Class Claims Insurance Giant Whacks Oldsters
NEW HAVEN, Conn. (CN) - Insurance giant CNA hiked its rates by 30 percent even as it abruptly changed its policy and began denying claims for stays in assisted-living facilities in Connecticut, an elderly woman claims in a federal class action.
Lead plaintiff Marie Gardner, 91, claims: "Defendants have engaged in an illegal course of conduct designed to reduce its exposure to costly long-term care claims by denying claims of elderly insureds through a scheme of fraud, deception, and manipulation of policy terms, while seeking massive premium increases at the expense of these same insureds."
While denying claims from longtime policyholders such as Gardner, "CNA subsequently sought a 45 percent rate increase - which was later approved at 30 percent - from the state of Connecticut on this very group of policies," Gardner says.
She sued CNA Financial Corp. and Continental Casualty Co. She claims they changed her policy to cover "nursing homes" only, when it previously covered a range of assisted-living facilities.
Gardner says she had been paying for her insurance policy for 15 years broke her hip in 2008 and moved into an assisted-living facility. CNA approved her claim and began paying the monthly benefit.
On Feb. 11, 2011 CNA terminated the payments, as Gardner's condition had improved. But on April 28, 2012, she fell down a flight of stairs and fractured her sacrum. This time CNA denied her claim.
The insurer told her that to qualify for benefits, the assisted-living facility where she lived had to have a nurse on premises 24 hours a day.
Gardner says she pointed out that a settlement in a previous class action requires that a nurse be on call 24 hours a day, and a nurse be on site for more than five houses a day, seven days per week.
"(A)t the time the CNA reached an alleged 'agreement' with the Connecticut Insurance Department, CNA did not disclose to the Insurance Department that it had previously been covering stays at assisted living facilities under this same policy," Gardner says in the lawsuit.
She says that CNA is now denying "new claims for stays at assisted-living facilities, and this is true even if a previous claim had been paid at an assisted-living facility, as is the case with Ms. Gardner."
She claims that CNA used the remediation process in the previous class action "as a way to invent new ways to avoid claim liability."
"CNA is attempting to create a regulatory loophole where none exists," the lawsuit says.
Gardner seeks class certification and an injunction preventing CNA from excluding claims for stays in Connecticut assisted-living facilities. She also seeks monetary damages for class members who have been denied stays based on the definition of an assisted-living facility.
She estimates that the class includes at least 383 people in Connecticut and at least 20,000 nationwide.
She is represented by Sean Collins, of Boston.
CNA Financial, based in Chicago, reported $9.5 billion in revenue in 2012 - $628 million net income and total assets of $58.5 billion, according to publicly available information.