTCI sold 18 years ago, is barred by the statute of limitations, or whether there is an issue of fact about whether and when the purchaser knew or should have discovered that benefits would be paid only for "nursing home" facility care.

In Washington, as in many states, state law changed to expressly require LTCI insurers to cover non-nursing home based care; however, the statutory change apprently occured after the effective date of the policy in question. 

The federal court order linked above resulted in remand to the state court for further proceedings under Washington law. (Allegations, of course, are not the equivalent of proof.)

https://lawprofessors.typepad.com/elder_law/2014/11/a-window-into-long-term-care-insurance-agency-and-coverage-issues.html

Cognitive Impairment, Dementia/Alzheimer’s, Ethical Issues, Health Care/Long Term Care | Permalink

TrackBack URL for this entry:

https://www.typepad.com/services/trackback/6a00d8341bfae553ef01bb07ace2f3970d

Listed below are links to weblogs that reference A Window Into Long-Term-Care-Insurance "Agency" and Coverage Issues:

Comments

Interesting case. I hadn’t been aware of the duty of an agent to disclose the principal though it seems like a commonsense application of the concept of mutual trust and candor which is central to the integrity of business dealings. The duty of the principal to supervise and direct the agent in this insurance context is comparable to the duty of the principal CCRC provider to supervise and direct the activities of its sales staff to ensure that elderly people entering into entry fee continuing care contracts fully understand the uses that can be made of their entry fee investment (consistent with what is in the provider’s standard contract forms) and the limitations of any entry fee refund representations that the sales staff may make.

Posted by: Jack Cumming | Nov 18, 2014 7:10:07 AM

Post a comment