Insurers for long-term care criticized

CONRAD, Mont. -- Mary Rose Derks was a 65-year-old widow in 1990 when she began preparing for the day she could no longer care for herself. Every month, out of her grocery fund, she scrimped together about $100 for an insurance policy that promised to pay eventually for a room in an assisted living home.

On a May afternoon in 2002, after bouts of diabetes had hospitalized her dozens of times, Derks reluctantly agreed that it was time. She shed a few tears, watched her family pack her favorite blankets and rode to Beehive Homes, five blocks from her daughter's farm equipment dealership, content that she would not be a financial burden on her family.

But when she filed a claim with her insurer, Conseco, it said she had waited too long. Then it said Beehive Homes was not an approved facility, despite its state license. Eventually, Conseco argued that Derks was not sufficiently infirm, despite her early-stage dementia and the 37 pills she takes each day.

After more than four years, Derks, now 81, has yet to receive a penny from Conseco, while her family has paid about $70,000. Her daughter has sent Conseco dozens of bulky envelopes and spent hours on the phone. Each time the answer is the same: Denied.

Tens of thousands of elderly Americans have received life-prolonging care as a result of their long-term-care policies.

With more than 8 million customers, such insurance is a fast-growing business, one of the many products that insurers, financial companies, and drug makers are pitching to baby boomers and older Americans reaching retirement. Thanks to recently passed federal incentives intended to promote purchases of long-term-care policies, the business is expected to grow even more.

Yet thousands of long-term-care policyholders say that years of paying premiums have resulted in only a stream of excuses about why insurers will not pay.

Confidential depositions from policyholder lawsuits and interviews by The New York Times indicate that some long-term-care insurers have developed procedures that make it difficult -- if not impossible -- for policyholders to get paid.

A review of more than 400 of the thousands of grievances and lawsuits filed in recent years shows elderly policyholders confronting unnecessary delays and overwhelming bureaucracies. In California alone, nearly one in every four long-term-care claims was denied in 2005, according to the state.

"The bottom line is that insurance companies make money when they don't pay claims," said Mary Beth Senkewicz, who resigned last year as a senior executive at the National Association of Insurance Commissioners. "They'll do anything to avoid paying, because if they wait long enough, they know the policyholders will die."

In 2003, a subsidiary of Conseco, Bankers Life and Casualty, sent an 85-year-old woman suffering from dementia the wrong form to fill out, according to a lawsuit, then denied her claim because of improper paperwork.

Last year, according to another pending suit, the insurer Penn Treaty American decided that a 92-year-old man had so improved that he should leave his nursing home despite his forgetfulness, anxiety, and doctor's orders to seek continued care.

The companies said in court filings that the denials were proper. They denied further comment.

In general, insurers say criticism of claims-handling is unfair because most policyholders are paid promptly and some denials are necessary to root out fraud.