Long Term Care Insurance May Become Federally Supervised

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Feb 17, 2010

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Insurance is regulated by states individually, but the long term care insurance fiasco is leaving many questioning if this area should be supervised by the federal government instead. Hillary Clinton and Barack Obama, both senators and presidential candidates in 2008, have asked the General Accountability Office (GAO) to investigate how insurance companies sold long term care policies and why they are denying claims in record numbers.

Lawsuits against insurers for denying long term care insurance claims have skyrocketed as many insurers have simply ignored their policyholders’ requests for claim coverage. Some insurers who haven’t ignored the requests have denied coverage for trivial reasons in hopes that claimants will go away or die before claims are paid.

More investigations being sought

In addition to the GAO’s investigation, a Congressional committee has also been set up to investigate the matter. The House Committee on Energy and Commerce has asked Penn Treaty American Corporation and Conseco, two of the insurers with the most long term care policies to provide the committee with data on their claims practices and how they marketed their products.

The combination of numerous lawsuits, consumer complaints, federal investigations and the states’ seeming inability to handle the matter have led many to believe that this area should be federally supervised. It’s no secret that state insurance departments can only do so much – especially when trying to monitor and regulate insurers who operate in every state and often ignore state mandates. Many insurers would rather pay a fine than change their practices and it’s an unfortunate fact that it’s often less expensive for them to do so. Undoubtedly, consumers are the ones who suffer when their insurer doesn’t play by the rules.

What to expect

The federal investigations are just beginning and, because it has also become a political issue, many wonder if federal supervision will ever really happen and don’t expect much. Fortunately, several states have started conducting their own investigations into the long term insurance fiasco and may be able to address the issue in less time. In the meantime, policyholders who have had legitimate claims denied, or who cannot get their insurer to respond to their inquiries, should seek the counsel of an attorney whose practice focuses in bad faith litigation.

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