AB 387 Grants California Department of Insurance New Powers to Protect Disability Insurance ConsumersOctober 14, 2015 Scott Calvert
Short-term disability insurance and long-term disability insurance policies provide insurance benefits to consumers who are unable to continue working due to injury or sickness. Such coverage can be offered as a benefit of employment by an employer (in which case, the policy is usually governed by a federal law called the Employee Retirement Income Security Act of 1974 or ERISA) or can be purchased by the individual insured.
Long-term care insurance covers long-term personal and custodial care services, including in a variety of settings such as your home, a community organization or other facility. Long-term care insurance policies reimburse policyholders a daily amount (up to a pre-selected limit) for services to assist them with their activities of daily living when they are unable to perform these activities.
Individuals who have these policies do not currently receive periodic notification from their insurer that these benefits are available. Without notification, these individuals and their families can easily lose track of the existence of the benefits, especially if the insured suffers from cognitive impairment. These individuals and families likely end up paying for care despite having this insurance or doing without when, in fact, benefits are available.
Insurance Commissioner Dave Jones announced that during the 2014 legislative session that Governor Jerry Brown signed nine bills sponsored by the California Department of Insurance (“CDI”). A bill that adds protections for small businesses that took effect in 2014 and five other consumer protection bills that were implemented January 1, 2015. Here is a list of them (taken from a CDI bulletin):
On Sunday December 14, 2014, CBS’ 60 Minutes program contained a segment entitled “Denied” which highlights that insurers routinely deny, based on lack of medical necessity, treatment for patients with mental illnesses, especially those for long-term in-patient care at mental health facilities. This segment was an indictment of health insurance companies’ actions (especially Anthem Blue Cross) to deny legitimate claims for such care, sometimes with tragic results. According to 60 Minutes, “we found that the vast majority of claims are routine but the insurance industry aggressively reviews the cost of chronic cases. Long-term care is often denied by insurance company doctors who never see the patient. As a result, some seriously ill patients are discharged from hospitals over the objections of psychiatrists who warn that someone may die.”
Court Allows Mandamus Claim Against the California Department of Insurance Regarding Disability Insurance DisputeOctober 28, 2014 Scott Calvert
There is a commonly held belief that every disability insurance policy sold to the public has been actually reviewed and approved by the California Department of Insurance. Indeed, California Insurance Code section 10291.5 requires the Insurance Commissioner to reject a proposed new disability insurance policy form if it does not meet certain requirements set forth in the Insurance Code. However, prior to the recent ruling of Ellena v. Department of Insurance, 2014 Cal. App. LEXIS 883 (1st Dist. Oct. 1, 2014), the California Department of Insurance was not following this code provision, and in fact maintained that it did not have a duty to review each new disability insurance policy form. There is now no question that the Department of Insurance has a mandatory duty to review all new disability insurance policy forms that insurers wish to sell in California.
CIGNA Forced to Re-evaluate Long-Term Disability Insurance Claims Handled Between 2008 to 2010, and Set Aside $77 Million to Pay Previously Denied ClaimsJune 03, 2013 Scott Calvert
Following an investigation conducted by the California Department of Insurance via a market conduct examination, as well as insurance regulators from Connecticut, Maine, Massachusetts and Pennsylvania, CIGNA and these states’ insurance regulators, reached a settlement over its improper handling of claims for long-term disability (“LTD”) insurance. This resulted in a Regulatory Settlement Agreement (“Agreement”) between CIGNA and its affiliates and these insurance regulators. The companies involved in the evaluation and settlement include CIGNA Health and Life Insurance Company (formerly known as Alta Health and Life), and Connecticut General Life Insurance Company, Life Insurance Company of North America (collectively, “CIGNA Companies”). A copy of the Agreement can be found here. In the examinations of CIGNA Companies, insurance department officials found that the CIGNA Companies engaged in numerous claim-handling irregularities, including not giving due consideration to the medical findings of independent physicians, discounting information provided by Social Security Disability decisions and not giving appropriate consideration to Workers’ Compensation records.
Insurance Commissioner Dave Jones last week announced that Governor Jerry Brown has signed AB 1747, authored by Assembly Member Mike Feuer (D-Los Angeles). The bill was strongly supported by Commissioner Jones and the California Department of Insurance and provides important consumer safeguards for life insurance policyholders. AB 1747, which will be effective January 1, 2013, adds new Sections 10113.71 and 10113.72 to the Insurance Code and will apply to every individual and group life insurance policy issued or delivered in California after January 1, 2013.
AB 1747 will require that every life insurance policy issued or delivered in this state contain a provision for a grace period of not less than 60 days from the premium due date and that the policy remains in force during the 60-day grace period. The law will also require an insurer to give the applicant for an individual life insurance policy the right to designate at least one person, in addition to the applicant, to receive notice of lapse or termination of a policy for nonpayment of premium. The law will require an insurer to provide each applicant with a form, as specified, to make the designation and to notify the policy owner annually of the right to change the designation. The law will also prohibit a notice of pending lapse and termination from being effective unless mailed by the insurer to the named policy owner, a named designee for an individual life insurance policy, and a known assignee or other person having an interest in the individual life insurance policy at least 30 days prior to the effective date of termination if termination is for nonpayment of premium.
MetLife Pays $40 Million To Settle Allegations That It Failed To Properly Identify And Pay Life Insurance BeneficiariesMay 17, 2012 Robert McKennon
The California Department of Insurance, along with five other state insurance departments, reached a settlement with Metropolitan Life Insurance Company, Inc. (“MetLife”) over allegations that the company failed to properly utilize the Social Security Administration’s Death Master File database to identify deceased life insurance policyholders and pay their beneficiaries. In addition to promising to enact business reforms to ensure that it promptly pays life insurance benefits to the proper beneficiaries, MetLife will pay $40 million to the state insurance departments.
Insurance Commissioner Dave Jones marked his first full year in office this week by looking back on the California Department of Insurance’s (CDI) major accomplishments during 2011. Some of these achievements were very important for insurance consumers. Here’s what his press release said:
“A little over a year ago, I took my oath as Insurance Commissioner and pledged to make my Administration one of action,” Commissioner Jones said. “I can confidently and proudly say that the Department has fully lived up to that pledge. We have achieved a number of critical successes on behalf of California’s consumers consistent with our vision to be the most effective consumer protection agency in the nation.”
Very recently, California Insurance Commissioner Dave Jones issued a bulletin advising consumers about the importance of understanding their options when considering disability income insurance. Here is what he had to say: