[Vision2020] NY Times: Aged, Frail and Denied Care by Their Insurers
Carl Westberg
carlwestberg846 at hotmail.com
Mon Mar 26 10:08:54 PDT 2007
"While the dems dilly dally..." Doggone dose dastardly dilly dallying
dems. Not to mention an increasing number of regrettably reprobate repubs?
Carl Westberg Jr.
>From: "Pat Kraut" <pkraut at moscow.com>
>To: "vision2020" <vision2020 at moscow.com>
>Subject: Re: [Vision2020] NY Times: Aged,Frail and Denied Care by Their
>Insurers
>Date: Mon, 26 Mar 2007 09:45:01 -0800
>
>While the dems dilly dally with who the AG is this country has some real
>problems...such as insurance run amok. The dems do not seem to realize the
>last vote was against the repubs not for dems and they are diminishing so
>much power from the office of the president it is dangerous. They and you
>may not like Bush but the next president is going to have to work within
>the same protocol that they are trying to force on Bush. They really do not
>get what they are doing. And so many citizens of the US are so unaware of
>the truth of the Constitution that they do not understand. I blame the
>public school system because of the dumbing down of they classrooms.
>
>
>
>----- Original Message -----
> From: Art Deco
> To: Vision 2020
> Sent: Monday, March 26, 2007 6:51 AM
> Subject: [Vision2020] NY Times: Aged,Frail and Denied Care by Their
>Insurers
>
>
>
>
>
>
>------------------------------------------------------------------------------
>
> March 26, 2007
> Aged, Frail and Denied Care by Their Insurers
> By CHARLES DUHIGG
> CONRAD, Mont. - Mary Rose Derks was a 65-year-old widow in 1990, when
>she began preparing for the day she could no longer care for herself. Every
>month, out of her grocery fund, she scrimped together about $100 for an
>insurance policy that promised to pay eventually for a room in an assisted
>living home.
>
> On a May afternoon in 2002, after bouts of hypertension and diabetes had
>hospitalized her dozens of times, Mrs. Derks reluctantly agreed that it was
>time. She shed a few tears, watched her family pack her favorite blankets
>and rode to Beehive Homes, five blocks from her daughter's farm equipment
>dealership.
>
> At least, Mrs. Derks said at the time, she would not be a financial
>burden on her family.
>
> But when she filed a claim with her insurer, Conseco, it said she had
>waited too long. Then it said Beehive Homes was not an approved facility,
>despite its state license. Eventually, Conseco argued that Mrs. Derks was
>not sufficiently infirm, despite her early-stage dementia and the 37 pills
>she takes each day.
>
> After more than four years, Mrs. Derks, now 81, has yet to receive a
>penny from Conseco, while her family has paid about $70,000. Her daughter
>has sent Conseco dozens of bulky envelopes and spent hours on the phone.
>Each time the answer is the same: Denied.
>
> Tens of thousands of elderly Americans have received life-prolonging
>care as a result of their long-term-care policies. With more than eight
>million customers, such insurance is one of the many products that
>companies are pitching to older Americans reaching retirement.
>
> Yet thousands of policyholders say they have received only excuses about
>why insurers will not pay. Interviews by The New York Times and
>confidential depositions indicate that some long-term-care insurers have
>developed procedures that make it difficult - if not impossible - for
>policyholders to get paid. A review of more than 400 of the thousands of
>grievances and lawsuits filed in recent years shows elderly policyholders
>confronting unnecessary delays and overwhelming bureaucracies. In
>California alone, nearly one in every four long-term-care claims was denied
>in 2005, according to the state.
>
> "The bottom line is that insurance companies make money when they don't
>pay claims," said Mary Beth Senkewicz, who resigned last year as a senior
>executive at the National Association of Insurance Commissioners. "They'll
>do anything to avoid paying, because if they wait long enough, they know
>the policyholders will die."
>
> In 2003, a subsidiary of Conseco, Bankers Life and Casualty, sent an
>85-year-old woman suffering from dementia the wrong form to fill out,
>according to a lawsuit, then denied her claim because of improper
>paperwork. Last year, according to another pending suit, the insurer Penn
>Treaty American decided that a 92-year-old man had so improved that he
>should leave his nursing home despite his forgetfulness, anxiety and
>doctor's orders to seek continued care. Another suit contended that a
>company owned by the John Hancock Insurance Company had tried to rescind
>the coverage of a 72-year-old man when he was diagnosed with Alzheimer's
>disease four years after buying the policy.
>
> In court filings, all three companies said the denials had been proper.
>They declined further comment on the cases, though Bankers Life and John
>Hancock eventually settled for unspecified amounts.
>
> In general, insurers say criticisms of claims-handling are unfair
>because most policyholders are paid promptly and some denials are necessary
>to root out fraud.
>
> In a statement, Conseco said the company "is committed to the highest
>standards for ethics, fairness and accountability, and strives to pay all
>claims in accordance with policy contracts." Penn Treaty said in a
>statement, "We strive to treat all policyholders fairly, and to deliver the
>best, most efficient evaluation of their claim as possible."
>
> But policyholders have lodged thousands of complaints against the major
>long-term-care insurers. A disproportionate number have focused on Conseco,
>its affiliate, Bankers Life, and Penn Treaty. In 2005, Conseco received
>more than one complaint regarding long-term-care insurance for every 383
>such policyholders, according to data from the insurance commissioners'
>association. Penn Treaty received one complaint for every 1,207
>long-term-care policyholders. (The complaints touch on a variety of topics,
>including claims handling, price increases and advertising methods.)
>
> By comparison, Genworth Financial, the largest long-term-care insurer,
>received only one complaint for every 12,434 policies.
>
> Conseco is among the nation's largest insurers, collecting premiums
>worth more than $4.2 billion in 2006, of which long-term-care policies
>contributed 21 percent. Penn Treaty focuses primarily on long-term-care
>products and collected premiums of about $320 million in 2004, the last
>year the company filed an audited annual report.
>
> In depositions and interviews, current and former employees at Conseco,
>Bankers Life and Penn Treaty described business practices that denied or
>delayed policyholders' claims for seemingly trivial reasons. Employees said
>they had been prohibited from making phone calls to policyholders and that
>claims had been abandoned without informing policyholders. Such tactics,
>advocates for the elderly say, are becoming common throughout the industry.
>
> "These companies have essentially turned their bureaucracies into profit
>centers," said Glenn R. Kantor, a California lawyer who has represented
>policyholders.
>
> Yet these concerns have been ignored by state regulators, advocates say,
>and have gone unnoticed by federal lawmakers who recently passed incentives
>intended to promote purchases of long-term-care policies, in the hopes of
>forestalling a Medicare funding crisis.
>
> Conseco and Bankers Life "made it so hard to make a claim that people
>either died or gave up," said Betty J. Hobel, a former Bankers Life agent
>in Cedar Rapids, Iowa.
>
> "When someone is 70 or 80 years old," she said, "how many times are they
>going to try before they just give up?"
>
> A Race to Sell Policies
>
> When Mrs. Derks bought her long-term-care policy from a door-to-door
>salesman in 1990, she was unaware that she represented the insurance
>industry's newest gold mine.
>
> Her husband had died eight years earlier of a stroke, leaving her to run
>a barley farm in northern Montana, where she lived with her three children
>and her aging mother. As she watched her own parent decline, Mrs. Derks
>became preoccupied with sparing her children the expense of her final
>years.
>
> "She was terrified that she would bankrupt us or get sent to a public
>nursing home," said Ken E. Wheeler, her son-in-law.
>
> At the time, long-term-care policies, which can cover the costs of
>assisted-living facilities, nursing homes and at-home care, were becoming
>one of the insurance industry's fastest-growing products. Companies like
>Conseco, Bankers Life and Penn Treaty were aggressively signing up clients
>who were not in the best health at rates far below their competitors' in
>order to win more business, former agents said. >From 1991 to 1999,
>long-term-care sales helped drive total revenue gains of roughly 500
>percent each at Penn Treaty and Conseco, including its affiliate Bankers
>Life.
>
> Cracks in the business, however, soon started to appear. Insurance
>executives began warning they had underestimated how long policyholders
>would live after entering nursing homes. The costs of treating Alzheimer's,
>Parkinson's and diabetes ballooned.
>
> As insurers began realizing their miscalculations, they persuaded
>insurance commissioners in California, Pennsylvania, Florida and other
>states to approve price increases of as much as 40 percent a year.
>
> By 2002, Conseco's long-term-care payouts exceeded revenue. Those and
>other disappointing results prompted the company to file for bankruptcy,
>from which it emerged 10 months later.
>
> That same year, Mrs. Derks entered Beehive Homes, a cheery, 12-bed
>center one block from the Prairie View elementary school. In the previous
>four years, she had been hospitalized more than two dozen times. She had
>once lain unconscious in her living room for a day and a half. Her
>physician ordered her into an assisted-living center.
>
> Initially, Conseco told Mrs. Derks's daughter, Jackie Wheeler, that her
>claim would go through smoothly, Mrs. Wheeler said. The family began paying
>Beehive Homes's $1,900 monthly fee.
>
> But three months after submitting her claim, Mrs. Derks received a
>letter from Conseco saying she had waited too long, and her earliest costs
>would not be reimbursed. Two months later, she received another letter
>denying her entire claim because she had not submitted proof of illness.
>
> Yet a copy of Mrs. Derks's policy, sent to the Wheelers by Conseco in
>2004 and reviewed by The Times, mentions no requirement for proof of
>illness. The policy requires only that the confinement be ordered by a
>physician, and it allows for a notice of claim to be sent "as soon as
>reasonably possible."
>
> Mrs. Derks's daughter called Conseco and explained that her mother could
>not recall the date or people's names and had started multiple fires by
>forgetting to turn off the stove. She sent letters stating that her mother
>needed assistance to dress, eat, go to the bathroom and inject insulin.
>
> "This is medically necessary!!!" reads a form signed by Mrs. Derks's
>physician in 2004. "This has been filled out three times! This person needs
>assistance!"
>
> Seven months later, Conseco sent another letter, this time denying Mrs.
>Derks's claim because her policy "requires a staffed registered nurse 24
>hours per day." Her policy does not mention such a requirement.
>
> Conseco also sent letters denying Mrs. Derks's claim because her policy
>had an "assisted living facility rider," and because Mrs. Derks "does not
>have an assisted living facility rider." In all, the family received more
>than a dozen letters from the company. Many contradict one another, and
>frequently cite requirements that are nowhere mentioned in Mrs. Derks's
>policy.
>
> "There was always a new step in the runaround," Mrs. Wheeler said. "It
>felt like everything was designed to make me just go away."
>
> Over two years, Mrs. Wheeler estimated, she called the company about 100
>times. Twice a month, she sent envelopes stuffed with medical records. Some
>afternoons, she spent hours making calls. After one conversation, Mrs.
>Wheeler slammed down the phone and started to cry. Then she drove to
>Beehive Homes, where her mother was surrounded by faded photos of her
>childhood and boxes of adult diapers.
>
> "I wouldn't tell her about the problems we were having with Conseco,
>because I knew it would cause her so much worry," Mrs. Wheeler said.
>
> Eventually, the Wheelers sold part of their John Deere dealership to
>raise money to pay for her mother's care. In October 2006, they sued.
>
> Conseco, asked by a reporter about the company's handling of the Derks
>claim, declined to answer, citing the pending litigation. In court
>documents, the company denied Mrs. Derks's allegations without specifying
>why her claim was denied.
>
> "We did everything they asked," Mrs. Wheeler said. "And this company
>just treats us like dirt."
>
> Tales of Bureaucracy
>
> Inside the large Conseco headquarters in Carmel, Ind., scores of
>employees receive the flood of documents and calls that arrive each day. At
>times, according to depositions and interviews, that deluge became so
>overwhelming that documents were lost, calls went unreturned and mistakes
>occurred.
>
> Some employees describe vast mailrooms where documents appear and
>disappear. One call-center representative said he was afforded an average
>of only four minutes to handle each policyholder's call, no matter how
>complicated the questions. Employees said they were instructed not to say
>when the company was behind in processing paperwork, even when the backlog
>extended to 45 days. Workers were prohibited from contacting each other by
>phone, although such calls might have quickly resolved obstacles, according
>to depositions.
>
> Conseco, asked in detail about the company's policies, declined to
>respond.
>
> Bureaucratic obstacles were pervasive, according to interviews with 10
>former Conseco employees and depositions of more than a dozen others.
>Robert W. Ragle, a former Bankers Life branch manager, once contacted the
>claims department on behalf of a client, and "they just laughed us off the
>phone," he said. "Their mentality is to keep every dollar they can." Mr.
>Ragle was dismissed by Bankers Life in 2002. He sued for wrongful
>termination and settled out of court.
>
> In lawsuits, complaints and interviews, policyholders contend that
>Conseco, Bankers Life or Penn Treaty denied claims because policyholders
>failed to submit unimportant paperwork; because daily nursing notes did not
>detail minute procedures; because policyholders filled out the wrong forms
>after receiving them from the insurance companies; and because facilities
>were deemed inappropriate even though they were licensed by state
>regulators.
>
> In depositions conducted on behalf of angry policyholders, Conseco
>employees described bureaucratic obstacles that prevented payment of
>claims. Those depositions were sealed in settlement agreements but were
>obtained by The Times.
>
> In a 2006 deposition, a Bankers Life and Conseco claims adjuster, Teresa
>Carbonel, testified that she denied claims because of missing records but
>was prohibited from calling nursing homes or physicians to request the
>documents. She also testified that when a claim was denied, she was
>forbidden to phone a policyholder, but instead used a time-consuming
>mailing system.
>
> Ms. Carbonel's testimony, recorded during lawsuit on behalf of a
>94-year-old policyholder, Rhodes K. Scherer, also disclosed that if
>policyholders did not mail requested documents within 21 days, Conseco
>might abandon their claim, sometimes without informing them.
>
> In the case of Mr. Scherer, who was institutionalized after a bathroom
>fall, it was difficult to obtain a response, Ms. Carbonel said, because the
>company's requests were mailed to his home address, rather than the nursing
>center where the company had been notified that he had moved. Ms. Carbonel,
>who is no longer with the company, did not return calls. Conseco declined
>to comment on her testimony.
>
> In another deposition, Conseco's then-senior manager for long-term- care
>claims, Jose S. Torres, testified that Conseco would sometimes withhold
>payments until it received documents not required by customers' policies.
>In Mr. Scherer's case, Mr. Torres said, the company refused to pay his
>nursing home costs unless he sent copies of the home's license, payment
>invoices and medical records, even though those documents had no bearing on
>approving his claim.
>
> Mr. Scherer's claim "was handled not in the best way, but it was handled
>according to the processes and procedures placed at the time," Mr. Torres
>testified. "Mistakes are going to be made, you know."
>
> Other executives testified that when Conseco appeared to have lost
>important documents in Mr. Scherer's claim, no investigation was initiated.
>Shawn Michael Schechter, a Conseco claims supervisor who left the company
>in 2005 on positive terms, according to the deposition, testified that the
>handling of Mr. Scherer's claim violated the principle of good faith, which
>requires insurance companies to treat customers fairly.
>
> "The claim adjuster could have made that very easy and not have put the
>burden back onto the policyholder," he testified.
>
> Mr. Torres did not return calls. Mr. Schechter declined to answer
>questions.
>
> Mr. Scherer died in 2004 without receiving benefits from Conseco. His
>estate settled with the company in February for an undisclosed amount,
>according to a lawyer representing the estate.
>
> Conseco declined to discuss its complaint history or individual cases,
>citing confidentiality agreements. In its statement, the company said that
>in 2006, Conseco paid nearly $2.3 billion on 9.8 million claims in all
>types of insurance sold by the company.
>
> The company added: "Conseco, through training, education and process
>improvements in all of its insurance companies, is continuously focused on
>enhancing service and resolving any problems expeditiously. The Conseco
>Insurance Group's overall insurance department complaints decreased 20
>percent from 2005 to 2006."
>
> Depositions of executives at Penn Treaty also point to questionable
>practices. In a 2005 lawsuit, a Penn Treaty senior vice president, Stephen
>Robert LaPierre, testified that the company rejected one claim without
>informing the policyholder why, asked for information that was not required
>to process a claim, gave incomplete information about a claim's status and
>said the company was delaying payment because of an investigation while
>failing to take steps that might have resolved the inquiry.
>
> Mr. LaPierre declined to discuss his testimony. Penn Treaty settled the
>lawsuit by paying the policyholder an unspecified amount, the
>policyholder's lawyer said.
>
> Penn Treaty said in a statement that evaluating a company by measuring
>its complaints was flawed, and that since 2003, the company has denied an
>average of less than 1.7 percent of the up to 8,000 claims it received
>every year because of reasons related to policyholder eligibility. "From
>time to time, Penn Treaty is compelled to investigate fraud or questionable
>billing activities," the company added.
>
> Few Regulatory Inquiries
>
> Few of the cases or complaints filed against Conseco, Bankers Life, Penn
>Treaty or other insurers have received much attention, in part because many
>lawsuits filed against long-term-care insurers have been settled with the
>requirement that depositions, documents and settlement terms be kept
>confidential. Frequently, say policyholders' lawyers, the companies have
>been willing to pay millions of dollars in exchange for confidentiality.
>
> Furthermore, despite the complaints against long-term-care insurers, few
>states have conducted meaningful investigations.
>
> Ron Gallagher, a deputy commissioner with the Pennsylvania Insurance
>Department, said, "I don't know that we have a real problem with improper
>claim denials."
>
> Yet data from the National Association of Insurance Commissioners show
>that from 2003 to 2005, Pennsylvania received more complaints regarding
>Conseco, Bankers Life and Penn Treaty than any other state. Mr. Gallagher
>said he might begin a new review of those companies.
>
> Other states with large numbers of long-term-care complaints, including
>California, Missouri, Maryland, Indiana and Washington have not begun
>investigations, or have reviewed only small numbers of policies.
>
> As a result, other seniors may end up like Mrs. Derks.
>
> While she was waiting for her lawsuit to proceed, Medicaid began
>contributing to Ms. Derks's care. Taxpayers now pay Beehive Homes about $32
>daily for her care.
>
> "Long-term-care insurance is supposed to result in less pressure on
>Medicaid, not more," said Ms. Senkewicz, the former executive at the
>insurance commissioners' association.
>
> For Mrs. Derks's family, things have already broken down.
>
> "How many other people are out there who don't have a family to fight
>for them and have just given up?" asked Jackie Wheeler. "This company
>should be ashamed."
>
>
>
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