ThePopTort

Caught in the Insurance Industry Shuffle

The insurance industry spends about $6 billion a year trying – largely unsuccessfully - to get drivers to switch their car insurance policies. (This is a $160 billion market and the big carriers control half of it.) Never-ending expensive TV commercials - that’s what most people know about insurance companies – until, of course, their lives have been wrecked by something they thought was covered by policies, for which they’ve been paying for years. Let’s take a look at a few recent episodes. 

Homeowners.  Homeowners whose lives were shattered by Superstorm Sandy are still engaged in perpetual battles with insurers to get their flood insurance claims properly paid.  The situation is no better for homeowners claiming under their non-flood policies, with insurers putting homeowners’ money into escrow accounts and then micromanaging repairs. Writes one policyholder, “No matter insurance company has documentation already and has approved repairs. No matter repairs have been made and homeowner just wants reimbursement.… TD Bank has this policy. So does Wells Fargo. Problem is you don't know this until u go to deposit insurance check.”

Business interruption insurance.  All kinds of businesses where shut down after Superstorm Sandy, but insurers aren’t paying the claims, saying buildings were closed due to flooding (so not covered by their policies). But others say that’s ridiculous.

“It was not water related," says Andrea Katz, interim development director at [radio station] WBAI. “It was a restricted building that we were not allowed entry to and therefore could not do business as usual.”…

“It seems like they have lawyers that write these things out, and everything’s so opaque that they can just find a way to get out of it,” says Norman James, co-owner of Space Salon.…

The New York State Department of Financial services is now investigating these and other business claims from Hurricane Sandy.

Meanwhile, many businesses are seeking legal counsel, getting ready for a fair fight.

Fire insurance. 

Victims who lost everything in [Colorado’s] Waldo Canyon fire last summer asked lawmakers at the Capitol on Tuesday to go even further in their reform of the insurance industry that they say left them in the lurch. …

It took Steve Price, who lost his roughly 5,000-square-foot home … two months to get a certified copy of his insurance policy after the fire. It took another two months to get copies of underwriting documents. “It’s a pattern among our insurance companies to delay, deny and ignore,” Price told a Senate committee considering House Bill 1225. “These contracts are unfair to begin with.”

The bill would require insurance companies doing business in Colorado to comply with a number of new mandates, including that a copy of a policy be provided within three days of the homeowner’s request. Policies would also have to be written on a 10th grade reading level and written notifications of changes in policy would be required. Price said he was very well prepared for a disaster, with photos documenting his home’s current state and contents, and he still was still about $10,000 underinsured.…

Ideally, he said Colorado should become one of 19 states that require insurance companies to pay out the maximum value of a policy in the event of a total loss — known as valued policy laws.

Incredible that this should even be an issue.

Health Insurance.  Health insurers are “letting millions of Americans renew their current coverage for another year — and thereby avoid changes under the federal healthcare law” and “critics say this maneuver could undermine government efforts to remake the insurance market next year and keep premiums affordable overall.…”

“Insurers are onto this, and the big question is how many will try to game the system,” said Timothy Stoltzfus Jost, a law professor and health policy expert at Washington and Lee University.

Some of the nation's biggest health insurers are looking to take advantage of this delay, and Arkansas officials are encouraging companies to do this by resetting customers' renewal dates for the end of December. There's also concern that some insurers and agents could rush to sell more individual policies before year-end so they could be extended in 2014.

Some policy experts are expressing concern about this practice for fear that insurers will focus on renewing younger and healthier policyholders and hold them out of the broader insurance pool next year. Their absence could leave a sicker and older population in new government insurance exchanges, driving up medical costs and premiums there.

Meanwhile, California’ awesome insurance commissioner, Dave Jones, seems to be the only commissioner in the country actually looking out for policyholders by consulting with a respected consumer organization, Consumer Watchdog, on how to protect small businesses from unneeded rate hikes. The group already has a spectacular record of saving California policyholders billions of dollars. The industry is complaining about this. They seem to prefer that the commissioner consult only with insurance industry-connected actuaries (like every other commissioner does), ensuring that price-gouging of California’s businesses remain uninterrupted.

Reports the LA Times,

In its first report Tuesday, the Santa Monica group accused Anthem of padding its profits and overcharging small-business customers by about $17 million. … Jones criticized Anthem Blue Cross for raising rates on about 7,000 small businesses as much as 23% and said the company rejected his request for lower rates. Anthem said its average rate increase of nearly 11% for these 45,000 employees and their dependents was necessary to cover rising medical costs.

Jamie Court, president of Consumer Watchdog, said the group's proven track record in challenging insurance company practices made it an ideal choice for the state. Consumer Watchdog says it has saved Californians $2.3 billion since 2003 by successfully disputing rate hikes for property and casualty insurance under Proposition 103, the 1988 ballot measure the group championed.

"We are the foremost expert on health insurance rates," Court said. "This grant allows us to pull back the curtain and show how the wizards at Anthem and other companies are manipulating Oz. We want to prove that rates are too high."

Insurance-industry commissioners. Meanwhile, former and hoping-to-be-reappointed Texas insurance commissioner, Eleanor Kitzman, is decidedly not on the side of policyholders. She’s hoping to win reappointment from Governor Rick Perry, but not if consumer advocates have anything to do with it.

One of the loudest critics, Alex Winslow of the consumer advocacy group Texas Watch, said that home insurance rates had “skyrocketed” during Kitzman’s term and that she had rolled back rules created to inform doctors and patients about high out-of-network expenses before those charges were incurred. Winslow can and does go on about what he sees as her shortcomings, but the important thing is that few in the Capitol or the insurance industry — which was initially full of praise for her — are leaping to her defense.

And a final observation: If only policyholders could demand that their billions in premium dollars pay for legitimate claims instead of TV commercials. 

Senior Citizen Dangers and Other Tribulations

There’s a line in the indie movie, The Savages, where siblings John and Wendy Savage (that would be Philip Seymour Hoffman and Laura Linney) are discussing the nursing home where they just had to put their dad.  John says about the place, “The landscaping, the neighborhoods of care; they're not for the residents, they're for the relatives. People like you and me who don't want to admit to what's really going on here.… it's a f*%#ing horror show!” 

If any of your close relatives have had the pleasure of living in a long term care facility of late, you know what he means.  Not gonna get into my own personal story, but I do at least want to tell you about an important Pro Publica/PBS "Frontline" investigative article entitled “Gone Without a Case: Suspicious Elder Deaths Rarely Investigated," to be followed by a PBS "Frontline" show that will air this Spring.

If you ever had any doubt why nursing homes should be on the hook for abuse and neglect and why lawsuits are so critical in the situations - sometimes the only way a family can learn about why someone is hurt or dies - this should remove all doubt. 

Writes Pro Publica,

ProPublica and PBS "Frontline" have identified more than three-dozen cases in which the alleged neglect, abuse or even murder of seniors eluded authorities. But for the intervention of whistleblowers, concerned relatives and others, the truth about these deaths might never have come to light. …

When investigators in one jurisdiction comprehensively reviewed deaths of older people, they discovered scores of cases in which elders suffered mistreatment. An array of systemic flaws has led to case after case being overlooked.

For example,

When treating physicians report that a death is natural, coroners and medical examiners almost never investigate. But doctors often get it wrong. In one 2008 study, nearly half the doctors surveyed failed to identify the correct cause of death for an elderly patient with a brain injury caused by a fall.…

"I've had instances where the physician just doesn't understand the importance of what they're writing down," said Anderson, who trains doctors in how to certify deaths. "I'm appalled when I hear that."

And just to make sure this story hits home, they note, “With the graying of the baby boom generation, such concerns will only grow in urgency. Within a few years, nearly one-third of all Americans will be over 60. …'We're where child abuse was 30 years ago,' said Dr. Kathryn Locatell, a geriatrician who specializes in diagnosing elder abuse. 'I think it's ageism -- I think it boils down to that one word. We don't value old people. We don't want to think about ourselves getting old.'”  Yikes, that can't be good since last I heard getting old wasn't an option.

On top of that, we learned today about hospice companies trying to milk Medicare by "enroll[ing] people into hospice who weren’t dying and resist[ing] discharging them despite evidence they weren’t deteriorating.”  This is according to a whistleblower lawsuit covered by Kaiser Health News, which writes,

The suits against AseraCare, a Fort Smith, Ark.-based hospice company operating in 19 states, follow several other suits against big hospice companies but go further in their allegations that the company coordinated its use of nursing care and hospice care to maximize Medicare reimbursements.

The company is owned by Golden Living, a national company that provides skilled nursing services and other services as well as hospice. The whistleblowers contend that AseraCare first recruited patients eligible for skilled nursing care –also provided by Golden Living— for 20 days, for which Medicare pays the entire bill. After 20 days, when Medicare requires patients pick up a part of the tab, AseraCare had the nursing homes send the patients to hospice, according to the lawsuit. In hospice, AseraCare would collect a flat payment from Medicare for each day they are enrolled.

Growing old with dignity – it shouldn’t be optional.  Learn more from The National Consumer Voice for Quality Long Term Care, a great organization looking out for all of us.

The Constitution of Arkansas, 1; Corporate Wrongdoers, 0

Article 5, Section 32 of the Arkansas Constitution prohibits the legislature from “limiting the amount that can be recovered for injuries resulting in death or for injuries to persons or property.”  Now, if I were a “founding father” of the State of Arkansas and you asked me if that provision meant that the legislature could go ahead and cap “the amount that can be recovered for injuries resulting in death or for injuries to persons or property,” I’m pretty sure I would have said “no.”  I mean, it could hardly be more clear. 

But of course, the founding fathers of Arkansas are long gone and instead we have corporate special interests with which to contend, whose answer to this question would most likely be “Constitution?  What, that old thing?”  So in 2003, these special interests got the State of Arkansas to cap punitive damages, specifically to whichever is more: $250,000 or three times compensatory damages not to exceed $1,000,000.  So basically, it’s a slap on the wrist to any billion dollar company that comes in and recklessly does enormous damage to the people of Arkansas.

I bet the German conglomerate Bayer thought they were all set when they came into Arkansas, contaminated the state food supply and hurt crop prices by introducing a strain of genetically altered rice seeds.  Or more specifically,

Bayer developed an experimental strain of rice called LibertyLink to withstand its Liberty herbicide. Federal regulators had not yet approved it for human consumption when trace amounts were found mixed with conventional rice seed in storage bins in Arkansas and Missouri. No human health problems have been associated with the contamination, but that wasn't known at the time. The fear that the rice was unsafe, along with the notion that genetically altered rice was somehow impure, quashed sales in major markets. Rice futures plummeted by $150 million immediately after the contamination announcement. European nations quit accepting shipments of rice from the U.S. that hadn't been extensively tested to show they weren't contaminated. Japan banned all American rice.

So an Arkansas jury hit Bayer with a $42 million punitive damages award, along with $5.9 in actual damages, which was the least it could do yet higher than the cap.  And in a unanimous decision today, the Arkansas Supreme Court struck down the cap as unconstitutional, just as many other states have done.

You can learn more about punitive damages - extremely rare yet vitally important - here.

Arkansas Supremes Strike Down “Tort Reform”

We could go on and on about how destructive, oppressive, and cruel it is to take away the legal rights of injured people, and goodness knows, we have.  But such measures are also unconstitutional – at least according to many many state courts.

It’s against that backdrop that yesterday the Arkansas Supreme Court struck down two provisions in the state’s 2003 “tort reform” law.

Without venturing too far into the legal weeds, the court struck down one provision, which allowed wrongdoers who are sued to point the finger at others who aren’t named in the suit (i.e., the “don’t look at me, it was some other guy who isn’t here,” defense).  The court also disallowed a provision, which limited the kinds of evidence a court could hear, as constitutionally, those decisions are for a judge to decide—not a legislature.

Anyway, hooray for Arkansas Supreme Court’s ruling(!).

In the News...

A great editorial in the NY Times about excessive amounts of money being spent by special interests on judicial elections and its impact on the justice system. (NY Times)

Just do it! Virginia ponders raising the draconian limit on the amount of compensation injured victims and their families can receive (the limit has not been changed for 15 years). While you are at it VA, you could just eliminate the unfair cap all-together. (Washington Post)

Preemption in Arkansas.  An ongoing case involving a man who claimed he suffered ear damage after he used a hearing device was dismissed on the grounds that the federal law preempted state law in regards to medical devices. (The Morning News)

Sneaking it in there.  In an 11th hour magician-like swap a bad piece of tort "reform" legislation passed Oklahoma's State Judiciary Committee.  Less than 24 hours before the vote, the bill's original language disappeared and in its place appeared 130 pages of tort deform, rights-limiting jargon. (The Journal Record)