Delaying Until Death


Ill health has left your mother unable to care for herself. She needs home care to get by. Thankfully she purchased a long-term care insurance policy over a decade ago and has been faithfully paying the premiums ever since. She was determined her children should not suffer the burden of paying for her care later in life.

But the paying from the insurance company never arrives. You call the insurance company over and over and send them document after document. They deny the claim, citing reasons from "the claim is too late," to "you did not fill out the paperwork," to "you filled out the wrong paperwork." The denials change each time, often citing provisions in the policy that do not exist, and often contradicting previous denials. Meanwhile, the cost of the healthcare has quickly depleted your mother's savings, and now the bills fall to you, the very prospect she sought to avoid.

The case of 77-year-old Mary Rose Derks from Montana attracted congressional attention after the New York Times highlighted her plight at the hands of insurance company Conseco. Her family was forced to sell their small business after Conseco denied the claim one way or another for more than four years. Insurance companies have long embraced delaying tactics to avoid paying claims, but undoubtedly the most shameful use of delay tactics has been by insurance companies involved in long-term care insurance. According to Mary Beth Senkewicz, a former senior executive at the National Association of Insurance Commissioners (NAIC), "the bottom line is that insurance companies make money when they don't pay claims...They'll do anything to avoid paying, because if they wait long enough, they know the policyholders will die." 

For you, making a insurance claim is likely to happen at a time when you are most vulnerable. Filing a claim with your insurance company usually follows an upset to everyday life, that could involve a car accident, a tree falling on your house, or hospitalization from a serious illness. For the insurance company it is business as usual. Many insurance companies routinely delay claims to try to avoid paying. By delaying as long as possible, the insurance company knows many of its claimants will eventually give up, or in some cases die.

Internal documents from Allstate featured an alligator and the caption "sit and wait" -- a reference to delaying claims to increase the likelihood that a claimant would give up.

Claim supervisors at AIG have reported locking checks in safes until claimants complained, delaying payments until they were a year old, and disposing of important correspondence during routine "pizza parties."

Employees at long-term care insurer Conseco and its subsidiaries have testified to a variety of tricks used to deny claims: deliberately mailing the wrong forms and then denying claims on the basis of incorrect paperwork; declaring policyholders have abandoned the claim if they fail to submit forms within 21 days; and withholding payment until the policyholder submitted documents not even required under the terms of the policy. In the words of former agent Betty Hobel,
the company "made it so hard to make a claim that people either died or gave up."

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