The California Dept. of Insurance has announced an agreement with Conseco Senior Health Insurance Company to pay $500,000 to settle charges the company mishandled a number of long term care claims between 2004 and 2007.
Conseco Senior Health, which was discontinued last year by its parent, Conseco Inc., Carmel, Ind., “showed a callousness or carelessness toward vulnerable policyholders” in denying valid claims unfairly, said California Insurance Commissioner Steve Poizner in a statement.
By converting the subsidiary into a new entity, the arrangement relieved Conseco of responsibility for 140,000 older LTC policies.
Poizner said a number of LTC insurance policy holders had complained that their claims were denied by Conseco Senior Health, which was placed in a trust last year under the Pennsylvania Department of Insurance and renamed as Senior Health Insurance Company of Pennsylvania.
The company’s claims-handling procedures were also “confusing and onerous” to many policyholders, whose average age is 80, Poizner said.
The order from the state DOI charged Senior Health with wrongfully delaying or denying payment of claims, failing to apply policy provisions fairly, requiring policy holders to provide unnecesary information to back their claims, and delaying responses or failing to answer inquiries from claimants as well as the state insurance department.
In addition to a $500,000 penalty, Conseco and will retroactively pay certain policyholder claims back to Jan. 1, 2004, along with interest at an annual 10% rate.
Conseco Senior Health Insurance Company was separated from Conseco in November 2008 and since then has been managed by a private trust under the supervision of the Pennsylvania DOI and run for the sole benefit of its policyholders.
A spokesman for Conseco Inc. noted that Senior Health now operates independently and that Conseco was not a party to the settlement.
“We understand, however, that SHIP [Senior Health Insurance Company of Pennslvania] believes that any errors that occurred during the period covered by the settlement were based not on willful intent but on inconsistent interpretation of policy terms under California regulations,” the spokesman said.
SHIP niether admitted to nor denied the department’s charges but agreed to the settlement “to put these matters behind the company and avoid further legal costs,” the spokesman said.