In Long Term Care Insurance, the Stonewall is Alive and Well

New York, NYIt was a few years ago that the New York Times reported unnecessary delays experienced by Conseco clients, and holders of their long-term health insurance products. The allegation was that Conseco was operating in bad faith by invoking delay tactics in an effort to stonewall policyholders making legitimate claims.

As recently as this past summer, it appears that the stonewalling is still happening. A blogger, writing anonymously in late August of 2008, talks of her mother purchasing a long-term care insurance policy from Conseco decades ago. Then, at age 65 she purchased yet another long-term care policy to supplement the first, thereby eliminating (in her mind, anyway) any chance for a waiting period.

That was 20 years ago. The dear lady credited with such forward thinking is now 85, and in long-term care. Her children, on her behalf, started the ball rolling for their mother's claim in May of this year and by the end of August—a wait of 3 months, Conseco had yet to process the claim. "Conseco is a master of delay," the disgruntled adult child writes. "They make their living preying on the old and the sick. This is the norm, not just a one-person problem."

That allegation is an old one. For years policyholders have been complaining that claims were delayed, or denied because policyholders failed to submit unimportant paperwork, or in Conseco's view a facility was deemed inappropriate even though it was properly licensed by the state.

Some policyholders were denied because they filled out, and submitted the wrong forms—even though the forms were sent by Conseco. Was it an error? Or was it a stalling tactic?

That's the million-dollar question, and aptly named in view of the fact that as baby boomers age, there will be an even greater demand for long-term care funding from policies, in force, for years.

And that's the rub. A policyholder will purchase a long-term care policy in good faith, and pay the premiums diligently each month. One might imagine the fallout should a payment be missed, or show up late. Thus, a policyholder maintains a policy in good faith for many years, only to be allegedly stonewalled when it comes time to trigger a claim.

Stonewalling, in an attempt to have a delay outlast an infirm policyholder? If the person dies while waiting for funds to arrive, then the claim is a moot point.

That's the sordid suggestion, from some. And in 2006 it came from Teresa Carbonel, a claims adjuster for Conseco and one other company. She testified in a 2006 deposition that she denied claims due to missing records, but was not allowed to contact nursing homes or physicians in an effort to request documents. Carbonel also testified that when a claim was denied, she was not allowed to inform the policyholder over the phone, but rather was mandated to use a convoluted, and time-consuming mailing system.

It appears that delays are still happening. Earlier this year, the Pennsylvania Insurance Department found Conseco had violated insurance claims handling practices and fined the company $32.3 million. Acting Pennsylvania Insurance Commissioner Joel Ario, defined the bulk of the fine as "restitution to consumers who were harmed."

Meanwhile, there are reports that Conseco carried some exposure to the sub-prime mortgage market. And a more recent development has advocates of seniors holding long term care policies, duly concerned.

It has been reported that Conseco elected earlier this year to move 144,000 long term care policies into a new Senior Health Insurance Trust, in an effort to mitigate financial duress from a troubled group of policies it purchased from American Travelers Life and Transport Life in the mid-1990's.

Industry experts were concerned that policyholders who purchased long term care policies from American Travelers Life, or Transport Life from the late 1980's to the mid-1990's could lose equity and benefits out of policies now administered by Conseco.

Beyond all of that, of course, is the simple fact that the consumer should be entitled to what he, or she has paid for. After all, you pay your premiums diligently for years, and on time, for something you hope you never need, but need as insurance against placing a heavy burden on your family. You know that should you never need the policy, or never collect benefits from it, you will not have those premiums returned to you. In a perfect world, that would happen.

But it's not a perfect world. You're paying for a what-if. Fine. If that 'what-if' comes true, you know you're covered. Such is the peace of mind that you have paid years to protect.
Premiums paid in good faith, for the benefit of good faith down the road.

Don't count on it. The insurance industry is a business, and many of the players behave badly. Don't let them get away with it. If you have paid faithfully into long term insurance, you have made a legitimate claim and you're being stonewalled, don't take it. Get yourself a good lawyer, and fight back. All you're asking for is what is rightfully your due.

Otherwise, you're just letting the bullies take over the playground.