Fighting for Insurance Claims
KNBC, Los Angeles
June 24, 2008
For more than two years, KNBC investigative reporter Ana Garcia has been looking into the treatment elderly policyholders received from a major insurance company. She began her investigation when a whistleblower from inside the insurance company told Channel 4 about some alleged problems with some older clients having their polices canceled, after they've invested tens of thousands of dollars into the system, and just when they need it the most.
The following is a transcript of Garcia's investigation as it aired on June 24, 2008.
Ana Garcia: B is 87 years old, and her husband just turned 93. They've asked us not to use their last name.
B: I couldn't possibly do everything for my husband.
Garcia: They live in an assisted living facility in Southern California.
B: It gave me peace of mind. I said, "Thank goodness we have long-term care nsurance."
Garcia: They, like millions of Americans, bought long-term care insurance to cover the costs of the problems that come with aging: in-home care, assisted living facilities, even a nursing home. For more than 10 years, B says they paid their premiums, but when her husband had a stroke in 2001, B claims she struggled to get the insurance company to cover the costs of home care.
B: Oh, my lord. I couldn't sleep at night.
Garcia: B and her husband are insured by CNA, which is part of Continental Casualty and headquartered in Chicago. She says CNA told her the company wouldn't pay for home care, because her husband's condition wasn't severe enough. So she says she used savings to pay for 5-years of in-home care. When that dried up and they needed assisted living...
B: I had to take a reverse mortgage in order to make this move, to cover the cost of this new apartment.
Garcia: B says CNA is finally paying for her husband's nursing home. But B claims she had issues with her policy as well.
B: They dropped me before I needed them.
Garcia: She says CNA told her, her policy had been canceled because she hadn't paid her premiums, though she insists she did. B showed us copies of canceled checks, and a refund for paying too much.
B: They had collected two checks and had cashed them.
Garcia: B says while she was trying to prove she was wrongly terminated, CNA told her in the meantime she could apply for "reinstatement." She did and was rejected. B says CNA claimed she had a pre-existing condition of osteoporosis.
B: I wasn't going to take this lying down.
Garcia: After months of battling with CNA, B says she prevailed and was reinstated at the same premium she had been paying.
B: I was paid up the whole time.
Garcia: Some inside the industry say no one should be surprised at the story B tells.
Garcia: Have you ever been instructed not to be helpful?
Insider: Yes.
Garcia: This insider came to Channel 4 news exclusively to expose how they say CNA does business.
Insider: I feel like these elderly are being totally taken advantage of, and I'm angry.
Garcia: We agreed to disguise the whistleblower's identity, who has worked at several insurance companies, including CNA.
Insider: I've seen them deny claims even though they have doctor's statements saying they are incapacitated.
Garcia: Attorney Frank Darras is a national expert on insurance law representing policyholders. In other words, he sues insurance companies.
Frank Darras, attorney: It's a tried-and-true claims strategy: deny, deny, deny, delay, delay, delay.
Garcia: Darras says he's never sued CNA, but says the insurance industry in general has this attitude.
Darras: Sick people don't fight hard, and old sick people don't last long.
Garcia: Darras says he gets more than 2,000 calls a month at his Ontario office from people who say their insurance company has wrongly denied them.
Darras: The last two clients I had died.
Garcia: Darras claims that too is part of the industry's strategy.
Darras: That's where they know they're going to win. Seniors can't fight long.
Garcia: Policies can lapse, or cancel, because the premiums haven't been paid on time, or haven't been paid at all. But what if, the payments are delayed because of a change of address at CNA?
Insider: We had a new premium billing address in which to send payments and our customers were not notified of that new address.
Garcia: Our insider says the payment address changed from Nashville, Tenn. to Phoenix. Though some original contracts still list the Nashville address.
Insider: It takes three to four weeks for that payment to be forwarded to Phoenix, causing the policy to lapse.
Garcia: CNA confirms it moved its payment center but says that was 10 years ago, and they say they notified clients. Also, CNA insists it takes them just one day to forward payments.
Garcia: The whistleblower claims CNA makes it difficult for policyholders to figure out where to send their payments -- especially since CNA's own notices list several addresses.
Rose Marie Morgan, former CNA policyholder: Up at the top, it says "Nashville, TN.," so I assumed that's where they wanted me to send this, so I sent it there.
Garcia: Rose Marie Morgan is a 72-year-old real estate agent in Virginia Beach, Va. She admits she mailed her payment to CNA late on the 17th, but before the 31-day grace period expired.
Morgan: They dropped me. They said we never received your check and I said well I mailed it.
Garcia: Two months later, Morgan stopped payment on the check after CNA canceled her policy. She says CNA told her she could reapply for coverage but would have to prove she was in the same physical and mental heath she was in 6 years ago when Morgan bought the policy. And how much had Morgan paid CNA all those years?
Morgan: Over 15,000.
Garcia: The insider claims policies generally begin lapsing after seniors have already paid tens of thousands to CNA.
Insider: The average premium seems to be around $25,000. I do feel like they're intentionally causing policies to lapse.
Steve Poizner, California Insurance Commissioner: If these allegations are proved to be true, they would be very troubling.
Garcia: California insurance commissioner Steve Poizner.
Poizner: Seniors need and deserve special protection.
Garcia: We played a tape of the insider's claims for the commissioner. While Poizner would not comment directly on CNA without his own investigation, he did tell us what the law requires in California.
Garcia: What if they are trying to avoid a paper trail?
Poizner: Then that's illegal. They have to document, even all their approvals in their files.
Garcia: Have you been told not to put thing in writing?
Poizner: Yes.
Garcia: What about wrongly denying claims?
Poizner: It's the No. 1 thing we look for in our audits.
Garcia: On the issue of canceled policies because of confusing and multiple addresses for payments?
Garcia: There are several address on just one statement?
Poizner: If a policyholder sends the payment to of these addresses on the statement, then California law and my regulations are pretty clear. By any of these CNA offices, that is money received, at that moment at that time. If there are delays getting it from one office to another, that's the insurance company's problem, not the policyholder.
Garcia: CNA left us a voicemail claiming if a payment is received at any address on the payment slip it is considered received. That seems to contradict this CNA letter we obtained, from just a year ago, informing a client if they mail their payment to the incorrect address again, their check will not be accepted and it will be returned.
Morgan: I mean we may have some age on us, but we're not stupid.
Garcia: Unfortunately B says the actions of her insurance company had devastating effects.
B: It was because of them I had to get a reverse mortgage.
Garcia: She says she's worried she could be dropped again.
B: It's taking undue advantage of people because of their age.
Garcia: We gave CNA more than a month and a half to respond to these allegations in depth. CNA says it does not comment on specific cases as we outlined and they declined to be interviewed on camera.
Garcia: CNA said in voicemail they give a 66-day grace period for late payments, though this contract filed with California says only 31 days.
Garcia: Here's the general statement they emailed us:
Text:
Although we are no longer selling individual long-term care policies, we continue to service approximately 300,000 individual long-term care policyholders. We are proudly committed to meeting the continuing financial and customer service needs of these customers. The thorough procedures that we follow in the handling of our claims are among the best in the industry. We align our claim handling processes and procedures to provide our insureds every opportunity to utilize their policy benefits to the fullest extent possible. Please note that our data indicates that CNA policyholders retain their policies at rates above industry average.
Morgan: I thought I was buying security, thought I was buying peace of mind, and I got zippo, zero.
If you believe you have been wrongly denied benefits, or your policy has been canceled, you may file a complaint with California Department of Insurance. You can do that by calling 1-800-927-HELP or by going to its Web site.
You can file the complaint yourself, or a relative can do it for you.
If your parent has passed away, but you believe they may have been wronged, you can still file a complaint on their behalf.
If the Determent of Insurance finds there was wrongdoing, you could get money back, get reinstated and the company can be fined.
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