On March 26, 2007 the New York Times reported that thousands of policy holders have been denied benefits. One example of an insurance company acting in bad faith is Conseco. It denied an 81 year old widow benefits, even though she had paid into a long term insurance policy since 1990. The company kept coming up with one excuse after another and in the end, her family had to pay about $70,000 to a long-term care facility. Conseco didn't pay anything.
This is far from an isolated case. According to the state of California, almost one in every four long-term-care claims was denied in 2005. One lawsuit alleged that 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: the insurer finally settled for an unspecified amount.
Policyholders have filed thousands of complaints against companies such as Conseco, its affiliate Bankers Life, Penn Treaty and John Hancock Insurance Company. Penn Treaty received one complaint for every 1,207 long-term-care policyholders -- compared with Genworth Financial, the largest long-term-care insurer that received only one complaint for every 12,434 policies, Penn Treaty has a bad track record.
From its annual report, Conseco stated that its long-term care policies were not making enough money so it sold policies through Bankers Life, "using stricter underwriting and pricing standards." According to the New York Times, Conseco collected more than $4.2 billion in premiums in 2006, of which long-term-care policies contributed 21 percent. Penn Treaty collected premiums of about $320 million in 2004, mostly from long-term-care products.
Even with so many policy holders filing complaints, the federal lawmakers and state regulators haven't done much to protect their citizens. Instead, insurers have persuaded insurance commissioners in California, Pennsylvania, Florida and other states to approve price increases up to 40 percent a year.
Depositions
In its March 2007 account, The New York Times obtained depositions that were conducted on behalf of angry policyholders. In one 2006 deposition, a Bankers Life and Conseco claims adjuster testified that she denied claims because of missing records but was prohibited from calling nursing homes or physicians to request the documents. She further testified that when a claim was denied, she was forbidden to phone a policyholder, but instead used a time-consuming mailing system. And the New York Times obtained similar depositions from Penn Treaty. In a 2005 lawsuit, a Penn Treaty senior vice president testified that one claim was rejected:
- without informing the policyholder why it was rejected
- asked for information that was not required to process a claim
- gave incomplete information about a claim's status
- said the company was delaying payment because of an investigation while failing to take steps that might have resolved the inquiry.
Lawsuits
In multiple lawsuits, policyholders allege they have been denied claims from Conseco, Bankers Life or Penn Treaty for many reasons such as:
- policyholders failed to submit unimportant paperwork
- daily nursing notes did not detail minute procedures
- policyholders filled out the wrong forms after receiving them from the insurance companies
- facilities were deemed inappropriate even though they were licensed by state regulators.
Not many lawsuits are made public, mainly because they have been settled with the stipulation that depositions, documents and settlement terms be kept confidential, oftentimes the insurance company has paid millions of dollars to retain confidentiality - they will go to great expense not to have their name and company image tarnished.
Yet the numbers of complaints and lawsuits are growing - it's just a matter of time for lawmakers to investigate. Meanwhile, many people with long term care insurance policies can't wait that long.
Other long term care insurers that have allegedly denied benefits include:
- Genworth
- New York Life
- John Hancock
- Farmers New World
- Physician’s Mutual
Sandpoint, ID: Martin McBirney has almost 20 years of experience in the long term care insurance (LTCI) industry. He started out in this field as an actuary and subsequently did product development, marketing and lobbying. In the past 8 years, he has worked as an independent consultant and for the last 2 last two years he has focused on expert consulting work for plaintiff's attorneys regarding unfair claim denials and excessive rate increases. [ 
Des Moines, IA: In a state that has served as somewhat of a poster child for complaints surrounding long-term health care, Iowa at the beginning of November announced the appointment of a consumer ombudsman, employed by the state, whose job is to advocate on behalf of Iowans having had difficulty collecting from their long-term care insurers. [ 
Washington, DC: My parents have a long term care insurance policy with Conseco," says Paul, "and they started making claims in January, 2005. But this company has practiced nothing but bad faith, and in so doing has turned my father into an angry, emotional wreck." [