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The Importance of Understanding Long-Term Care Insurance

Most people are familiar with various types of insurance, such as auto, life, and homeowners or renters insurance. However, many are not familiar with long-term care insurance. Long-term care insurance can be very beneficial for you as you age and may need additional care.

It is important to understand what this type of coverage is, what it covers, and how to hold your plan responsible for covering care as agreed, as with any insurance coverage. These things may be especially important to understand in the context of long-term care insurance given the manner in which insurance companies issued long-term care policies in the 1990s and 2000s that they are now struggling with, as explained here [LINK TO

What Is Long-Term Care Insurance?

Long-term care insurance pays for long-term care, typically in health care facilities, not covered by your other insurance policies. Traditional disability and health insurance policies have limits and do not always cover the care you may need, for example, if you have a chronic condition or serious injury that prevents you from performing your activities of daily living. Long-term care insurance can cover things such as in-home care or staying in an assisted living facility.

Why People Buy Long-Term Care Coverage

One reason people buy long-term care coverage, as with other types of insurance, is for peace of mind. Purchasing long-term care coverage will likely instill a sense of confidence that you will have access to care in the future, if and when you need it. This can be especially helpful for those in or approaching old age, as the aging process makes long-term care needs more likely.

Another reason people buy long-term care insurance is to protect their future assets. The type of care you might require as you age, especially if you have a chronic health condition and need regular care, will likely be costly. For example, without long-term care coverage, you may pay out-of-pocket costs of $100,000 – $200,000 or more in a year for long-term care that you need.

If you unexpectedly have to pay for in-home care, assisted living facility services, or other long-term care options, you may have to dip into your retirement funds, which can require you to completely alter your finances and retirement plan. These expenses can also decimate other savings or cause you to have to sell off assets to pay for care — all of which reduce your quality of life and your ability to pass assets to loved ones in the future. Long-term care insurance that reduces your out-of-pocket costs for care can mitigate these concerns.

Types of Long-Term Care Insurance

As with almost any type of insurance, there are different types of long-term care insurance. Some policies only cover care in a specific place, such as your home or a qualified nursing home or assisted living facility. Others limit coverage by care, type of service, or by the length of time it pays benefits.

You may be able to purchase a long-term care policy that offers a per diem amount to cover whatever care you need or, you might opt for a policy that only covers certain services based on what you think will be the most likely solutions you may need later in life.

One popular option is comprehensive coverage, which provides a daily benefit that you can use in multiple settings, so you have the flexibility to meet changing care needs.

What Does Long-Term Care Insurance Cover?

A comprehensive long-term care policy may help pay for medical and care services provided in your home, an adult day care center, an assisted living facility, a hospice or respite facility; and in a nursing home. The services covered will partially depend on where the coverage is being used. For example, you might have a plan that covers skilled nursing services, help with personal care, and a variety of therapies, but only as long as they are provided in your home. This is because these in-home services may not be covered by other insurance types. However, the same plan may only cover personal care services in a nursing home setting because skilled nursing services and options like physical therapy are typically covered by Medicare, Medicaid, and other payers when they occur in a nursing home setting.

Aside from medical, clinical, and wellness services, long-term care policies may also cover other assistance such as housekeeping and cooking. However, it is important to understand that such services likely need to be provided in coordination with other services covered by your policy.

Under most policies, to be covered, you must be unable to perform certain activities of daily living. A common insuring provision provides coverage if the insured is “unable to perform, without substantial assistance, at least two activities of daily living.” Substantial assistance means “the physical assistance of another person without which you would not be able to perform an activity of daily living.” Policies often then list the relevant activities of daily living as:

Bathing – washing oneself by sponge bath, or in either a tub or shower, including the task of getting into or out of the tub or shower;
Continence – the ability to maintain control of bowel and bladder function; or, when unable to maintain control of bowel and bladder function, the ability to perform associated personal hygiene (including caring for catheter or colostomy bag);
Dressing – putting on and taking off all items of clothing and any necessary braces, fasteners or artificial limbs;
Eating – feeding oneself by getting food into the body from a receptacle (such as a plate, cup or table) or by feeding tube or intravenously;
Toileting – getting to and from the toilet, getting on and off the toilet, and performing associated personal hygiene;
Transferring – sufficient mobility to move into or out of a bed, chair or wheelchair or to move from place to place, either by walking, using a wheelchair or by other means.

How Much Does Long-Term Care Coverage Cost?

The cost of long-term care insurance depends on a variety of factors, including your age and health when you purchase it. As with many other insurance types, buying a plan early when you do not need it often saves you money.

Other factors in the cost of long-term care insurance relate to the benefits you select, such as how much your daily benefit for in-home care will be or how much you will receive while in an assisted living facility, and how long you may receive such benefits. For instance, a policy that pays a high daily amount for up to five total years will be more expensive than a policy that pays a lower daily amount for up to two total years.

What If Your Plan Has Denied Your Long-Term Care Claim?

The insurance companies that provide long-term care policies are for-profit businesses, so they have profit margins to attend to, stakeholders to satisfy, and many other concerns that have little to do with approving or paying your claims. Therefore, monetary issues that have nothing to do with coverage under a policy often come into play to influence claims decision making. For example, your insurer might pay benefits that are less than you expected or it may outright deny a claim for coverage, or your benefits might be cut off before the maximum period listed in your policy.

If you are facing any of these types of issues or feel that your long-term care insurance company is not acting in good faith, you should contact a knowledgeable attorney with expertise in the area of long-term care insurance. The attorneys at the McKennon Law Group PC have the knowledge and experience to help you get the benefits to which you are entitled under your long-term care policy. Reach out to the McKennon Law Group PC for a free consultation now.

McKennon Law Group PC has successfully defended its client against a Motion to Dismiss (the “Motion”) filed by Northrop Grumman Corporation and its associated pension plan (collectively “NG”) in Sheets v. Administrative Committee of the Northrop Grumman Space & Mission Systems Salaried Pension Plan, No. 2:22-cv-07607, slip op., at 1 (C.D. Cal. Nov. 22, 2023). The Motion argued that our client, Michael Sheets, had failed to properly allege claims for relief when he sued NG in federal court in the Central District of California. (In addition to addressing insurance matters, McKennon Law Group PC also attempts to compel pension plans and employers to pay pension benefits that are improperly withheld). In this matter, we were hired to address NG’s refusal to pay our client, Mr. Sheets, pension benefits that were promised to him. To compel our client to leave his former employer, Boeing, NG promised him pension benefits. The promised benefits related to his having previously worked for a company that NG had acquired, TRW, Inc. Mr. Sheets already possessed a vested pension under TRW’s pension plan. NG had promised him that if he left his current employer and began working for NG, his time working for NG would “bridge” with his time spent working for TRW. This would result in a significantly greater pension benefit. He left his former employer and worked for NG for five years. He diligently sought and received confirmation, in writing, that he would be entitled to a particular level of pension benefits if he began working for NG. After working for NG for five years, he retired. Before retiring, he wisely made personal copies of many of the communications related to his pension benefits. After receiving the promised level of benefits for seven years, NG unilaterally decided that it had erred, and it reduced his benefits by over one-half. Mr. Sheets appealed, and when his appeal was denied, he hired us to assist him. We promptly sued NG to compel it to resume paying Mr. Sheets the promised level of benefits, and for attorneys’ fees, costs, and interest. The complaint asserted claims for improper denial of benefits and breach of fiduciary duty under ERISA. Out of an abundance of caution and in the alternative, we also brought state law claims for negligent misrepresentations, fraudulent misrepresentations, and unjust enrichment. NG, in turn, filed the Motion. After extensive briefing, the Court ruled in Mr. Sheets’ favor on the ERISA claims.

As for the claim for improper denial of benefits, the Court ruled that the applicable plan documents potentially supported such a claim. The parties first argued before the Court as to which version of the Plan controlled the dispute: the version in effect when Mr. Sheets was hired, or the one in effect when he retired. Without providing a definitive ruling, the Court stated that at this stage in the litigation, the version Mr. Sheets alleged controlled, in fact controls. The Court then provided a thorough analysis of the plan documents and concluded that they could potentially support Mr. Sheet’s claim for improper denial of benefits.

The Court then addressed Mr. Sheet’s claim for breach of fiduciary duty. NG argued that the claim was improper for two reasons: (1) the applicable statute of limitations rendered it untimely and (2) the alleged breaches were ministerial actions and, therefore, could not be subject to a breach of fiduciary duty claim. The Court rejected both arguments.

As for the argument that Mr. Sheet’s complaint was barred by the statute of limitations, NG argued that the complaint had to be filed by no later than 2014, before NG had reduced Mr. Sheets’ pension benefits. This was based on a draconian analysis of the applicable statute of limitations, 29 U.S.C. Section 1113. The Court rejected this interpretation. As the Court explained, “The Ninth Circuit has adopted a two-step process in considering the ERISA statute of limitations: first, courts ask when the ‘breach or violation’ occurred, and second, courts ask when the plaintiff had ‘actual knowledge’ of the breach or violation. Ziegler v. Conn. Gen. Life Ins. Co., 916 F.2d 548, 550 (9th Cir. 1990).” Sheets, No. 2:22-cv-07607-MEMF at 13. The Court explained that, pursuant to the operative complaint, the misrepresentations that formed the basis of the breach of fiduciary duty claim arose in 2008. All other alleged breaches occurred in 2021. The Court then addressed the second stage in the analysis: when Mr. Sheets learned of the breaches. This occurred in 2021. The Court completed its analysis by explaining that:

Accordingly, the statute of limitations does not begin to run on these until 2021. See Ziegler, 916 F.2d at 552 (“We stress that an ERISA plaintiff’s cause of action cannot accrue[,] and the statute of limitations cannot begin to run until the plaintiff has actual knowledge of the breach, regardless of when the breach actually occurred. The ERISA statute of limitations, 29 U.S.C. § 1113, requires satisfaction of this second prerequisite, the plaintiff’s actual knowledge of the breach, before the statute can begin to run.”).

The six-year statute of limitations would apply to these allegations (which allege fraud) pursuant to the closing portion of the provision. 29 U.S.C. §§ 1113 (“[I]n the case of fraud or concealment, such action may be commenced not later than six years after the date of discovery of such breach or violation.”). These are therefore not barred.

With respect to the other violations, it appears that the six-year statute of limitations would apply. Regardless, however, of whether the three-year or six-year statute of limitations applies, these are not barred, and the Court declines the dismiss the FAC on this basis.

Id. at 14-15.

Having concluded that the complaint was timely filed, the Court addressed the sufficiency of the allegations. As the Court explained, “‘To state a claim for breach of fiduciary under ERISA, a plaintiff must allege that (1) the defendant was a fiduciary; (2) the defendant breached a fiduciary duty; and (3) the plaintiff suffered damages.’ Bafford v. Northrop Grumman Corp., 994 F.3d 1020, 1026 (9th Cir. 2021).” Id. at 15. NG argued at length that Bafford, a pension dispute previously decided by the Ninth Circuit Court of Appeals, barred Mr. Sheets’ claims. The Court ruled that NG’s analysis was in error. It explained that:

The Northrop Defendants argue that Sheets cannot maintain a claim for breach of fiduciary duty based on the alleged misrepresentation that his benefits would “bridge” if he came back to work at Northrop. The Northrop Defendants cite extensively to Bafford, arguing that any statements concerning “bridging” were merely “ministerial” in nature and fall within Bafford’s holding excluding such conduct as the basis for a breach of fiduciary duty. Mot. at 15-16. However, Bafford makes clear that the miscalculation of benefits at issue in that case was ministerial in nature because under the facts of that case, it did not involve discretion. Bafford, 994 F.3d at 1028 (“[D]iscretion is one of the central touchstones of a fiduciary role.”). Bafford explains that, in contrast, conduct such as communicating with plan beneficiaries about plan benefits—as Sheets alleges Davis and Solis did here—is a fiduciary function, no matter who performs it, and is actionable as a breach of fiduciary duty. Id. at 1027-28. Northrup’s arguments to the contrary fail. Mot. at 15-17; Reply at 7. The Court therefore declines to dismiss the FAC on this ground.

Id. The Court then proceeded to address the various breaches of fiduciary duty that Mr. Sheets had alleged. The Court found that all but one had been properly alleged. As for the improperly alleged breach, it noted that, “Because it appears that Sheets may be able to adduce additional facts in support of these purported violations, the dismissal is with leave to amend.” Id. at 16.

The Court then proceeded to dismiss Mr. Sheets’s state law claims. It ruled that they were preempted by ERISA. Whereas this was disappointing, these claims were always pled in the alternative. Given that the Court ruled that the ERISA claims were properly alleged, this dismissal does not meaningfully diminish our client’s case.

The Court’s denial of NG’s motion was significant. It allows Mr. Sheets to pursue his claims in in the litigation and is a good roadmap for the parties. It also serves as additional precedent that employers and pension plans cannot deceive would-be employees with false promises of benefits. When people receive information from their pension plans, they often make life-altering decisions in reliance thereon. Employers and plans cannot be permitted to change their position after it is too late for employees to protect themselves.

Understanding Cost, Coverage, and Other Differences

The Employee Retirement Income Security Act of 1974, or ERISA, provides several protections related to insurance and retirement plans sponsored by employers for their employees and their beneficiaries. That includes short-term disability insurance, long-term disability insurance, life insurance, accidental death and dismemberment insurance, long-term care insurance, and pensions, if these are offered by a private, non-church-related employer.

However, ERISA-related group insurance is not the only type of protection you can buy concerning potential these types of insurance. You might also purchase individual insurance policies, such as long-term disability insurance, life insurance, accidental death and dismemberment insurance, and long-term care insurance. While your goals in selecting either of these types of insurance are likely similar, there are some differences between the two types of insurance that are important to understand.

What Is ERISA Insurance Coverage?

ERISA insurance coverage is a term that refers to any insurance policy that is governed by ERISA. You have ERISA protections regarding your insurance coverage if they are qualifying policies sponsored by your private, non-church-related employer.

Depending on the benefits structure offered by your employer, you may have employer-provided insurance coverage that you elected and paid for. Your employer might also provide some level of coverage that you do not pay for as part of your employee benefits package.

What Is Individual Insurance Coverage?

Individual insurance coverage refers to a policy that you purchase yourself outside of the sponsorship of your private, non-church-related employer. You may be able to purchase such a plan through the insurance agent you deal with. Alternatively, you can find individual insurance coverage, such as long-term disability insurance, through brokers and online markets, and some credit unions offer an option to purchase these types of plans as a benefit of being a member.

What Are Some Major Differences Between These Two Types of Insurance Coverage?

On the surface, employer-sponsored insurance plans and individual insurance plans appear very similar. They are both meant to provide a certain amount of insurance coverage should you, for example, find yourself disabled long-term due to a covered incident or condition. However, there are differences in these plan types.

The Benefits Offered

In either case, the exact nature of the benefits you receive depends on your insurance policy. However, you may find that you have more flexibility and customization options with individual policies. That is because when an employer sponsors plans as part of its benefits package, it usually selects a few options employees can choose from. With individual plans, you can choose anything in the market.

Another difference in the benefits is how the plans define various coverages. For example, as to disability insurance coverage, some group plans sponsored through employers may initially define a disability as being unable to perform your existing/own occupation. In other cases, these plans may define a disability as being unable to perform “any occupation.” A change to this type of definition can limit a person’s options for claiming benefits. With individual plans, you choose a plan that has a disability definition you like. This allows you to increase the likelihood that you can receive benefits if you are unable to work in your “own occupation,” though you will pay more for this type of plan.

The Cost of Benefits

Typically, individual insurance plans cost you more out of pocket than employer-sponsored group plans do. This is because, in the case of group plans, the employer often covers some or all of the cost of the insurance premiums as part of your benefits package and larger employers may also be able to get discounts on insurance premiums because so many people enroll and there are “volume” discounts.

Relationship to Taxes

In many cases, the amount of premium you pay for an employer-sponsored long-term disability plan is paid out of pre-tax dollars. That means your premium costs reduce your taxable income.

In contrast, you pay for individual long-term disability plans with post-tax dollars. There is generally no tax benefit associated with these premiums or the insurance benefits you receive.

Whether the Plan Is Portable

An employer-sponsored benefit is not always portable, which means you cannot take it with you if you leave your job. Instead, you may need to buy individual insurance at that point or wait until you get another job and qualify for insurance coverage again. On the other hand, individual insurance plans typically are yours to do what you want with as long as you pay the premiums and the company remains in business.

Process for Appealing Denied Claims

The process for dealing with denied claims, bad faith on the part of the insurance company, and other issues are different for employer-sponsored and individual insurance plans. If your employer-sponsored group plan is governed by ERISA, you must follow both plan rules and ERISA regulations in dealing with denied claims or other issues. This typically means going through the administrative appeal process and any other requirements under the plan before you can seek legal recourse in the courts.

As an individual insurance policyholder, you may have more flexibility when it comes to seeking solutions. If your claims are denied and you believe they were denied inappropriately, you may be able to file a lawsuit sooner than you would with an ERISA plan. Of course, you do need to be aware of the details of your policy and contract with the insurance company, as you may have signed an arbitration or mediation agreement that requires you to take certain steps in the face of a dispute.

Legal Help If Your Disability Claims Are Denied

Whether you are dealing with an ERISA insurance issue or fighting bad faith from the insurance company you purchased an individual policy through, you might feel like you are in an impossible situation. Insurance companies tend to be large corporations with big legal teams, and you might feel like the underdog in a fight you have no hope of winning. That is where McKennon Law Group PC comes in. Our experienced team fights aggressively for your rights under ERISA group plans or individual insurance policies, working on your behalf to help ensure claims are paid according to your policy. To get help with your ERISA or individual insurance claim, contact us.

In a world where medical uncertainties abound, having a safety net for unexpected medical events is crucial. Disability insurance provides that financial safety net, ensuring that individuals who are unable to work due to illness or injury can still support themselves and their families. One common avenue for obtaining disability insurance is through group disability insurance plans, which are often offered by employers.

If you are considering purchasing disability insurance, one issue you may be facing is whether to enroll in a group plan offered by your employer or to procure an individual policy independent of your employment. Whatever decision you make, there are both advantages and disadvantages of enrolling in a group policy and purchasing an individual policy. Therefore, your decision should be based on how these advantages and disadvantages are suited to your situation.

If you work for an employer who sponsors a group benefit plan, that plan is most likely governed by the Employment Retirement Income Security Act of 1974, or ERISA, a federal statute that provides a set of rules and regulations concerning everything from issuing the policy to making benefits determinations. Below we discuss some of the advantages and disadvantages of enrolling in a group disability plan.

Advantages of Group Disability Insurance

Ease of Qualification: Unlike individual disability insurance, group plans typically have less stringent underwriting requirements. This means that individuals with pre-existing health conditions or a history of illness may find it easier to qualify for coverage through a group plan. For employees with health concerns, this accessibility can be a lifeline in obtaining crucial coverage. And, enrolling in a group plan is a streamlined process for you to acquire coverage. Typically, the plan has been established for some time and your employer handles the administrative aspects of enrollment, so your role boils down to simply deciding the level of coverage you want. For an individual policy, your role in the administrative process of obtaining coverage will likely be much more involved. Thus, these plans allow you to get coverage more quickly and easily than individual policies.

Less Expensive: Enrolling in a group policy is generally less expensive as compared with individual policies. Group plans necessarily involve a minimum number of members, which allows the insurance company to provide the coverage for a lower cost to each member of the group. Additionally, many employers contribute some or all of the premiums for group coverage. Therefore, you may be able to get coverage without paying anything more out of your pocket, whereas you may need to pay the premiums for an individual policy on your own.

Governed by ERISA: Your policy will likely be governed by ERISA, which may have some advantages for you. Because ERISA is a federal statute, this means that should you have occasion to bring a lawsuit against your employer, insurance company, or other plan fiduciary, you can do so in a federal district court rather than in the state court system. The federal court system often moves more efficiently than its state court counterparts and federal judges know ERISA well and are adept at interpreting it. Also, a stated purpose of the ERISA statute is to protect those who are insured by a disability policy, and therefore many ERISA regulations may be more favorable to you as an insured than the state laws. Moreover, while some favorable state laws are not applicable in ERISA, federal law under ERISA makes it much easier for you to collect attorneys’ fees if you have some success in your lawsuit.

Disadvantages of Group Disability Insurance

Disadvantage Policy Provisions: As compared to individual coverage, group plans may have less favorable standards for receiving disability benefits. A group plan’s definition of what constitutes a disability may be more vague or restrictive than that in an individual policy. Specifically, a group plan will typically consider you disabled if you are unable to perform the requirements of your “own occupation” for the first two years of receiving benefits, but after two years, will consider you disabled only if you are unable to perform the requirements of “any occupation.” This change can result in you receiving benefits for two years because they conclude that you are able to perform “any occupation” for which you are qualified by education, training and experience. Most individual disability insurance policies do not have these provisions.

Caps on Certain Types of Benefits: Benefits will likely be capped with some types of disabilities. It is typical in group disability plans to have maximum benefits payable for a short period of time regarding mental-nervous medical conditions, often two years. Individual policies do not typically have such limitations.

Offsets that Reduce Benefits Payable: Group policies almost always contain certain offsets, called deductible income, that will reduce your benefits paid under the disability policy. For example, if your disability insurance provides for a monthly benefit of $5,000, and you also qualify for monthly disability benefits from another source, like state disability benefits or Social Security Disability Income (SSDI) benefits, of $2,000, the group plan will reduce your benefits by that amount and will pay you $3,000, so that the total monthly benefit you receive from all sources is $5,000. This can be further complicated if your group plan insurance company pays you benefits for some time, then you later get a favorable decision as to state or SSDI benefits, as your group plan insurer will expect you to then pay it any applicable offset because it “overpaid” you.

Less Control: You will have less control over your policy with a group plan compared with individual coverage. Group plans often do not offer any portability, so if your employment ends, so does your coverage. Also, your employer and the insurance company have the power to alter or even terminate a group plan without your input. And your group plan almost certainly provides broad, umbrella-type coverage that will apply to the entire group, and you will not have the option of customizing the coverage to suit your circumstances. Obtaining individual coverage gives you more control over these factors.

Tax Implications: While the premiums for group disability insurance plans are often paid with pre-tax dollars, the benefits received in case of disability are usually taxed as income. This can result in a lower net benefit for the insured individual compared to benefits from individual disability insurance policies, which are often tax-free. Understanding the tax implications is essential for accurate financial planning.

Limited Choice of Providers: Group disability insurance plans typically limit participants to a specific list of insurance providers chosen by your employer. This limitation means that individuals may not have the opportunity to shop around for the best coverage or to select a provider that aligns with their preferences. Limited provider choices can impact the quality of service and flexibility in managing claims.

Whether you decide to enroll in a group plan or obtain individual disability insurance coverage, obtaining disability insurance will likely present you with considerations and issues that you will have to weigh in making the decision. And, once you have disability insurance, if your disability claim is denied, call on the disability insurance experts at McKennon Law Group PC to get the help you need.

Introduction

Long-term care (LTC) insurance is designed to provide financial security for people facing challenges that come with aging, such as those suffering from chronic medical conditions or disabilities that require assistance with daily activities. However, recent trends indicate a growing concern: long-term care insurers underpriced their policies several years ago and now that those insured by these policies are coming of age, LTC policyholders are filing many claims. As a result, these insurers are denying more legitimate claims than ever. If you or someone you know purchased a LTC policy in the late 1990s or early 2000s, there is a good chance that a claim made under the policy will be denied, regardless of the merits of the claim. And the likelihood of such a claim being denied will only increase over time, as the insurance companies expect the number of LTC claims to substantially increase for the foreseeable future.

The Underpricing Dilemma

Many insurers initially offered affordable premiums to make LTC insurance an appealing option for policyholders. The problem is that as policyholders age and begin to need care requiring the benefits of these policies, the actual costs of providing such services can be significantly higher than the premiums collected. This results in a precarious financial situation for insurers, leading them to take extreme measures to maintain profitability.

Some factors that contribute to the underpricing dilemma include:

Misjudgment of future claims: Insurers initially underestimated the number of policyholders who would file claims and the duration and extent of care they would eventually need. As a result, insurers find themselves with a more significant financial burden than expected.
Increasing healthcare costs: The cost of healthcare services has been steadily rising over the past several years. These escalating costs place additional strain on insurers attempting to honor their policies.
Low interest rates: LTC insurers invest the premiums they collect to generate income. With persistently low interest rates in recent years, the returns on these investments have been insufficient to offset the growing liabilities from claims.

The Denial of Legitimate Claims

The underpricing problem has caused LTC insurers to resort to denying legitimate claims, often leaving policyholders in dire straits. This unlawful practice can have severe consequences for those who have invested in these policies for years, believing they would receive the coverage they paid for. For many policyholders, not receiving the benefits they were promised and to which they are entitled under their policies can be catastrophic and can leave them without any means of receiving the care they desperately need. The denial of legitimate claims manifests itself in several ways, including:

Strict policy language: LTC insurance policies often contain complex and ambiguous clauses that may be exploited by insurers to deny claims. Even seemingly minor discrepancies in documentation or the interpretation of policy language can result in a claim being denied.
Post-Claims underwriting: Some insurers have engaged in a controversial practice known as retroactive underwriting, which involves scrutinizing policyholders’ health histories and medical records after a claim is made. If any discrepancies or undisclosed medical conditions are discovered, the insurer may use this information to deny the claim. The upside for the insurance company is that it can collect premiums for several years and invest those premiums to finance its business, then simply refund those premiums (but not the income the insurer benefitted from) without paying the benefits promised to the policyholder.
Delay tactics: Some insurers employ delay tactics to extend the time policyholders must wait for a claim decision, such as requesting additional documentation or medical evaluations, to stall the claims process. This can place undue stress on policyholders who are already dealing with the challenges of LTC needs.
Denials based on supposed inadequate medical evidence: This is perhaps the most oft-used reason for a denial of LTC claims. Insurers hire biased medical professionals to assess medical evidence and then assert that the medical evidence is simply inadequate to support a valid claim for LTC benefits.

Protecting Your Interests

Given the potential pitfalls associated with LTC insurance, it is essential for policyholders and potential buyers to take steps to protect their interests, such as:

Thoroughly review policy terms: Before purchasing LTC insurance, carefully review the policy terms and conditions. Seek legal counsel if needed to ensure you understand the coverage and any potential pitfalls.
Transparency is key: When applying for LTC insurance, be transparent about your health history and any pre-existing conditions. Failing to disclose this information can give insurers grounds for denying claims in the future.
Thoroughly document your claim: when you prepare to file a claim, make sure you assemble all necessary evidence you will need to adequately document and support your claim. Be sure you are able to obtain physician support for an inability to perform the required activities of daily living.
Document diligently: Keep detailed records of all interactions with the insurer, including phone calls, emails, and written correspondence. This documentation can be valuable if you need to dispute a denied claim.
Seek professional assistance: If your claim is denied and you believe the denial is improper, seek legal counsel to navigate the appeals process.
Stay informed: Stay up to date with the latest developments in LTC insurance and the insurance industry as a whole. Being informed will help you make better decisions regarding your policy.

Conclusion

LTC insurance is supposed to provide peace of mind and financial security to individuals as they age. However, the underpricing of policies and the denial of legitimate claims by LTC insurers have seriously undermined the peace of mind and financial security that LTC policyholders expect. It is therefore imperative that those considering filing LTC insurance claims are informed, cautious, and proactive in protecting their interests. By understanding the potential pitfalls and taking measures to mitigate them, policyholders can better ensure that their insurance coverage serves its intended purpose during their time of need. If you have made a claim for LTC benefits that has been denied or delayed, contact the McKennon Law Group PC for a free consultation.

Many disability insurance policies provide benefit payout periods that are much longer for disabilities caused by physical conditions as opposed to mental conditions. Typically, while allowing benefits for disabilities caused by mental or nervous conditions are paid only for a limited time period, often two years. Additionally, insurance companies operate for the purpose of generating profit and therefore have a substantial financial motivation to avoid paying benefits whenever possible. If an insurance company is unable to justify denying a disability claim outright, the next best action they can take to save money is to limit the benefits it pays out to as short a period as possible. Thus, given the choice between paying benefits related to a physical condition versus a mental or nervous condition, any insurance company will logically prefer to only approve a claim for a mental or nervous condition, and not for a physical condition. To complicate matters, there are many times when a claimant suffers from both a physical condition and a mental/nervous condition, which may or may not be separately disabling. On top of this, some disabling conditions, such as chronic fatigue syndrome, are subjective in nature, lacking objective testing. When a claimant is disabled due to such a condition, it will be difficult, if not impossible, to provide objective evidence to the insurance company to prove such a disability.

A recent District Court decision, Veronica L. v. Metropolitan Life Insurance Company, 647 F.Supp.3d 1028 (D. Oregon 2022), sheds light on how insurance companies handle claims based on subjective conditions and how claimants can recover their much-needed benefits. The plaintiff, Veronica, made a claim for long-term disability (LTD) benefits with MetLife. She had been diagnosed with PTSD, major depressive disorder, and generalized anxiety disorder, all mental/nervous conditions. She had also been diagnosed with chronic fatigue syndrome (CFS).

MetLife approved Veronica’s claim for LTD benefits based on her PTSD, anxiety, and depression. During its review of her claim, MetLife conducted a “paper review” of her medical records, done by a physician who reviewed Veronica’s medical records without examining or speaking directly with her. The paper review physician concluded that Veronica had no restrictions or limitations caused by CFS, supporting the conclusion with vague language: “based on the medical documentation, it is understood that the claimant’s low energy [is] likely related to psychological condition.” A second paper review physician also “found insufficient support for a diagnoses of CFS” based only on Veronica’s medical records, which included no interaction with Veronica and no discussion with her treating physicians.

Veronica began treating with a new physician who noted that she had fatigue that had progressively worsened over the previous three years. The new physician provided records to MetLife, but by the time MetLife received the records, it had already determined that Veronica was entitled to LTD benefits subject to the mental/nervous limitation of three years. Veronica appealed MetLife’s decision, highlighting records and notes from her physician supporting her position that she was disabled due to CFS, a physical condition, independent of her mental/nervous conditions.

In reviewing Veronica’s appeal, MetLife hired a third paper review physician, who’s opinion was, predictably, that Veronica had no restrictions or limitations based on CFS, “given the lack of objective evidence.” In response to this, Veronica’s treating physician asserted that CFS is difficult to assess through objective evidence but rather is determined by personal interaction with the patient. Simply put, CFS is inherently subjective in nature and objective evidence, such as imaging or lab work, does not exist. This did not change the opinion of the paper review physician, who again pointed to a lack of objective evidence to support his conclusion that Veronica was not disabled due to CFS.

The court decided the matter on de novo review, meaning that it would determine in the first instance if Veronica had adequately established that she was disabled under MetLife’s plan. After reviewing the evidence, the court found that MetLife had based its decision on incomplete information and had erred by failing to conduct an independent medical exam (IME). Citing Salomaa v. Honda Long Term Disability Plan, 642 F.3d 666 (9th Cir. 2011), the court noted that there are no objective laboratory tests for CFS, its etiology is unknown, and a diagnosis of CFS is based on a patient’s subjective reports of symptoms, reviewing her medical history, and ruling out other disorders. Because there was no means of objectively proving that she had CFS, evaluating Veronica’s disability was essentially a credibility determination.

The court found that Veronica’s treating physicians provided credible evidence that she in fact suffered from CFS; the evidence included a substantial history of subjective complaints by Veronica regarding her lack of energy, her inability to perform more than one major task per day, the fact that she no longer was able to do activities she had previously enjoyed, and requiring abnormally long periods of sleep. Additionally, Veronica had sought treatment for her CFS for several years but had not been able to find any treatment that alleviated her symptoms.

Because Veronica had presented evidence that she was disabled due to CFS, including her uncontested diagnosis of the condition, her own statement about her subjective symptoms, and corroborating statements made by her treating physicians, the court explained that because CFS cannot be objectively measured, MetLife would need to make a determination that Veronica’s claim was not credible in order to justify denying her LTD benefits beyond the mental/nervous limitation period.

The court explained that MetLife had a duty to conduct an adequate investigation of Veronica’s claim, citing Petrusich v. Unum Life Ins. Co. Of Am., 984 F. Supp. 2d 1112 (D. Or. 2013). While ERISA did not require MetLife to conduct an IME, failure to do so may raise questions about the thoroughness of its review and determination. The court noted that failure to conduct an IME may be particularly dubious when a claimant’s condition is based on subjective symptoms, citing Robertson v. Stand. Ins. Co., 139 F. Supp. 3d 1190 (D. Or. 2015). In this case, MetLife could have conducted an IME, which could have provided the evidence it needed to determine whether Veronica was disabled from CFS but declined to do so. Especially considering that MetLife expressed doubt as to Veronica’s credibility and the severity of her subjective symptoms, for MetLife not to conduct an IME meant that its decision was based on inadequate evidence. None of Veronica’s treating physicians ever questioned her credibility, nor did they opine that she exaggerated symptoms yet MetLife still discredited her subjective symptoms anyway, without providing any rationale for doing so. However, MetLife was obligated to consider Veronica’s self-reported symptoms because no objective tests exist for CFS; MetLife could not condition her LTD benefits on objective proof of CFS because it is a recognized condition but is not objectively provable.

ERISA does not have a rule requiring treating physicians’ opinions to get more deference than other physicians but treating physicians have more opportunity to know and observe a patient than those who have not examined the patient. See Black and Decker Disability Plan v. Nord, 538 U.S. 822 (2003). Especially with a condition like CFS, which requires examination of a patient’s symptoms and medical history, that patient’s treating physician is likely in a better position to diagnose such a condition than a paper review physician. In this case, MetLife’s paper review physicians did not provide any explanation for discounting the opinions provided by Veronica’s treating physicians, who had expertise with CFS. Thus, MetLife’s decision was improper.

It is vital to understand your insurance company’s obligations in reviewing your disability claim. Especially if your condition is something like CFS, for which objective evidence is impossible to provide, accepting the insurance company’s denial of your claim may be tantamount to foregoing disability benefits to which you may be entitled. To avoid such circumstances, you should consult with an expert disability insurance claims attorney with expertise and knowledge of ERISA and insurance companies’ obligations. The team of attorneys at McKennon Law Group PC have exactly such expertise and knowledge and can help you navigate your disability claim and appeal of the insurance company’s denial of your claim. If you have made a claim for disability benefits or intend to do so, contact McKennon Law Group PC immediately for a free consultation.

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