Leading Long-Term Care Insurer's Premiums Soaring
Long-term care insurer John Hancock has begun the process of seeking sharp premium increases nationwide . . .
Read moreA California case about to go to trial will test what constitutes lying about one's health on an application for long-term care insurance. The outcome could have implications for many who buy policies and later suffer from diseases that cause cognitive impairment.
When Harold Carrington bought long-term care insurance in 1995, he expected it to be there when he needed it.
Now at age 76, he needs it. Carrington suffers from Alzheimer's disease and spends his days in a nursing home that costs about $4,000 a month. All told, the cost of his care has topped more than $200,000.
But although Carrington has paid more than $20,000 in premiums, his long-term care insurance company refuses to pay a dime.
In court documents, the insurer, John Hancock Insurance Co., says it denied the claim because Carrington committed fraud on his original application 10 years ago by failing to disclose important medical information. Carrington's 74-year-old brother and legal guardian, Ray, is fighting the company, and the case is to go to trial in the fall.
Meanwhile, Carrington is completely unaware of the legal battle surrounding him. According to the San Francisco Chronicle, which has written about Harold Carrington's unfortunate case, the "case serves as a cautionary tale showing that when consumers are purchasing coverage for peace of mind, things can go terribly wrong."
What went wrong in this case is open to debate and in part lost in the ebbing sands of Carrington's memory. Carrington met with a long-term care insurance agent in October 1994. While he did not purchase the policy then, he filled out an application that included his medical background. The application didn't mention memory loss.
Carrington, who was then 65, visited his doctor one month later and mentioned then that he'd been experiencing some memory loss. According to court documents, the doctor noted suspicions of early signs of dementia or possible Alzheimer's in Carrington's medical records, but made no mention of that to Carrington.
Carrington purchased the long-term care policy in April 1995. He wasn't diagnosed with Alzheimer's until 1998.
In court documents, John Hancock claims it was deceived by Carrington and that he was obliged to report symptoms of memory loss before he signed the policy. Carrington's attorney says it's up to the insurer to conduct a medical evaluation as well as to review the applicant's medical records, as allowed by law. In this case, the attorney says the company failed to review the records until Carrington's brother initiated a claim in 2000. He adds that Carrington may not have viewed the memory loss he experienced in 1994 as particularly significant.
Consumer health advocates following the case are particularly interested in the implications for other cognitive disorders, such as other forms of dementia and Parkinson's disease.
"People could be in the early stages of one of these disorders, and they wouldn't necessarily know it," said Bonnie Burns, policy specialist for California Health Advocates, an association of advocacy and counseling programs for Medicare beneficiaries.
Hancock has offered to return Carrington's $20,000 in premiums, but his brother won't drop the lawsuit. Although as it turns out Carrington, who was an exceedingly frugal man, has more than enough money to cover his nursing home expenses, his brother says it's the principle of the thing.
"The fight is 'How dare they!' " he said of the insurer's refusal to pay and the company's accusation that his brother lied.
To read the entire article in the San Francisco Chronicle, click on: https://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2004/06/13/BUGL574S4G1.DTL
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Read moreIn addition to nursing home care, Medicaid may cover home care and some care in an assisted living facility. Coverage in your state may depend on waivers of federal rules.
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