It seems no good deed goes unpunished. A temporarily disabled Korean War veteran in California is suing the Senior Health Insurance Company of Pennsylvania (SHIP) for allegedly engaging in deceptive practices to avoid paying claims the plaintiff says should have been covered.

• Long-term insurance company sued in California for evading payment of patient’s bills
• Lawsuit alleges company deliberately stalled and obfuscated in violation of its own policies
• Resources available to check out your insurance carrier before you buy

A Complete Scam

William Hall, a former Army colonel and Purple Heart recipient, signed up for a long-term care policy in 1996 with a company since taken over by SHIP. Hall, now 87, was determined to protect his family’s resources in case he ever had to receive home health care or enter a facility for an extended period of time.

In 2010, his fears were realized when he twice broke his hip and required personal caregivers to come to his home and help him with day-to-day activities. His policies indicated that the costs would be covered by his insurance agency. However, when Hall tried to claim his benefits, he was inundated with bizarre requirements and obstacles that were never part of the policy, according to the lawsuit.

“I think it’s a complete scam,” says Harvey Rosenfield, founder of Consumer Watchdog and one of the attorneys in the lawsuit. “It’s very clear to us that this company is preying on the elderly.”

The Most Vulnerable

Among the steps that SHIP took to avoid paying Hall’s claims, according to the lawsuit:

• Requiring certification for home caregivers, which is the opposite of what the policy stated.
• Requiring patients to take “daily visit notes” with the caregiver, which was not listed on the policy.
• Requiring patients to fill out a flood of paperwork, over and over again
• Requiring that Hall be examined by a SHIP physician, contrary to policy

Hall is seeking damages on his own behalf, as well as an order on a class basis with all policy holders to force SHIP to reform its policies. Rosenfield says he’s already heard from others who say SHIP acted in the same manner toward them and their loved ones.

“This is one of those situations where a large insurance company is targeting the most vulnerable in our society; the people least able to defend themselves,” the attorney says.

The insurance company denies the assertions. “SHIP focuses on ensuring that eligible claims are paid in accordance with the policy contracts that its customers have purchased, and operates without profit motive,” a company spokesperson said in a statement. “SHIP’s sole mission is to pay eligible claims accurately and timely, and has established a very strong record of compliance.”

The company is owned by a trust created by the Pennsylvania Department of Insurance and claims to operate without a corporate profit motive.

Insurers Under Fire

With the baby boom generation getting older by the day, more and more Americans are faced with the bleak prospect of ending up infirm and incapacitated in their waning years, beyond the ability of friends and relatives to care for. The country has a vast network of long-term care options and facilities to accommodate such situations, but costs can be prohibitive, running thousands of dollars or more per month. Fortunately, there’s insurance available to offset the cost, but how do you know you’re getting a square deal from your insurance company?

This isn’t the first time a long-term care insurer has come under fire. A New York Times story from 2007 details abuses by companies following procedures designed to deny claims to seniors who thought they were covered.

However, the bad publicity of a few bad actors doesn’t mean that long-term insurance is something that should be avoided. On the contrary, it can provide peace of mind and protect a family’s finances in the event that long-term care becomes a necessity. Elderlawanswers.com lays out some factors to keep in mind when seeking a long-term care insurance policy:

• Check the ratings by services like A.M. Best, Moody’s and Standard & Poor’s.
• Read the policy carefully to make sure it covers everything you need.
• Consider getting an inflation rider to ensure the policy terms will still cover your expenses if you don’t need it for decades down the road.
• Look up the company’s claims record to see if there have been a large volume of complaints against it.

The site also lays out a list of questions you should ask when figuring out what policy you want to buy.

If you already have a policy and suspect your insurer is giving you the runaround, consider the advice of an attorney specializing in insurance law or elder law and don’t let your rights be trampled on.

“To make a decorated Korean War veteran with a Purple Heart who’s now in a wheelchair play the shit Olympics of claims handling is an outrage,” says Rosenfield. “I’m looking forward to seeing that company in court.”