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Life Health > Long-Term Care Planning

5 recent LTCI court cases you need to know

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San Antonio — The kinds of trial lawyers who make life interesting for chemical manufacturers and securities issuers are starting to pay more attention to long-term care insurance (LTCI).

Stephen Serfass, a partner at Drinker Biddle & Reath LLP, and Josh Akbar, a partner at Dentons, delivered that news Monday here at the Intercompany Long Term Care Insurance Conference. For Serfass, the ILTCI talk amounted to a sequel to a talk he gave in October, on a Web video conference organized by the American Association for Long-Term Care Insurance (AALTCI). Serfass then told an audience made up largely of LTCI agents and brokers that major plaintiffs’ lawyers began taking a serious interest in LTCI litigation in April 2012, when a woman who had LTCI claim problems won a $34 million jury award.

See also: Lawyer sees more LTCI claim suits

At the ILTCI conference, Serfass and Akbar reviewed a long list of recent ILTCI cases for an audience made up mainly of actuaries and home office executives.

He reported that the number of LTCI-related cases filed in the United States each year has increased to about 50 to 60 each in 2014 and 2015, from fewer than 20 per year a decade ago.

The increase in the number of suits filed is probably due at least partly to the reality that the relatively young people who bought LTCI policies when sales were strong are now getting older. Whenever policyholders file claims, that leads to the possibility that the insurer will reject the claims, and rejected claims occasionally lead to lawsuits, Serfass said.

Plaintiffs’ lawyers are also getting more familiar with how LTCI workers, Serfass said. In the past, he said, plaintiffs’ lawyers that looked at LTCI issuers generally said, “It’s complicated, and there’s not a lot of money there.”

Akbar said “dark” articles about LTCI in big national newspapers have contributed to a tougher litigation climate.

But Akbar and Serfass said insurers have succeeded at fighting off most of the suits.

For a look at some of cases they discussed, read on. 

Golden Gate Bridge

1. Sanchez et al. v. CalPERS et al. (California)

Michael Bidart leads the legal team that brought this case, which has its own website

Policyholders filed this case in response to a series of a big premium increases at a self-funded LTC benefits program set up by the California Public Employees’ Retiree System (CalPERS). In 2013, CalPERS announced an 85 percent rate increase.

The Sanchez legal team organized a class action against the insurer, its board members and the carriers’ actuary, with charges ranging from breach of contract, to bait and switch, to professional negligence on the part of the actuary.

That case is still under way, Akbar said.

Akbar said some plaintiffs have tried to accuse CalPERS of hiding the fact that its LTC benefits prices could go up, even though the policy said rates could go up in several places. 

See also: CalPERS to raise some LTCI rates 85 percent

Image: AP photo/Eric Risberg


2. Toulon v. CNA Financial Corp. (Illinois)

In the Toulon case, a plaintiff is fighting a 76.5 percent rate increase.

The plaintiff is alleging that a standard personal worksheet she filled out around the time she bought her policy indicated that rate increases would be about 20 percent. She has said that she relied on the information in the worksheet, not the information in the policy.

She also has accused CNA of structuring the LTCI coverage in such a way that rates were sure to go up sharply in the future. 

See also: Regulators hammer out LTCI worksheet changes

The court dismissed the suit. After the plaintiff’s lawyers refiled it, the court dismissed it again, with prejudice, meaning that it can’t be refiled again.


3. Driscoll (Washington state) 

In the Driscoll case, a plaintiff sought to use a state administration action to allege that Washington state regulators had used deficient information to support a rate increase.

Statute of limitations problems knocked an early case out, but now the plaintiff has filed a new, timely case, and that may give the actuarial deficiency argument a chance to get some extra attention.  

See also: Washington state tries Medicare-Medicaid coordination

Stoney Creek, Conn.

4. Marie Gardner v. CNA (Connecticut)

In the Gardner case, which is still pending, a plaintiff is suing over the benefits provided by a “campus” that contains independent liviing apartments, an assisted living facility, a nursing home and other types of housing. 

A campus like that may have different levels of licensing in different areas. When the same campus licensed to provide different levels of care, that can lead to confusion and claim disputes, Serfass and Akbar said.

In the Gardner case, the plaintiffs also accused the company of refusing to issue timely written claim denial, or only issuing verbal denials to elderly policyholders.

The court certified a class action March 1. 

See also: Why that new LTCI experience study matters


5. Gutowitz v. Transamerica Life

Serfass and Akbar talked about several cases, including Gutowitz, that deal with a policy’s definition of the term “nursing home.” The definition states that a “nursing home” must be “engaged in providing… nursing care and related services on a continuing inpatient basis.”

“Three different judges, from two different courts in different states, have now analyzed identical policy language three different ways,” Serfass and Akbar say in their slidedeck.

Akbar noted that, in some places, judges seem to be frustrated. “The judges don’t necessarily like what they’re called upon to do with these older policies,” he said. 

See also:

Conversation documentation guideline

Consumer rep raises LTCI disclosure concerns


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