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Life Health > Life Insurance

Newspaper Eyes LTC Claim Complaint

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The New York Times today published a front-page article that alleges the long term care insurance industry as a whole appears to be rejecting valid claims.

Charles Duhigg, the reporter who wrote the article, cites California statistics suggesting that 1 in 4 LTC insurance claims may be rejected.

Duhigg gives a human face to the issue by presenting a detailed description of the case of Mary Derks, a 77-year-old policyholder of a unit of Conseco Inc., Carmel, Ind., who suffers from Alzheimer’s disease and other conditions and has started several fires by forgetting to turn off the stove, Duhig writes.

Derks’ daughter and son-in-law “sold part of their John Deere dealership to raise money to pay for her mother’s care” while trying to get the Conseco unit to pay Derks’ LTC insurance claim, Duhigg writes in the article.

Conseco says the article gives a misleading impression of its LTC insurance operations.

The article “contains many inaccuracies that we were unable to correct because we are precluded from revealing policyholder information and from discussing individual cases due to confidentiality agreements,” Conseco says in the statement.

The American Council of Life Insurers, Washington, also is taking issue with the Times article.

“What was represented in the story does not comport with our knowledge of how things commonly transpire in the industry,” ACLI spokesman Jack Dolan says.

The article includes a table of LTC insurance consumer complaint data. That article, which reflects tallies of all types of complaints, not just complaints about claims, shows that 4 of the top 10 LTC carriers, including units of Genworth Financial Inc., Richmond, Va., MetLife Inc., New York, and the John Hancock Life Insurance Company unit of Manulife Financial Corp., Toronto, generated only 1 complaint in 2005 per 10,000 policies sold.

Another carrier, a unit of Unum, Chattanooga, Tenn., generated 0 complaints per 10,000 policies sold.

The 3 listed companies with 5 or more complaints filed per 10,000 policies sold are Penn Treaty American Corp., Allentown, Pa., with 9 complaints per 10,000 policies sold; Conseco’s Bankers Life and Casualty unit, with 5 complaints per 10,000 policies sold; and Conseco’s Conseco Senior Health unit, with 29 complaints per 10,000 policies sold.

The table does not indicate what percentage of the complaints filed dealt with handling of claims, nor does it compare LTC complaint ratios with complaint ratios for other comparable product lines, such as health insurance or disability insurance. The text of the article also does not compare LTC insurance claim processing with claim processing for other lines.

In Texas, for example, the 2006 complaint ratio for accident and health carriers was 0.7 “justified” complaints per 10,000 policies sold, according to the Texas Department of Insurance.

A unit of PNC Financial Services Group Inc., Pittsburgh, recently reported that 96% of hospital claims submitted to major medical insurers are rejected at least once, and that hospitals without electronic billing processes end up resubmitting claims an average of 11 times before getting paid.

Duhigg says a review of 400 “grievances and lawsuits” suggests that elderly LTC insurance policyholders have been “confronting unnecessary delays and overwhelming bureaucracies.”

In the Derks case, Conseco sent many letters seeking documentation and referring to requirements that did not seem to appear in the policy, Duhigg writes.

Duhigg refers to a deposition in which a Bankers Life and Conseco claims adjuster testified that she was required to use a cumbersome mailing system to fill in gaps in LTC claim documentation.

At Conseco, executives say the article gives a skewed picture of its LTC insurance claims process.

“The article focuses on a small number of dissatisfied policyholders, and not on the vast majority who are receiving satisfactory service and benefits from the Conseco insurance companies,” Conseco says in its statement.

In 2006, Conseco insurance companies paid 9.8 million claims with a total value of about $2.3 billion, Conseco says.

Life insurers as a group paid about $3 billion in LTC insurance benefits in 2006, Dolan says.

That figure is “pretty clear evidence that we are delivering on our promise of benefits to people in their time of need,” Dolan says.

America’s Health Insurance Plans, Washington, declined to comment specifically about the article in The New York Times, but a spokesman says member companies are committed to resolving any challenges involving LTC insurance claims or information about contract terms expeditiously.


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