Long Term Care Insurance Denials
A recent article in the Wall Street Journal “Old-Age Safety Net Frays for Millions of Americans” raises a dilemma faced by many older Americans when their long term nursing care insurance premiums are hiked to unaffordable levels.
Insurers pushed these long term care policies hard and have profited for years telling people that they would provide coverage if they ever needed to go into a nursing home, assisted living facility or needed in-home health care. Now the bill is coming due.
There are limits to the premium increases – usually provided in the state’s statutory insurance laws.Has an Insurance Company Unreasonably Reduced, Delayed or Denied Your Claim?
A second and even more disturbing issue raised in the WSJ article is the sharp uptick of denials of such claims due to the unprofitability of the policies. It turns out that people are living longer nowadays and the cost of medical care has skyrocketed. Moreover, the type of person who responsibly purchases these long term care policies is typically more diligent in keeping the premiums paid and less policies have lapsed than expected.
However, the insurance company is bound by the terms of the policy regardless of profit – it has actuaries to determine risk and reward, and such policies serve to protect an individual from otherwise devastating medical costs later in life. Now that a large wave of baby boomers are starting to require long term care, the costs are increasing and insurers are starting to waffle and stall.
In our consumer oriented practice, we seek to ensure that both of these practices do not unfairly take advantage of our older clients and their caregivers. Various states including Florida have allowed insurance companies to raise their rates – but there are rules regarding how much and the notice required for such increases. As for denials, we look to the contract first and foremost. Many of the older policies obtained in the 80s and 90s contain ambiguous terms, and assisted living facilities didn’t even exist yet. While ambiguities are legally determined in favor of the insured in court, they are fertile ground for denials. Many people simply move on when they receive a denial and don’t argue or litigate for the coverage, electing to instead spend down the elderly parent’s savings and then go onto Medicare. However, many denials are reversed and should be challenged for the best care. Medicare does not cover assistive or custodial care – only medically necessary care under certain conditions.
An argument can be made that some insurers quoted unreasonably low premiums to gain the business, with full knowledge that the policies may lapse when the premiums are inevitably raised years down the road for the insured who is now on a fixed income. However, with the high cost of medical care, they have found that Americans have cut back in other areas in order to keep the premiums paid. As a result, the second prong of defense has been to unreasonably delay and deny insurance coverage. What better way to privatize profits and socialize losses. Insurance companies have received monthly or annual premiums since the 80s and 90s with the accompanying commissions and bonuses to executives, only to now refuse coverage and force the insured onto Medicare.How to fight back?
First, understand that the insurance companies are no strangers to litigation and they are very familiar with the insurance terminology in their contracts and the interpretations over the years rendered by our courts. It’s important to first read the contract very carefully and hire an attorney (on a contingency basis if possible) to represent you. Obtain an opinion from a consumer or insurance attorney as to the interaction between the contract, the state statutes governing the policies and any recent court cases. An attorney on contingency only gets paid if the claim is successful.How to Know if the Long Term Care Insurance Company is Playing Games.
Similar to what we saw in the housing meltdown where mortgage companies denied mortgage modification claims due to missing or insufficient paperwork, we are seeing the same games being played out by long term care insurance companies. In today’s electronic age, they usually require claim documentation to be submitted by snail mail. They advise they didn’t receive paperwork that was sent multiple times. They make unreasonable requests for barely relevant data. They send the wrong forms to be filled out – or fail to send the forms at all. They have long hold times if you can reach someone by telephone. All of these tactics that were engaged in the era of home loan mods are being used again, this time to delay or deny insurance coverage.
Sometimes the insurance company may dispute the nursing assessment that the insured is cognitively impaired. They may send a person to interview your parent – if so, make sure you are present to help your parent correctly answer the questions about what they can and cannot do. The insurance company may say that your parent does not need assistance in the activities of daily living as required to activate the policy. Or they may ignore the medical necessity trigger, or state that it is not medically necessary that nursing home or assisted living care be provided. They may deny coverage based upon their interpretation of the definitions of terms used in the policy – such as what constitutes a “nursing home”.How can an Attorney Help?
First, having an advocate who understands these contracts on your side can be invaluable.
Second, this advocate should also be knowledgeable about the court system, statutory law and applicable insurance guidelines as well as recent case law involving long term care insurance disputes.Legal Theories to Hold Insurers Accountable.
Because litigation can be both costly and time consuming, our team attempts to resolve these coverage disputes at the earliest possible stage. However, if litigation or arbitration is in our client’s best interest or cannot otherwise be avoided, we have the civil litigation experience necessary to take the insurance company to court. There are several causes of action to force the insurance company to abide by its contract which are recognized in Florida such as:
- Breach of contract
- Breach of Implied Covenant of Good Faith and Fair Dealing
- Declaratory and Injunctive Relief
It can be if the attorney is billing you on an hourly rate. But it all depends upon the case. Most claims are litigated on a contingency basis which means if you do not prevail, the attorney does not get paid. Besides not costing you out-of-pocket, this approach has two advantages: your attorney will be incentivized to work harder for you and to work expeditiously to obtain coverage as soon as possible.What are Some of the Reasons for Claims Denial that Have Been the Basis for Lawsuits?
- Policyholders failed to submit “irrelevant” paperwork
- Daily nursing notes did not contain sufficient detail to invoke policy
- Policyholders filling out the wrong forms – even though it was the form sent to them
- Facilities that are deemed inappropriate even though licensed
- Dispute over the terminology used in the contract
- New York Life
- Penn Treaty
- John Hancock – and various divisions
- Farmers New World
- Physician’s Mutual
- American Heritage Life Ins.
- Mutual of Omaha Ins.
If you or the person for whom you are acting as caregiver has experienced an unusually large premium hike or reduction, delay or outright denial of long term care insurance benefits, please fill out our short confidential form below to have us review your situation free of charge.