Capitol News Service

Two senior groups have filed suit against state Insurance Commissioner Charles Quackenbush, claiming he hasn’t done enough to enforce regulations on companies that sell long-term care insurance policies to older Californians. A Quackenbush aide said the charges are based upon an incorrect interpretation of the law.

Consumers for Quality Care and the Congress of California Seniors on Tuesday asked the Los Angeles Superior Court to issue an order forcing Quackenbush to do more to help those who buy policies to pay for nursing homes and other assisted-living care.

Lois Wellington, a Los Angeles County resident who is president of the Congress of California Seniors, was named as the plaintiff in the legal action.

The suit alleges that the commissioner has failed to create a task force to study problems in the long-term care insurance industry, hasn’t enforced laws requiring public disclosure of information by insurance companies, and has not kept tabs on the companies to ensure that unscrupulous agents aren’t taking advantage of seniors.

The suit seeks a court order to force Quackenbush to take remedial steps, as well as an order that would require the state to pay the fees of the attorneys who filed the suit.

“The commissioner’s record with the elderly so far is grim,” Ed Howard, a lawyer for Consumers for Quality Care, said.

Among the laws the commissioner allegedly has ignored is a 1997 statute designed to prevent agents from forcing seniors out of valuable long-term care policies and replacing the coverage with policies that provide lower benefits but may offer tax advantages.

The attorney said many insurers prefer a long-term policy that pays less generous nursing home and home-care benefits, but are sold using a claim that the policy will be tax-deductible. However, 90 percent of taxpayers cannot claim tax benefits on such policies because they aren’t eligible to itemize their medical deductions, Howard said.

Quackenbush and the two senior groups went to court in 1997 in a dispute over a similar issue. In that case, Los Angeles Superior Court Judge Robert H. O’Brien ordered Quackenbush to rescind a directive that allowed insurance companies to sell long-term care policies with benefit levels lower than previously permitted by California law.

In the 1997 case, Quackenbush argued that his directive was in compliance with federal laws, and would help consumers by offering them more choices and more opportunities for tax deductions. The senior groups complained that the commissioner’s directive resulted in consumers receiving inferior insurance policies.

Following O’Brien’s decision, the Legislature and Gov. Pete Wilson enacted a new law to allow companies to sell either deductible or non-deductible policies, as long as the companies disclosed details of the two types of policies to consumers. The law was supported by Quackenbush, the insurance industry, consumer groups and leaders of both major political parties.

Howard said the commissioner hasn’t required enough public disclosure of insurance information, leaving seniors without facts such as how many long-term claims are denied by various insurers.

Amy Zajac, the legislative bureau chief for the Department of Insurance, said a preliminary review of the allegations “indicates that the plaintiffs in the lawsuit are incorrectly interpreting the law and, in some instances, have made false statements.”

For example, Zajac said a 1996 state law prohibits state agencies from preparing or issuing reports until Oct. 1, 1999. The law, written by Democratic lawmaker Jackie Speier, put a moratorium on all but a few exempted reports in order to save tax dollars.

“The fact of the matter is, the California Department of Insurance enforces the law as it is written, not as some people wish that it had been written or believed it had been written,” Zajac said.

Quackenbush has 30 days to respond to the suit, after which the issue could be scheduled for a court hearing.

Private health insurance usually does not cover long-term care, nor is the care covered by Medicare or Medicare supplements. Coverage generally is paid through a special long-term care policy, or by Medi-Cal for low-income Californians.

Consumers for Quality Care is a division of the Santa Monica-based Foundation for Taxpayer and Consumer Rights. The Congress of California Seniors is the state affiliate of the National Council of Senior Citizens, and has strong political ties to labor unions and trial lawyers.