State Fines Bankers Life $115,000 for Mishandling Long-Term Care Claims, Denying Benefits Without Full Investigation
The Oregon Insurance Division has fined Bankers Life and Casualty Company, one of the state’s largest long-term care insurers, $115,000 for improper claims handling.
Bankers Life must also review approximately 26,000 claims involving 2,069 policyholders as far back as Jan. 1, 2010, to find any other situations where the company owes benefits. Long-term care insurers typically pay bills for services on a monthly basis so one policyholder can have multiple claims.
Also, the Chicago-based company must change practices to ensure proper claims handling in the future.
“The company treated its policyholders unfairly,” Insurance Commissioner Laura Cali said. “In addition to the financial penalty, it must find and fix any problems we haven’t already uncovered and take steps to assure us that it will meet policyholder obligations going forward.”
Other than multistate investigations, this is the second-largest fine the Oregon Insurance Division has issued against a company since 2008. In that year, the division fined Bankers Life $150,000 for selling unsuitable annuities to clients.
The disciplinary order outlines multiple instances of claims mishandling, including:
Twenty-three instances where the company denied claims without conducting a reasonable investigation. In several claims, for example, Bankers Life needed more information to determine if a policyholder qualified for benefits because the policyholder was mentally impaired or needed help with daily living activities. Instead of requesting the information, Bankers Life initially denied the claims.
Eighteen incidents where the company failed to handle claims promptly. Oregon requires an insurance company to acknowledge or pay claims within 30 days of the date the claim is filed.
Ten instances where the company’s unfair practices harmed victims. In most instances, the company charged premium after a policyholder’s “waiver of premium” benefit had started. This benefit prohibits the company from charging premium once a person receives covered services for more than 90 days.
In dozens of instances, Bankers failed to tell people whose claims it denied how to contact the Insurance Division or notify them of their right to appeal a decision that they didn’t qualify for benefits.
Seven incidents where Bankers Life failed to respond promptly when asked for information about claims.
The company already corrected errors or made refunds to consumers in cases that the Insurance Division investigated. However, it now must ensure no other policyholders were treated unfairly.
Review of past claims
The order requires Bankers Life to hire a division-approved industry professional to review certain claims that were filed from Jan. 1, 2010, through Oct. 31, 2013, including all benefit denials.
The company will also review other claims filed in the same time period at a policyholder’s request. Bankers Life will send letters to its policyholders explaining the outcome of the claims it must review, as well as how to request a review on other claims. Policyholders who disagree with the finding can request an arbitrator’s review.
Bankers Life now has 60 days to provide the Insurance Division with its detailed plan to review past claims and to submit a corrective plan to ensure proper claims handling in the future.
With nearly $13 million worth of premium in 2012, Bankers Life is among the largest long-term care insurers in the state. In the Insurance Division’s most recent complaint guide, Bankers Life ranks the worst among 20 long-term care companies based on the number of complaints it received measured against its share of the market.
The Insurance Division is part of the Department of Consumer and Business Services, Oregon’s largest business regulatory and consumer protection agency. Visit www.dcbs.oregon.gov. Follow DCBS on Twitter: http://twitter.com/OregonDCBS. Receive consumer help and information on insurance, mortgages, investments, workplace safety, and more.