The McKennon Law Group PC periodically publishes articles on its California Insurance Litigation Blog that deal with frequently asked questions in the insurance bad faith, life insurance, long term disability insurance, annuities, accidental death insurance, ERISA and other areas of the law. This article in that series focuses on long-term care insurance.
What is long-term care insurance?
Long-term care insurance refers to coverage for health care and treatment in extended care facilities (for example, convalescent homes, nursing homes, etc.), at-home health care and/or adult day care for individuals (usually above the age of 65 or with a chronic or disabling condition that needs constant supervision) rather than in an acute care unit of a hospital. See California Insurance Code § 10231.2 et seq. Long-term care insurance is designed to pay for care that is generally not covered by health insurance, Medicare or Medicaid.
Long-term medical care is typically expensive but can be an important part of financial planning for single persons and families. This insurance is designed to cover out-of-pocket expenses for long-term care, and assists those who purchase it from relying on children or other family members for support in the latter years of life.
Insurers often deny these claims interpreting facts and the law in a manner that unfairly and unreasonably favors their financial interest in denying claims.
When is an insured eligible to receive long-term care insurance benefits?
While the specific coverage offered by long-term care insurance may vary, typically, an insured is eligible for long-term care benefits if he or she is unable to perform at least two or more activities of daily living without substantial assistance. “Activities of daily living” will be a defined term in the insurance policy, but normally, activities of daily living include eating, dressing, bathing and attending to other personal hygiene, walking and toileting without assistance. Most policies provide benefits when and insured is diagnosed with a severe cognitive impairment such as Alzheimer’s or Parkinson’s disease.
What should an insured do if the insurer denies a long-term care insurance claim?
In an insurer denies a claim for long-term care insurance, then the next step would generally be to bring a civil lawsuit against the insurer, as there is typically no requirement that the insured submit an appeal. However, an insured should review the policy and denial letter to ensure that he/she has completed all the necessary steps for claiming long-term care benefits. After doing so, the insured should consult with an experienced insurance attorney regarding bringing a civil action. Most attorneys, including the McKennon Law Group PC, will take a meritorious case on a contingency fee basis (meaning the insured does not pay a fee unless there is some type of recovery from which a fee may be earned).
In the rare instance that the long-term care insurance was provided and paid for by the insured’s employer, the policy is most likely governed by ERISA. In this case, then the insured cannot immediately file a civil action to recover long-term care insurance benefits until he/she appeals the initial claim denial. ERISA requires that the insured first appeal the initial determination in accordance with procedures contained in the plan documents/policy. Under the Department of Labor Regulations, an insured has no more than 180 days to appeal a denial decision relating to long term care insurance benefits. If the insured does not timely appeal an adverse benefit decision, then he/she may lose the right to collect benefits under the Plan. When an insurer denies an insurance claim made under an ERISA-governed policy, it is required to advise the insured of the specific reasons for the denial and describe any additional material or information necessary to perfect the claim. Additionally, the insurer must inform the insured of the plan’s review procedures and inform the insured of his/her right to file a subsequent civil action. However, the insurer never tells the insured that he/she will not be allowed to use new evidence to support a subsequent civil action. Because the insured may be limited to the information contained in the Administrative Record in the lawsuit, it is crucial that the Administrative Record contains all information that supports the insured’s long-term care insurance claim.
As such, following denial of a long-term care insurance claim, the insured should immediately consult with an experienced long-term care insurance attorney and discuss whether to appeal the insurer’s initial decision or proceed to a lawsuit. As discussed above, time is of the essence and the insured does not want to risk losing long-term care insurance benefits by failing to file a timely appeal. But, if an appeal is required, the insured should not simply submit an appeal stating that he/she disagrees with the insurer’s denial decision. The insured should have an attorney prepare the appeal and ensure that the file contains all of the documents and information needed in a subsequent lawsuit. Specifically, a qualified attorney can help the insured review the insurer’s often voluminous records and identify any problems or irregularities in its initial denial. An experienced attorney can also ensure that these problems or irregularities are noted in the Administrative Record and are backed up by applicable case law citations. Moreover, when confronted with the arguments of experienced ERISA attorneys such as McKennon Law Group PC, the insurer or plan administrator will often reverse itself and approve the claim for benefits without the need to file a lawsuit.
If the matter is not governed by ERISA, then state law claims will apply, such a breach of contract and insurance bad faith. These allow for a broader array of damages, including compensatory damages caused by the insurer’s bad faith, emotional distress, and punitive damages. Furthermore, under California law, an insured may be able to bring additional claims under Bus. & Prof. Code section 17200 and California elder abuse law, that potentially allows for treble damages.
For more information about long-term care insurance, visit our full FAQ regarding this topic located here.