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Lawyer sees more LTCI claim suits

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Plaintiffs’ lawyers are paying more attention to long-term care insurance (LTCI) policyholders, and long-term care (LTC) planners need to do their part to ward off litigation.

Stephen Serfass, a partner in the life and annuities group at DrinkerBiddle, asked LTC advisors for their help Tuesday during a session at an American Association for Long-Term Care Insurance (AALTCI) LTC sales conference.

AALTCI organized a traditional conference in Washington and also streamed video of the conference on the Web. 

Serfass told conference attendees and Web video viewers that plaintiffs’ lawyers began taking a serious interest in LTCI litigation in April 2012, when a woman won a $34 million jury award in connection with problems collecting LTCI policy benefits.

The award was eventually reduced to $12.3 million, and, later, the insurer settled the case, Serfass said.

“For the plaintiffs’ bar,” he said, “this was the shot heard ’round the LTCI world.”

The number of new LTCI cases his firm has located increase to 27 in 2012, from 22 in 2011. The new case count then rose to 35 in 2013, and 50 in 2014. Plaintiffs have already filed 48 new cases this year, he said.

Because the LTCI market is maturing and more policyholders are filing claims, the increase in the number of claims could increase the risk of litigation, regardless of what else is happening, Serfass said.

Rate increases can also trigger litigation, but, in recent years, he said, he has noticed significant growth in cases involving questions about claims, such as questions about exactly what kinds of insureds qualify for benefits payments, and what kinds of providers are eligible to get reimbursed for helping LTC coverage holders, Serfass said.

Plaintiffs have filed suits over rate increases even in situations in which the insurer declared, in bold type on the first page of the policy, that rates could go up, Serfass said.

See also: Consumer rep raises LTCI disclosure concerns

But Serfass said LTC planners may be able to protect themselves and insurers from some litigation risk by making sure they take a systematic approach to documenting what they have told clients.

Even if a planner takes care to tell a client many important things, at some point, a son, a daughter, a son-in-law or a daughter-in-law who is a lawyer may wonder what the planner told  the client, Serfass said.

“They are confused about what was said to mom or dad,” Serfass said.

See also: Conversation documentation guideline

One financial professional who was following the video version of the session suggested documenting refusals of LTC plans with a form that describes the client’s income and assets as well as the LTC plan the client has rejected.

Another professional recommended summarizing conversations and recommendations with clients in a recap email.

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