Long-Term Care Insurer Denies Benefits and Policyholder Awarded $34 Million

When 90-year-old Arlene Hull purchased long-term care insurance in 1997, she expected the insurance would pay benefits if she needed residential care. What she didn’t expect was to be denied benefits after she was diagnosed with Alzheimer’s disease and had already been receiving assisted living care for two years. According to the Billings Gazette, Ability Insurance Company refused to continue paying for Hull’s care, saying the facility’s medical staff and an independent consultant concluded that Hull did not need “continual supervision due to a severe cognitive impairment” and that her doctor said she was “moderately” not “severely” impaired.
Hull sued, and the insurer’s own medical examiner determined that Hull qualified for benefits. Ability resumed paying for Hull’s care, but refused to reimburse her for the intervening period during which it had denied benefits.

Ability’s conduct didn’t win approval with a Montana jury, which awarded Hull $250,000 for breach of contract; $2 million for violation of Montana’s Unfair Trade Practices law; and $32 million in punitive damages, about the largest jury award in the state’s history. Hull won’t receive that much, since the state caps punitive awards at $10 million. Still, the size of the award sends a message to insurers who treat people with Alzheimer’s unfairly. See, “Jury awards elderly Billings woman $34 million in long-term care dispute.”

This case is not unlike the many denials we encounter because insurance companies are too often looking for reasons to deny, rather than to pay benefits. Ability likely tried to take advantage some information it this lack of clarity to make a benefits determination to its advantage.

We urge clients and their treating physicians to maintain and submit full and complete records, going beyond insurers’ forms to provide detailed explanations of why a policyholder needs care. We encourage use of both plain language and medical terminology in writing to make sure insurance examiners can’t rely on ambiguities to deny benefits. This still doesn’t mean the insurer won’t find another reason to deny benefits.

Sometimes, like Hull, you need a lawyer and a jury to help convince your insurer it shouldn’t deny your benefits. When that happens, call us at (800) 446-7529. We can help.

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