California Insurance Lawyer Blog

At Kantor & Kantor we hear from people every day about their troubles in trying to obtain benefits under Long Term Disability, Long Term Care, Health and Life insurance policies. We created our Blog as a way to try and share some of the stories we hear, as well as the news being made in these and other related insurance areas.

Well, it seems people are reading our Blog and getting a benefit out of our efforts, all of which makes it even more worthwhile. Our Blog was just recently named as one of the Top 50 Legal Blogsites by the LexisNexis Insurance Law Center. This is what they had to say: "These blogsites contain some of the best writing out there on insurance on coverage, catastrophic loss, regulatory compliance, life insurance, health care and insurance issues in general,...They contain a wealth of information for the insurance community with timely news items, practical information, expert analysis, frequent postings and helpful links to other sites. These blogsites also show us how insurance issues interact with politics and culture. Moreover, they demonstrate how bloggers can impact the world of insurance law and insurance industry issues.”

Thanks LexisNexis. We will keep on blogging!

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Posted In: ERISA , Health Insurance , Insurance Bad Faith , Life Insurance , LongTerm Care Insurance , LongTerm Disability (LTD) Insurance

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Insurers throughout the country are asking state insurance regulators to allow price increases for long-term care insurance. Essentially, they are admitting they made mistakes early on by pricing the policies too low in order to compete for business. Now, faced with an aging baby boomer population, these companies are concerned they will be paying out more in claims than they anticipated. They want to counter this by charging their customers more money. An article from TheStreet.com reports in the past year, Genworth Financial requested increases ranging from 8% to 12% on some policies already owned by its customers; John Hancock announced a 14% increase in some existing policies in May 2008; and this week, MetLife announced it will raise annual premiums an average of 18% for policy holders who were younger than age 70 when they purchased policies in the years from 1998 through 2005.

Financial consultant and columnist Terry Savage queries, “isn't it the job of the insurance company to assess those trends that impact pricing before they go to market -- whether they be the rising cost of providing benefits or the cost of hedging against low interest rates that impact the investment of their reserves?”

We agree with Savage that insurance companies could be doing much better with customer service in selling, servicing and particularly in paying claims.

Still, Savage is an advocate for the purchase of long term care insurance, especially when compared to the alternative of relying on the government. She cautions against relying on government-funded programs such as Medicare to pay for long-term care because quality care options through government programs are shrinking rapidly.

And remember, the need for long-term care may arise long before you or your spouse even reach retirement or “long term care” age. Illnesses such as multiple sclerosis, fibromyalgia, Alzheimer’s, AIDS, lupus and a host of other debilitating ailments too numerous to name here may require assisted living or in-home care for years. We know because we help people with these issues every day.

With all the roadblocks policyholders often face when dealing with insurers – including having to hire lawyers like us to fight for their benefits – it’s still probably better to have some insurance than none at all.

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Posted In: LongTerm Care Insurance

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Health Net Inc. has now joined the growing list of health insurers to reinstate policies it canceled after policyholders got sick, reports the Los Angeles Times. In the settlement, called the first of its kind because it involved both the state Department of Managed Healthcare and the Department of Insurance, reinstated 926 policies and forces the company to pay $3.6 million in penalties and $14 million in restitution for unpaid medical bills. Heath Net admitted no wrongdoing.

Critics are calling the deal only a partial solution, and we agree. As a result of the settlement, individual policyholders with legitimate suits against Health Net may be persuaded to give up their rights to seek damages for economic losses and emotional distress.

Health Net CEO Jay Gellert calls the deal an opportunity “to move forward” and help the state overhaul the healthcare industry.

What do you think? Are these settlements letting wrongdoers off the hook by allowing them to save millions in court costs, or is it more important that insurers are allowed the flexibility to fix past mistakes and perhaps do a better job in the future?

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Posted In: Health Insurance , Insurance Bad Faith

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Our friend Bonnie Burns testified before the House Energy and Commerce Oversight and Investigations subcommittee last week about the need for federal standards governing private long-term care insurance policies. Burns, a policy specialist at the Medicare advocacy organization California Health Advocates, pointed out the “disconnect between those services available in a community and the way they are described in an insurance policy, and no two companies have the same definitions.”

We agree with Bonnie that uniformity can help consumers more fully understand what they are purchasing and what they can expect when they need benefits. Limited federal intervention in this area may assist the industry to develop affordable products that would appeal to the public the same way life, automobile and home insurance does. Many states are doing an excellent job of educating their residents about the value of long-term care insurance.

What would really make a difference, however, would be if the insurance industry would begin to police itself before the federal government has to address long-term care the same way it did retirement benefits through ERISA, the Employees Retirement and Income Security Act, which has been a bureaucratic headache since its inception. The industry needs to take an honest survey of its claims-handling practices, ending the “delay-and-deny” tactics so many policyholders are subjected to.

While industry experts such as Marc Cohen, president of the long-term care consulting firm Life Plans, who also testified before the subcommittee, continue to insist that unresolved disagreements between long-term care policyholders and carriers remain less than 5 percent of all claims, the widespread dissatisfaction with claims-handling tends to belie that statistic.

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Posted In: LongTerm Care Insurance

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The debate about how beneficial long-term care insurance really is continues. Recently, the ZDNet Healthcare blog, posted comments responding to business journalist Dana Blankenhorn’s article “The running scandal of long-term care insurance,” Those comments tipped slightly in favor of some insurance as opposed to none at all.

Blankenhorn points out that the cost of care for someone with an illness such as Alzheimer’s or Parkinson’s disease, which may require many years of skilled or home care, is not realistically insurable. Blankenhorn argues that the insurance industry isn’t able to write a policy without caps because “premiums on a policy guaranteeing us quality care for however long we may need it would be too high to bear. And everything else is a scam.”

He tells the story of Martin Kenneth Bayne, aka Mr. Long-Term Care, a former insurance salesman and advocate for “properly drawn” policies, now in an assisted living facility suffering from Parkinson’s. His long-term care policy pays an annual benefit of $86,000. That provides a $400 square-foot room and care the quality of which, according to Blankenhorn, leads Bayne to “rage concerning his treatment and the failure of the insurance industry to protect anyone.”

But the truth is, most people who need it will never receive the quantity of benefits Mr. Long-Term Care doesn’t appreciate, and those who rely on shrinking government benefits would likely covet his situation.

Is this the stuff of nightmares? Not entirely. Healthcare psychologists have estimated that men turning 65 in 2005 will average up to three years of institutional, formal or informal home care in their lifetimes. Women average as much as 3.7 years of care. Only 31 percent of that population will not need any LTC, but at least 20 percent will require LTC for more than five years. Kemper, Peter, Harriet Komisar, and Lisa Alecxih, “Long Term Care Over an Uncertain Future: What Can Current Retirees Expect?” Inquiry, Vol. 42, No. 4, pp. 335-350 (Winter 2005-06).

These statistics contradict Blankenhorn’s worst-case scenario. But who can predict the state of medical science in 10 years or the baby-boomer generation’s desire to celebrate centennials.

The moral of this story is, buy the best LTC coverage you can afford, pray you never need the benefits, but be prepared to fight for them if you do.

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Posted In: LongTerm Care Insurance

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Suit Seeks More Than $1 Billion in Damages

The Los Angeles Times reports that in a lawsuit filed July 16, Los Angeles City Attorney Rocky Delgadillo has accused health insurer Blue Shield of using complex and confusing applications to trick consumers into making allegedly false written statements the insurer can use against them in rescinding coverage. (“Blue Shield Sued for Allegedly Lying About Its Coverage”)

The suit alleges the insurer cancels coverage when insureds are ill and facing substantial healthcare costs. Blue Shield may have to pay more than $1 billion in fines and penalties. A similar recent lawsuit against Athem Blue Shield forced the California Department of Managed Health Care to review more than 2000 rescission cases to determine if the cancellations occurred after the policyholders became ill.

The article quoted Dr. Richard Frankenstein, president of the California Medical Assn. “Having health insurance does not mean you will receive healthcare when you need it,” he said. “Insurance companies promise you the moon and a thousand doctors, but if you really need your medical care you can bet they will be looking for a way to deny treatment or cancel your policy.”

We’ve been saying that all along, and its rewarding to know that the head of California’s medical community agrees with us.

Delgadillo’s attempts to keep health insurance carriers honest are praiseworthy, and we hope it is motivated by more than political aspirations. Ending this harmful rescission practice is a huge undertaking, however, and will require more than participation than just one California city attorney’s office. We urge the legal, medical and regulatory communities to get behind these efforts, and we challenge the state legislature to take note and begin to legislate accordingly.

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Posted In: Health Insurance , Insurance Bad Faith

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A report this month compiled by the American Association for Justice documents what most of us already know: Some of the county’s top insurance companies consistently place their own financial interest above the interests of their policyholders and raise premiums, delay claims and deny coverage. For "The Ten Worst Insurance Companies in America, see, www.justice.org/docs/TenWorstInsuranceCompanies.pdf.

Although Allstate stood out as number one because of its shameless mission statement “to earn a return for our shareholders,” our old nemesis Unum ranked number two. Conseco, another insurer we regularly battle on behalf of policyholders, ranked number five.

On page one of the report is this telling statement: “The insurance industry has so much excess cash, it may spark a downturn in the industry.” How did the industry amass such wealth? According to the report “the name of the game is deny, delay, defend – do anything, in fact, to avoid paying claims.”

Take disability insurer Unum, for example, which paid it CEO $7.3 million in 2007, raked in $679 million that same year, and has assets of $52.4 billion. Debra Potter sold Unum disability policies for many years as part of financial services packages. She bought one herself. She developed multiple sclerosis and filed a claim for benefits. Unum denied the claim, alleging the disease was “self-reported,” a euphemism for “fraudulent.” Potter’s physicians supplied letters and memos validating her illness. Unum continued to deny the claim for three more years. Potter hired a lawyer. Only then did Unum eventually pay Potter’s disability benefits.

We see this every day. It doesn’t matter the disease and, sadly, it’s beginning to infect the entire industry as more carriers realize what insurers such as Allstate and Unum are able to get away with until regulators step in and administer what many times is little more than a slap on the wrist.

The insurance industry is sitting on mountains of gold accumulated from policyholder premiums. Understandably, the carriers have a duty to their shareholder’s to protect assets from fraudulent claims. But, the carriers go way beyond that objective and deny valid claims every day knowing that the fewer claims they pay, the higher their profits will be. Nothing in the AAJ report shocked us. In fact, we would have been surprised had the report reached any other conclusion. But don’t expect the insurance industry to show any shame. They’ll deny and delay as always, and continue business as usual until laws are changed to prevent such conduct.

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Posted In: ERISA , Health Insurance , Insurance Bad Faith , LongTerm Disability (LTD) Insurance

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This question comes up all the time, so we thought we'd discuss it.

Although it is a relatively straightforward question, the answer is not so straightforward. In short, it depends.

First, it is both to your benefit and to the benefit of the insurance company or employer paying your LTD claim that you receive SSDI Benefits. In every group policy I have ever seen, your LTD benefit will be reduced by the amount you originally receive from SSDI, so the insurance company is very happy to have Social Security pay what is often a high percentage of your claim. That is why it benefits the insurance carrier.

It also benefits you to obtain SSDI, in that after being receiving benefits for 24 months, you will be entitled to receive Medicare, which may be your only avenue to obtain health coverage. Also, the carriers will not offset any increases you receive from Social Security due to Cost of Living Allowances.

It is also to your benefit to have obtained SSDI, as the very recent U.S. Supreme Court decision in Glenn v. MetLife provides that insurance companies must consider the fact that Social Security has granted you benefits when they are considering whether or not to pay your claim.

So, getting SSDI is a good thing, but that doesn’t answer the question whether you should allow the insurance carrier to assist you.

First, having the insurance company obtain a representative for you, or hiring one yourself, will not save you money, or cost you money. Social Security lawyers can only charge you if they win, and if they do, the insurance companies almost universally offset only the amount you receive after the lawyer has been paid. So, the cost of the Social Security lawyer/representative is not relevant to your decision.

Second, you have to consider if the lawyer hired by the insurance company can help you get SSDI benefits, but at the same time harm your ability to continue to receive LTD benefits. The answer to this question may decide the issue for you. SSDI has no limitations on the time it will pay for disabling conditions, which is not the case with most group LTD Plans. The LTD Plans often have 24 month limitations for Mental & Nervous Conditions, and/or Substance Abuse. Suppose someone has Fibromyalgia with secondary depression. A representative hired by the insurance carrier may well push Social Security to award you benefits based on the depression, knowing that the insurance company will be able to turn around and use the award of SSDI benefits to limit your LTD claim to 24 months. Will the SSDI representative actually do that? No one knows for sure, but I have seen instances wherein I certainly believed it happened. Based on the foregoing, if there is any aspect to your disability which could be classified in such a way as to limit your ability to continue to receive LTD benefits, the safer approach is to retain your own representative who will be serving the interests of only one party, YOU!

In my opinion there is only one reason to even consider letting the insurance company retain someone to help you get SSDI. That reason is, if the insurance company is willing to hire someone to convince Social Security that you are totally disabled under the governments very strict standards, it will be more difficult for the same insurance company to turn around and deny your LTD claim. However, the mere offer by the insurance company to hire someone for you is probably strong enough evidence of your disability to outweigh the disadvantages of allowing the insurance company the ability to control your SSDI claim.

If you need assistance in getting your SSDI benefits, contact NOSSCR, which is the National Organization of Social Security Claimants Representatives. The organization, will, without charge, find someone in your geographic area qualified to help you.

Finally, if you think the advice offered in this blog is biased because I am looking for business, I am not a member of NOSSCR, and do not EVER represent claimants seeking to obtain SSDI benefits. However, I have seen scores of cases where the choice of a Social Security representative has impacted a client’s ongoing claim for LTD benefits. GK

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Posted In: LongTerm Disability (LTD) Insurance

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In case you missed it Good Morning America did a segment in April (2008) on Susan Kristoff, from West Palm Beach, Fla., who suffered from potentially deadly form of breast cancer. (We blogged it earlier.) She applied to CIGNA for payment of her long term disability insurance benefits and was repeatedly denied. Click to watch the original video.

After ABC started investigating for its segment on TV, CIGNA paid the claim. As a result of the Good Monring America show, dozens of other people called or wrote to ABC to report similar stories. You can read about this, and even watch the follow-up video on the ABC website by clicking here.

We deal with these denials every day. And, it's not just CIGNA we battle with. We have similar cases against MetLife, Unum, Standard, Hartford, Aetna, and others. Hopefully, this ABC report will cause these insurance companies to think twice before denying claims without a full and fair investigation of the facts. AK

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Posted In: ERISA , LongTerm Disability (LTD) Insurance , LongTerm Disability (LTD) Insurance

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Last month we wrote how about MetLife v. Glenn had then recently been argued before the Supreme Court. Last week the decision was handed down. For the most part, it is a good step in the right direction...just not a very big step, at least as far as California and other insured’s (in the 9th Circuit) are concerned.

In Metropolitan Life Insurance Company v. Glenn, –U.S.–, 2008 WL 2444796 (June 19, 2008), the Supreme Court held that an insurance company which had the financial obligation to pay the claim, was not entitled to unfettered deference by the courts to its claim decision. This, even when the insurance policy gives the insurance company absolute discretion to make claims decisions. Rather, trial courts must factor in an insurer’s financial conflict of interest when reviewing the propriety of a claim decision.

For some time, the landscape in ERISA cases has been such that a trial court does not review the merits of the claim decision. Instead, when an employer granted “discretion” to an insurer, a trial court would only review whether the insurer acted “unreasonably” during the claim process. Oftentimes, the courts would never even get to the question of whether the claimant was disabled and entitled to benefits. Proving that an insurer acted “unreasonable” during the claim process was and is a very difficult burden for a claimant seeking to overturn a benefit denial.

In Ms. Glenn’s case, the Court was of the opinion that MetLife’s conflict of interest had influenced the claim decision and therefore, MetLife was not entitled to the full discretion it claimed. In its decision, the Court questioned claims practices we see all too often in benefit denials. For example, MetLife encouraged Ms. Glenn to apply for Social Security benefits, which would benefit MetLife financially since it could reduce its own liability by the amount of Ms. Glenn’s Social Security Award. Although MetLife took the financial benefit of the Award, it then virtually ignored the signficance of the Award and terminated Ms. Glenn’s disability benefits. The Court was also extremely critical of MetLife’s “selective review” of Ms. Glenn’s medical evidence. MetLife relied upon its own physician’s reports and discounted or ignored the evidence which supported Ms. Glenn’s disability.

Much of what the Glenn case represents had already been articulated by the 9th Circuit Court of Appeals in the matter of Alta Health v. Abatie. We believe the Glenn decision will reinforce Abatie, and help to further influence judges to more critically review insurer’s claim decisions on their merits, as opposed to abjectly deferring to the administrator’s decisions. All in all, we believe the Glenn decision will help us help our clients obtain the benefits to which they are entitled. CC & AK

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Posted In: ERISA , LongTerm Disability (LTD) Insurance

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After more than two years of fighting, five months spent submitting claims forms, a protracted appeal, a lawsuit and a call from ABC News’ “Good Morning America,” Susan Kristoff, unable to work and being treated for stage 4 cancer, finally received her long-term disability benefits.
Cigna, her insurer, announced that its change of heart resulted from “additional information” uncovered during Susan’s appeal. Susan’s lawyer Alicia Grisham thinks differently. “The insurance companies understand that if they deny and deny claims, then many of the claimants will never pursue their claims,” Grisham said, describing a tactic known as “slow walking.”

We’ve seen this before: Bury the policyholder in mountains of claims forms, move your customer service department off-shore, keep your clients on hold, lose the paperwork, deny the claim, ask for more information, subject the sick or injured claimant to a confusing and prolonged appeal process, delay, deny, delay, deny, and perhaps the insured will give up or die.

The sad fact is that there are enough people in Susan Kristoff’s situation to keep “Good Morning America” on the air well into the next century.

Is the answer, as Grisham suggests, penalizing insurance companies for slow walking by allowing punitive damages in consumer lawsuits? Right now, the federal law known as ERISA protects disability insurers from such punitive damages in employee welfare benefit cases, and that give insurers little incentive to speed up claims processing and appeals.

At the moment, a policyholder’s best protection against slow walking is speed dialing an experienced disability insurance lawyer the moment a claim is denied. Two years without income is too long to wait, even if it means you end up featured on “Good Morning America.”

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Posted In: ERISA , ERISA , Insurance Bad Faith , LongTerm Disability (LTD) Insurance

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Last week, the U.S. Supreme Court heard oral arguments about what standard to use when reviewing an insurance company denial of ERISA welfare benefits (employer provided long term disability insurance). MetLife v. Glenn, 06-923. Under current law, an insurance company can make a terribly unfair decision to deny employee welfare benefits, and if the benefit plan contains some “magic words” a court can be prevented from reviewing such a decision on the merits, and instead, forced to let the unfair denial stand. Those magic words, notoriously known as “discretionary clauses” give the insurance company full discretion to interpret policy language and make claims decisions. Some federal districts have developed case law which requires a reviewing court to give consideration to the fact that an insurance company in the position to both pay the claim, and grant or deny benefits, stands in an inherently conflicted position. If it can be shown that such conflict tainted the claim decision making, then some lesser degree of discretion should be given, and the insurance company’s decision given more scrutiny. The problem lies in the reality that different courts look upon these circumstances differently, and there is no one general rule to be easily and consistently applied when an insurance company plays a dual and conflicted role.

In Wanda Glenn’s case, and as in so many other disability benefits cases that pass through our offices – the only entity determining the employee isn’t disabled is the insurance company acting as a plan administrator. For Ms. Glenn, her doctor diagnosed that if she returned to work she could die. The Social Security Administration determined that she was disabled and paid her government benefits. Incredibly, MetLife alone, decided there must be a job somewhere for her, so it denied her claim, and also thereby avoided having to pay her benefits. For additional detail on the facts in Glenn, click here.

For the actual Supreme Court transcript of the hearing, which can give you a sense of how unclear (even for the Supreme Court), and frustrating this system is click here.

The bottom line is that it just isn’t fair for insurance companies to be making claims decisions that are insulated from full scrutiny or “de novo” review by the courts. Hopefully, the Supreme Court will establish a rule that recognizes, and prevents this egregious conduct in the future.

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Posted In: ERISA , LongTerm Disability (LTD) Insurance

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