5 first steps you should take after the insurance company denies your long term care claim
- Gather all documentation. Analyzing an insurance claim is like putting together the pieces of a complicated
jigsaw puzzle. The various documents all contain bits of information, and each is a piece of the puzzle. You can't
put the puzzle together until you have all the pieces. The most important pieces in a long-term care claim are
usually the following:
- The policy;
- Application for insurance - this is usually attached to the back of the policy;
- Claim form - the company usually provides a form to you for this purpose;
- Attending physicians statement - this is a statement completed and signed by your physician on a form
provided by the insurance company;
- Records from the nursing home or assisted living facility - these records will contain details of
the assistance and services that you require on a day-to-day basis;
- Nurses assessment - obtained by the insurance company. The company will often hire a
nurse to personally visit you, conduct an interview and perform an assessment of your
cognitive and physical abilities. The nurse will fill out a long and detailed form containing
10 to 20 pages of information. She frequently administers a "mini mental evaluation" in which
the subject is asked a series of questions designed to test awareness and short-term memory.
The nurse completes all of these tasks, and includes her own comments, and then submits the
documentation to the insurance company. The company usually relies heavily on this information
in accepting or denying the claim;
- Denial letter -this is the insurance company letter denying the claim. By law, the company
must explain the basis for its denial, and must do so in writing. If the company has not done
this, immediately right a letter asking the company to explain the basis for the denial.
Ask the company to specifically set forth the facts and policy provisions on which it relies.
If the company refuses to do so, it is breaking the law;
- Other Documents - any other documents related to the claim, including medical records
that relate to your reason for needing assistance, and all correspondence between you
and the company.
Read all the documents, and start with the denial letter. What facts or policy provisions does the company
point at as a basis for the denial? The most common are these:
- the policy provides benefits for nursing home care, and the facility you have selected does
not qualify under the definitions of the policy as a "nursing home".
- the nursing assessment shows that you are not "cognitively impaired".
- the nursing assessment and nursing home records show that you do not need assistance
with the activities of daily living required by the policy as a condition of benefits.
- it is not medically necessary that you receive nursing home or assisted living care.
Verify the policy language. Does it really say what the company says it says? You would be amazed at how often
the claims adjuster is wrong about the company's own policy language. How can this be? Well, the company
frequently has several different versions of each policy, each of which is similar, but slightly different.
Perhaps the company does business in a number of different states, and some of those states require different
language. Perhaps the company has updated some of the language and its policies over the years, much like General
Motors produces updated versions of different models of cars with each passing year. And, much like a car
manufacturer, insurance companies want to run their claims department like an assembly line. The company does not
want claims handlers stopping to read the policy each time a new claim comes in, because that slows production.
So the company designs a system. The system is a "one-size-fits-all" approach, and claims handlers are taught to
decide all claims using that same system. The system is not fully accurate, but accuracy is sacrificed for speed.
Mistakes are made, but the company has a solution for this too: the template is designed so that most of the
mistakes occur in the denial of claims, not in the payment of claims. That way, if no one ever catches the
mistake, the company just makes extra profit.
Verify the policy meaning. Even if the company is accurate in the way it recites the policy language, the
language may not mean what the company says it means. Here is an example: your policy says that in order
to qualify for long-term care benefits, you must meet one of three benefit triggers: medical necessity,
cognitive impairment, or functional impairment. Your doctor writes a letter saying it is medically necessary
that you receive assisted-living services. But the company still denies your claim, pointing at the fact
that you are not cognitively impaired, and can perform all of the activities of daily living listed in the
policy. The company accurately recites the policy language. However, the policy only requires that you meet
one of the three benefit triggers, not all three. The company simply ignores that fact, or suggest that since
you are not cognitively impaired, and since you can feed yourself and dress yourself, it is unreasonable to
suggest that you have any medical need for assistance. This kind of "misinterpretation" is very common.
Here are some general rules of insurance contract interpretation that will help you in reading the contract:
Very often, insurance policies contain provisions that are highly ambiguous and difficult to understand.
Just because the company seems confident that the policy language means you are out of luck, and your claim
should be denied, does not make it so. The company is simply relying on a very common truth about human
behavior, called the "authority principle." Since the world is a complicated place, and human beings
must make thousands of decisions every day, we develop shortcuts that allow us to operate on autopilot.
One of those shortcuts is to rely on the advice of recognized "authority" figures. Television commercials
are filled with doctors in white coats getting us health advice, and beautiful movie stars getting us
advice about cosmetics. If a police officer tells you to step out of a car, most of us don't think, we
just do it. Insurance companies take advantage of this. They are the experts about the insurance, and if
they tell us that the policy means we are not entitled to coverage, most people just believe it. But you
shouldn't. They are frequently wrong.
- The plain meaning of the words used in the policy will control the outcome.
- If a provision is ambiguous, the law requires that it be interpreted in favor of the policyholder.
- A provision is ambiguous if it is reasonably susceptible to different interpretations leading to different results.
- A policy is ambiguous if key terms are not defined, and can be interpreted in different ways.
- Contract terms cannot be read in isolation. Instead, all of the terms of the policy must be read as a whole.
- If two different provisions conflict with each other, the more specific provision will be given more weight
than a general provision.
- The purpose of an insurance contract is to provide coverage. The court will try to read the contract
anyway that gives effect to the purpose of the contract.
- Get Legal help. You don't need to spend any money at all to get a preliminary diagnosis of where you
stand from a lawyer. Furthermore, if the lawyer has enough experience in this precise area of the law,
it is often possible to sue the insurance company, get all of your benefits, and not pay any legal fees
out of the recovery. That is because many states have laws that require the insurance company to pay
your lawyer fees and sometimes other penalties, if it is established that the company denied the
arbitrarily or unreasonably. Like any other situation, you need to find a lawyer who is already knowledgeable
about long term care insurance as well as insurance bad faith litigation, and doesn't need to reinvent
the wheel. If the lawyer has to reinvent the wheel, he will not be helpful to you, and may even lead you to
believe that you have no case.
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