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Long-Term Care Insurer Targeted In Class Action


Retired doctor says insurance company ignored, denied claims by sick and elderly.

An 87-year-old man has filed a potential class action against a Indiana-based insurance company, accusing it of refusing to honor thousands of long-term care policies and thus delaying and denying medical aid to sick and elderly policyholders.

The lawsuit was filed Tuesday in San Bernardino County Superior Court by Consumer Watchdog and Shernoff Bidart Echeverria Bentley LLP on behalf of William Hall, an elderly Upland resident, Korean War veteran and retired physician.

The complaint alleges that Senior Health Insurance Co. of Pennsylvania has been cashing in on elderly Californians' premiums for decades while illegally making seniors jump through unnecessary hurdles to get their benefits, withholding millions of dollars in claim payments.

SHIP services policies originally sold by Conseco Senior Health Insurance Co., American Travelers Life Insurance Co., Transport Life Insurance Co. and Continental Life Insurance Co. It withheld benefits by taking an "unreasonably long time to process claims," ignoring claims and denying claims by using ambiguous language or by giving no reason, according to the complaint.

"SHIP focuses on ensuring that eligible claims are paid in accordance with the policy contracts that its customers have purchased, and operates without a profit motive," company spokeswoman Annett Gobrogge said. "SHIP's sole mission is to pay eligible claims accurately and timely, and has established a very strong record of compliance."

Long-term care policyholders typically pay small monthly premiums to ensure future expenses for a home caregiver won't fall on family members.

Hall alleges he purchased a long-term care policy in 1994 and paid premiums on it for 16 years, only to have SHIP delay his claims for eight months and then pay only 20 percent of what it owed him. Hall was forced to pay tens of thousands of dollars out of his own pocket for home caregivers, the complaint alleges.

The insurance company's documentation practices were allegedly designed to deny coverage, including requiring multiple claim forms requesting duplicate information, demanding forms authorizing SHIP to obtain the insured's medical records and proof of caregiver certification and requiring detailed daily caregiver notes.

"SHIP's claim process not only violates California law, it violates the terms of the insurance policy that it sold to Dr. Hall," said William M. Shernoff, one of Hall's attorneys, in a statement.

The lawsuit alleges breach of contract and breach of the covenant of good faith and fair dealing, as well as violations of California's Unfair Competition Law and Welfare and Institutions code. The complaint seeks unspecified damages and attorney fees. Hall v. Senior Health Insurance Co. of Pennsylvania, CIVRS 120096 (San Bernardino Super. Ct., filed Feb. 7, 2012).

In 2009, SHIP agreed to pay $500,000 to settle claims by California regulators that its process for handling claims was difficult and confusing and that it improperly denied claims on long-term policies.