California Insurance Lawyer Blog

...Premium Increases

Long term care insurance has become a staple for many individuals and couples entering their "golden years." Insurance companies have been rather active in their quest to capture the market of the aging baby boomers looking to ensure that they are cared for in their old age. And, the market is huge. The idea of long term care insurance actually makes a lot of sense for those who can afford it. What consumers didn't (and don't) bank on, is that the cost of such insurance can be highly uncertain. The premium payments quoted at the time of sale, may be more of a "loss leader" than a sign of what the insurance will cost you over your lifetime. Take the case of Mr. and Mrs. Vargo who were the subject of a recent Wall Street Journal article. They bought insurance in 2002 from Lincoln Benefit Life, a subsidiary of Allstate Corp with premiums at $3,305. This September they were advised that premiums would increase to $4,868, a 47% increase.

This is becoming more and more common. The Wall Street Journal also reported that John Hancock Financial was seeking an average 40% increase for about 850,000 of its 1.1 million policyholders. The insurer, a unit of Manulife Financial Corp., also stopped sales of new long-term-care plans to employer-benefits programs.

Other companies including American International Group Inc., MetLife Inc. and Lincoln National Corp. have also recently applied for or received approval for rate rises ranging from 10% to 40%.

Why are premiums going up so much? That's the crazy thing...carriers say it is because "more people used the insurance than anticipated." Insurance companies are in the business of assessing risk. It's what they do. It seems much more likely that carriers lured people into the world of long term care coverage by selling the idea of a secure old age with low rates, and then, after collecting years of premiums, raise rates so high that the insurance gets dropped, and they never have to pay benefits. We haven't seen any evidence of this, but it just doesn't seem reasonable that insurers could have all made such huge errors in their analysands. You can judge for yourself what you think is going on here. The point is, beware! When buying, or renewing long term care coverage, try to get some assurances that you are dealing with a reputable company. Get a history of premium increases. Inquire about fixed premiums. Inquire about any planned future premium increases, or outstanding requests. Get everything in writing. At a minimum these are the things you need to do to protect your interests.

One of the primary reasons people purchase health insurance is to cover medical expenses for catastrophic illnesses such as cancer. Because of this, they are often startled and dismayed when they have to fight insurer delays, denials and policy cancellations when they need cancer treatment. We are confronting this callous insurer behavior more often than ever before as health insurers seek more ways, as they put it, “to control costs” by refusing to uphold their portion of the insurance contract.

That’s why we are encouraged that the Los Angeles City Attorney has filed a lawsuit against Wellpoint Inc., the parent company of Anthem Blue Cross of California, for alleged false advertising and fraud regarding its rescission practices, particularly those targeting women with breast cancer. See “L.A. Accuses Wellpoint of Misleading Public,” (Los Angeles Times) http://www.latimes.com/business/la-fi-wellpoint-suit-20101014,0,1295801.story.

At issue are what prosecutors call three false and misleading press releases Wellpoint issued attacking assertions about the company’s rescission practices while at the same time continuing policies that cancelled coverage for women seeking benefits for breast cancer treatment.

“This is a company that seems willing to say anything – true or not – in order to maintain their profit level,” Chief Assistant City Attorney Jeffrey Isaacs told the Los Angeles Times.

Wellpoint contends the allegations are “misguided” and that it will vigorously defend itself against the claims.

What’s really misguided is forcing sick people to fight their insurers for benefits they paid for. The fact that government authorities are making health insurers honor their contracts is a step in the right direction.

Breast Cancer Survivor Denied Benefits to Treat Disease Resulting From Chemotherapy

October 15, 2010

Kantor & Kantor, LLP, announced today that the law firm filed a complaint in Los Angeles District Court against Kaiser Foundation Health Plan Inc. on behalf of Desiree Kohan, 46 years of age and a breast cancer survivor who was diagnosed in May with myelodysplastic syndrome (MDS), a disease for which the only treatment is a bone marrow/stem cell transplant. Kaiser denied Ms. Kohan’s request for the procedure on the grounds that since breast cancer would likely limit her life span, it was not worthwhile to administer the transplant. Ms. Kohan’s breast cancer is in remission, however, and the only threat to her right now is MDS, a disease she likely developed from the drugs prescribed to cure her breast cancer.

“The basis for Kaiser’s denial of Desiree’s request is so outrageous that it shocks the conscience and calls out for immediate response by the Court,” said Ms. Kohan’s lawyer Lisa S. Kantor, who represents plaintiffs denied health benefits. “Kaiser has ignored the overwhelming medical evidence Desiree submitted and the support of four renowned transplant specialists who stand ready, willing and able to perform the procedure. In addition, Kaiser has committed multiple violations of federal laws of ERISA that govern Desiree’s right to benefits.”

In the complaint, Ms. Kohan petitioned the Court to issue a temporary restraining order compelling Kaiser to approve her request for the bone marrow transplant so that she may be put on the transplant list and begin the process of testing her family members to determine if they are donors. Ms. Kantor is also requesting an expedited bench trial along with a hearing on a preliminary and permanent injunction within three court days.

Although they initially at least paid lip service to President Obama’s overhaul of the nation’s healthcare system, insurers have now thrown their efforts behind Republican attempts to repeal the law that requires every American to purchase health insurance by 2014, reports the Chicago Tribune. See, “Insurance Firms Infuse GOP With Big Doses of Cash.” Or at least those portions of the law they don't like. They tend to like the idea of requiring every American to buy insurance, but not like the parts where their conduct is regulated so as not to spin out of control.

The Tribune writes that this year the nation’s five largest insurers and the industry’s lobbying group, America’s Health Insurance Plans, have poured three times more money to Republican lawmakers and political action committees than they gave to Democrats. In 2009, donations were almost evenly split between the two parties. And the largest insurers also are paying hundreds of thousands to lobbyists with ties to Republican lawmakers who could be shaping health policy.

Typically, the industry supported the law when it believed mandated coverage would increase profits. But now that the final legislation requires insurers cover sick children, quit denying benefits when policyholders actually need them, and eliminate lifetime benefit caps, the industry complains providing such coverage is just too expensive. Instead, according to the Tribune, they are betting a Republican-controlled Congress will return to an era of tax-payer funded government subsidies to insurers through Medicare Advantage Plans and cost-shifting to consumers.

“We generally support candidates whose views align with our business and health care interests,” Aetna spokeswoman Anjie Coplin told the Tribune.

Too bad those same interests don’t appear to align with the interests of the people concerned, namely, all of us consumers.

“Anorexia has the highest mortality rate of any psychiatric illness,” cites Jillian Croll, Ph.D., speaking at the Insight Behavioral Health Conference in Chicago September 24. “It is the third most common chronic illness among adolescents. More people in the United States are affected by eating disorders than are HIV positive.”

Those are chilling statistics, particularly to those who understand that eating disorders can be successfully treated, but many insurance carriers are reluctant to cover the residential treatment necessary for a full recovery – even though federal law requires that insurers provide the same treatment levels for mental illness as they do for physical illness. And some states such as California have even more stringent metal health parity laws.

So why is it so difficult to get insurance benefits for eating disorder treatment? Croll, who is Director, Education, Research and Program Development for the Minnesota-based Emily Program treatment facilities, points to the fact that treatment takes time, can cost up to $2000 a day, and requires skilled clinical support to diagnose, treat and support full recovery.

Most health plans do not have the facilities and professionals necessary within their networks, so patients must go outside the plan to get successful treatment. Insurers typically attempt to force policyholders to use what’s available within the plan before approving out-of-plan treatment. This is usually a waste of time and can be life-threatening for some policyholders.

As a result, most people have to sue their insurer to receive the level of care they need in a timely manner. We file lawsuits around the country on behalf of people with eating disorders, and have appealed cases to higher courts. Our biggest dilemma is that some women may not have the time it takes to wage a lawsuit for treatment. Having legal counsel with experience filing eating disorder claims is critical when the goal is to have insurance companies capitulate and pay for treatment.

For more information about our nationwide Eating Disorder Practice, call (800) 446- 7529, or e-mail lkantor@kantorlaw.net.