Long-Term Insurance Policies Not living Up to Their Promises

Though many people have received benefits under their long-term care insurance policies, many others have reported unfair denials that seem aimed at stalling benefit payments until the purchaser dies and the company is off the hook. The two companies most often named in consumer complaints are Conseco and its subsidiary Bankers Life and Casualty and Penn Treaty. These companies have been the target of complaints and numerous lawsuits. While many of those lawsuits were settled on the condition that the evidence remain secret, New York Times reporters gained access to much of the evidence and wrote an article on March 26, 2007 that stirred up public and governmental concern about the long-term care insurance industry.

According to the New York Times some companies, most particularly Conseco and Penn Treaty, used bad faith practices to avoid paying benefits to disable elderly purchasers who were no longer able to care for themselves. Tactics for unfair denials included sending the wrong form to be filled out and then denying the claim for faulty paperwork, denying a claim for conditions not included in the policy, withholding payment until information was sent that had nothing to do with approving the claim, and denying claims for petty reasons (i.e., inadequate nursing notes). Employees testified that they were required to deny claims because of issuing documents and not allowed to call and ask that the documents be sent. When documents were not sent on time the claims were sometimes abandoned, often without informing the claimants.

Serious problems in the long-term care industry arose several years ago when some of the insurance companies miscalculated increasing costs of long-term care and the claims the companies were paying sometimes exceeded their premiums. Conseco ended up in bankruptcy. A few states allowed the insurance companies to increase premiums to cover costs, but critics claim that some companies decided to increase profits by denying more benefits. This problem is also bigger than just a few companies. The New York Times reported that one out of four long-term care claims were denied in California in 2005, an extremely high rate of refusal for elderly people who have paid expensive premiums for their coverage.

The New York Times article stirred up interest in this problem and Senator Clinton called for a GAO investigation. Government action may stop abuses, but for now the best advice is the old saying, buyer beware!

If you think you have been wrongfully denied benefits under your long term care insurance policy, contact a lawyer who is well versed in insurance matters.