(Salem) - The Oregon Insurance Division has fined Bankers Life and Casualty
Company, one of the state's largest long-term care insurers, $115,000 for improper
Bankers Life must also review approximately 26,000 claims involving 2,069 policyholders
as far back as Jan. 1, 2010, to find any other situations where the company
owes benefits. Long-term care insurers typically pay bills for services on a
monthly basis so one policyholder can have multiple claims.
Also, the Chicago-based company must change practices to ensure proper claims
handling in the future.
"The company treated its policyholders unfairly," Insurance Commissioner
Laura Cali said. "In addition to the financial penalty, it must find and
fix any problems we haven't already uncovered and take steps to assure us that
it will meet policyholder obligations going forward."
Other than multistate investigations, this is the second-largest fine the Oregon
Insurance Division has issued against a company since 2008. In that year, the
division fined Bankers Life $150,000 for selling unsuitable annuities to clients.
The disciplinary order outlines multiple instances of claims mishandling, including:
- Twenty-three instances where the company denied claims without conducting
a reasonable investigation. In several claims, for example, Bankers Life needed
more information to determine if a policyholder qualified for benefits because
the policyholder was mentally impaired or needed help with daily living activities.
Instead of requesting the information, Bankers Life initially denied the claims.
- Eighteen incidents where the company failed to handle claims promptly.
Oregon requires an insurance company to acknowledge or pay claims within 30
days of the date the claim is filed.
- Ten instances where the company's unfair practices harmed victims. In
most instances, the company charged premium after a policyholder's "waiver
of premium" benefit had started. This benefit prohibits the company from
charging premium once a person receives covered services for more than 90 days.
- In dozens of instances, Bankers failed to tell people whose claims it
denied how to contact the Insurance Division or notify them of their right to
appeal a decision that they didn't qualify for benefits.
- Seven incidents where Bankers Life failed to respond promptly when asked
for information about claims.
The company already corrected errors or made refunds to consumers in cases
that the Insurance Division investigated. However, it now must ensure no other
policyholders were treated unfairly.
Review of past claims
The order requires Bankers Life to hire a division-approved industry professional
to review certain claims that were filed from Jan. 1, 2010, through Oct. 31,
2013, including all benefit denials.
The company will also review other claims filed in the same time period at
a policyholder's request. Bankers Life will send letters to its policyholders
explaining the outcome of the claims it must review, as well as how to request
a review on other claims. Policyholders who disagree with the finding can request
an arbitrator's review.
Bankers Life now has 60 days to provide the Insurance Division with its detailed
plan to review past claims and to submit a corrective plan to ensure proper
claims handling in the future.
With nearly $13 million worth of premium in 2012, Bankers Life is among the
largest long-term care insurers in the state. In the Insurance Division's most
recent complaint guide, Bankers Life ranks the worst among 20 long-term care
companies based on the number of complaints it received measured against its
share of the market.
The Insurance Division is part of the Department of
Consumer and Business Services, Oregon’s largest business regulatory and
consumer protection agency.