You have been You have been accepted to …accepted to …

Dr. Stephen HollandUnivita

Robert RussPrudential

Michael RafalkoDrinker Biddle & Reath LLP

LTCLTC

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Welcome to TrainingWelcome to Training

Roll CallRoll Call● ● Your Instructors (LTC Police Officers)Your Instructors (LTC Police Officers)● ● Goals for trainingGoals for training

- Examine real life case studies- Examine real life case studies- 3 perspectives: claims, SIU, legal- 3 perspectives: claims, SIU, legal- Identify red flags, surveillance tactics, - Identify red flags, surveillance tactics,

and legaland legal hazards associated with LTC claimshazards associated with LTC claims

● ● Promotion from cadet to officerPromotion from cadet to officer- Prizes for completion of examinations- Prizes for completion of examinations

● ● Promotion to Commandant for one lucky Promotion to Commandant for one lucky cadetcadet

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First Case Study . . .First Case Study . . .• Mr. Everett, 70 year old retired plumberMr. Everett, 70 year old retired plumber

–– LTCI policy effective date June 15, 1995LTCI policy effective date June 15, 1995

–– Cash benefit: $130/day, TQ, comprehensive coverage, Cash benefit: $130/day, TQ, comprehensive coverage, 30 day EP30 day EP

• Claimed for benefits in June 2007 describing Claimed for benefits in June 2007 describing significant dementiasignificant dementia

• In-person assessment: MMSE 15/30, lethargic, In-person assessment: MMSE 15/30, lethargic, mumbling incoherently in a foreign languagemumbling incoherently in a foreign language

• Approved for benefits on June 25, 2007, cash Approved for benefits on June 25, 2007, cash benefits begin after EPbenefits begin after EP

• Subsequent assessments showed claimant to be Subsequent assessments showed claimant to be disoriented and confused, very lethargic, MMSE disoriented and confused, very lethargic, MMSE always less than 15/30, noted to be 2-4 ADL always less than 15/30, noted to be 2-4 ADL dependentdependent

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First Case Study . . .First Case Study . . .• At 24 months, inconsistent marital status on At 24 months, inconsistent marital status on claim renewal form identified, further claim renewal form identified, further investigation into careplan noted that claimant investigation into careplan noted that claimant was being cared for my his daughter, who is was being cared for my his daughter, who is confined to wheelchairconfined to wheelchair

• APS ordered – very little corroboration of a APS ordered – very little corroboration of a significant cognitive impairment or ADL deficitssignificant cognitive impairment or ADL deficits

• A meeting is heldA meeting is held

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A Plumber, a Cash Policy and A Plumber, a Cash Policy and DementiaDementia

SIU involvement is requested – first step, SIU involvement is requested – first step, Activity CheckActivity Check•Activity check revealed home phone number is Activity check revealed home phone number is for an active plumbing businessfor an active plumbing business

–– Confirmed with Better Business Bureau Confirmed with Better Business Bureau

–– Business re-bonded while claimant in paymentBusiness re-bonded while claimant in payment

–– Called business number and claimant answered Called business number and claimant answered phone and identified himself by namephone and identified himself by name

•Escalated to surveillance Escalated to surveillance –– Plumbing services requested by SIUPlumbing services requested by SIU

–– Videotaped responding to service callVideotaped responding to service call

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• 2 days later SIU arranged for in home interview with claimant and caretaker

- Claimant found bedridden, starring at ceiling - Claimant found bedridden, starring at ceiling mumbling in foreignmumbling in foreign

languagelanguage

- Daughter stated that he was semi-comatose 85% of - Daughter stated that he was semi-comatose 85% of the time, needingthe time, needing

constant care, unable to drive or care for himself constant care, unable to drive or care for himself

• Claimant informed of videotaping and driving to service call

• Claimant immediately became cognizant and attentive

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• You are the Attorney, what is your You are the Attorney, what is your Recommendation?Recommendation?

Deny claim; seek to rescind the policy.Deny claim; seek to rescind the policy.

Deny claim; file civil suit for fraud to recover benefits Deny claim; file civil suit for fraud to recover benefits paid.paid.

Deny claim; refer case to state authorities for Deny claim; refer case to state authorities for consideration.consideration.

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• You are the Attorney, what is your You are the Attorney, what is your Recommendation?Recommendation?

Deny claim; seek to rescind the policy.Deny claim; seek to rescind the policy.

(Probably Not)(Probably Not) Deny claim; file civil suit for fraud to recover benefits Deny claim; file civil suit for fraud to recover benefits

paid.paid.

(Possibly Yes)(Possibly Yes) Deny claim; refer case to state authorities for Deny claim; refer case to state authorities for

considerationconsideration

(Probably Yes)(Probably Yes)

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Legal Considerations (Case Legal Considerations (Case Study # 1)Study # 1)• The answer is almost always “it depends”The answer is almost always “it depends”• RecessionRecession

Contestable periodContestable period Policy languagePolicy language State lawState law Voluntary recessionVoluntary recession Return of premiumReturn of premium No apparent problem with “contract formation”No apparent problem with “contract formation”

• Pitfall: Attempts to “unilaterally” unwind Pitfall: Attempts to “unilaterally” unwind PolicyPolicy

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Legal Considerations (cont.) (Case Legal Considerations (cont.) (Case Study # 1)Study # 1)

• File suit for fraud to recover benefits paidFile suit for fraud to recover benefits paid State lawState law ““it’s not what we know, it’s what you can prove”it’s not what we know, it’s what you can prove” Amount in controversyAmount in controversy Damages unrecoverableDamages unrecoverable Send message to the marketplaceSend message to the marketplace Open door for counterclaims?Open door for counterclaims? Possible media exposure/industry perceptionPossible media exposure/industry perception

• Potential Pitfall: “The game isn’t worth Potential Pitfall: “The game isn’t worth the candle.”the candle.”

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Legal Considerations (cont.) (Case Legal Considerations (cont.) (Case Study # 1)Study # 1)

• Refer case to state authorities for Refer case to state authorities for considerationconsideration State law – mandatory fraud reporting requirement?State law – mandatory fraud reporting requirement? What does the evidence showWhat does the evidence show Send message to marketplaceSend message to marketplace Restitution order possible (but probably unlikely)Restitution order possible (but probably unlikely) Industry/marketplace perceptionIndustry/marketplace perception Utilize in-house/outside counselUtilize in-house/outside counsel

• Possible pitfall: not having your ducks Possible pitfall: not having your ducks row; privilege considerationsrow; privilege considerations

• Note: This is not an exhaustive list of Note: This is not an exhaustive list of options; each case is uniqueoptions; each case is unique

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Case Study #2Case Study #2• Ms. P.N. Tush, 75 year old, retired school Ms. P.N. Tush, 75 year old, retired school teacherteacher

LTCI policy effective date 2003LTCI policy effective date 2003 Cash benefit: $120/day, TQ, comprehensive coverage, 60 Cash benefit: $120/day, TQ, comprehensive coverage, 60

day EPday EP• Claimed for benefits based with diagnosis of frozen Claimed for benefits based with diagnosis of frozen

shoulder s/p bilateral rotator cuff reconstruction shoulder s/p bilateral rotator cuff reconstruction complicated by fibromyalgiacomplicated by fibromyalgia

• In-person assessment showed insured to be 4 ADL In-person assessment showed insured to be 4 ADL dependent needing assistance with bathing, dressing, dependent needing assistance with bathing, dressing, toileting and transferring, walked with shuffling gait, toileting and transferring, walked with shuffling gait, very lethargic. Assessing nurse stated that she will very lethargic. Assessing nurse stated that she will likely need help for the “rest of her life”. likely need help for the “rest of her life”.

• Approved for benefits on April 15, 2006, cash benefits Approved for benefits on April 15, 2006, cash benefits begin after EPbegin after EP

• Subsequent assessments by different assessor Subsequent assessments by different assessor documented no improvement, though assessor noted documented no improvement, though assessor noted movement or lack of movement to be very exaggeratedmovement or lack of movement to be very exaggerated

• APS obtained – very little to corroborate level of APS obtained – very little to corroborate level of disability and dependency; no evidence of past rotator disability and dependency; no evidence of past rotator cuff repairs in recordscuff repairs in records

• A meeting is heldA meeting is held

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A Teacher, a Cash Policy A Teacher, a Cash Policy and Frozen Shouldersand Frozen Shoulders

SIU begins investigation – surveillance and an in-SIU begins investigation – surveillance and an in-person nursing assessmentperson nursing assessment•Surveillance initiated around the in-person Surveillance initiated around the in-person nursing assessmentnursing assessment•The day before assessment claimant documented:The day before assessment claimant documented:

Driving, walking without an aide, hesitation or equipment, Driving, walking without an aide, hesitation or equipment, shoppingshopping

Good ambulation and upper extremity range of motion and Good ambulation and upper extremity range of motion and strength strength

•On the day of assessment she is not observed On the day of assessment she is not observed outsideoutside•The assessment report documented : The assessment report documented :

Claimant in severe pain, confined to chair, needing caregiver Claimant in severe pain, confined to chair, needing caregiver (friend) to help her transfer and ambulate, described severe (friend) to help her transfer and ambulate, described severe limitations with dependencies in all IADLs as well as bathing, limitations with dependencies in all IADLs as well as bathing, dressing and toiletingdressing and toileting

Stated that she pays friend to help her with ADLs every day, friend Stated that she pays friend to help her with ADLs every day, friend agreesagrees

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• The day after the nursing assessment the claimant is again documented talking on cell phone and smoking while driving, ambulating and shopping at several stores without an aide or assistance , carrying packages

• Claim was denied and payments stopped• Appeal made via an attorney• Case summary and surveillance video sent to attorney

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• You are the Attorney, what is your You are the Attorney, what is your Recommendation?Recommendation?

Company should strongly consider resuming payment Company should strongly consider resuming payment because insured has retained counsel and is “lawyered up.”because insured has retained counsel and is “lawyered up.”

Company should file declaratory judgment action seeking Company should file declaratory judgment action seeking declaration as to eligibility for benefits.declaration as to eligibility for benefits.

Company should engage in discussions with insured’s Company should engage in discussions with insured’s attorney and should render decision on appeal based on all attorney and should render decision on appeal based on all information available.information available.

Company should deny appeal outright because of Company should deny appeal outright because of overwhelming evidence of fraud.overwhelming evidence of fraud.

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• You are the Attorney, what is your You are the Attorney, what is your Recommendation?Recommendation?

Company should strongly consider resuming payment Company should strongly consider resuming payment because insured has retained counsel and is “lawyered up.”because insured has retained counsel and is “lawyered up.”

(Probably not)(Probably not) Company should file declaratory judgment action seeking Company should file declaratory judgment action seeking

declaration as to eligibility for benefitsdeclaration as to eligibility for benefits

(Possibly – conservative approach)(Possibly – conservative approach) Company should engage in discussions with insured’s Company should engage in discussions with insured’s

attorney and should render decision on appeal based on all attorney and should render decision on appeal based on all information available.information available.

(Probably)(Probably) Company should deny appeal outright because of Company should deny appeal outright because of

overwhelming evidence of fraud?overwhelming evidence of fraud?

(Possibly – aggressive approach)(Possibly – aggressive approach)

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Legal Considerations Legal Considerations (cont.)(cont.) Case Case Study # 2Study # 2

• Facts not a “slam dunk” as in case study #1Facts not a “slam dunk” as in case study #1 Assessments say insured is eligible for benefitsAssessments say insured is eligible for benefits Video suggests insured is not eligible for benefitsVideo suggests insured is not eligible for benefits Insured will claim she has good days and bad daysInsured will claim she has good days and bad days

• Probably not a strong case to file civil suit for Probably not a strong case to file civil suit for damagesdamages

• Be wary of attorney involvementBe wary of attorney involvement Goal to appropriately deny claim without being suedGoal to appropriately deny claim without being sued What state are we in?What state are we in? If breach of contract, then bad faithIf breach of contract, then bad faith Communicate carefully and diligentlyCommunicate carefully and diligently

• Pitfall: Failing to position company favorably in Pitfall: Failing to position company favorably in case of legal actioncase of legal action

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Case Study #3Case Study #3• Ms. Simpson, 69 year old retired policewoman Ms. Simpson, 69 year old retired policewoman

LTCI policy effective date 1997LTCI policy effective date 1997 Indemnity, reimbursement, $150/day, TQ, comprehensive, Indemnity, reimbursement, $150/day, TQ, comprehensive,

90 day EP90 day EP• Found by daughter at ChristmasFound by daughter at Christmas

Confused, disoriented, depressed, 5/6 ADL dependencies, Confused, disoriented, depressed, 5/6 ADL dependencies, unsafe houseunsafe house

• MD Evaluation: Dementia, unspecified, depression, MMSE MD Evaluation: Dementia, unspecified, depression, MMSE 15/3015/30 Begun on Aricept, Namenda and antidepressantBegun on Aricept, Namenda and antidepressant Admitted to a locked dementia unitAdmitted to a locked dementia unit Approved for benefits, deductable beginApproved for benefits, deductable begin

• At 30 days, ADL independent, begins to socializeAt 30 days, ADL independent, begins to socialize• At 45 days, transferred to the ALF from dementia unit, only At 45 days, transferred to the ALF from dementia unit, only

on antidepressanton antidepressant• At 90 days, stopped all medications, socializes with At 90 days, stopped all medications, socializes with

residence and staff, needs to be cued for meals, bathing and residence and staff, needs to be cued for meals, bathing and dressing, mostly stays close to room, never leaves facility, dressing, mostly stays close to room, never leaves facility, all medications stopped, diagnosis of dementia and all medications stopped, diagnosis of dementia and depression remain on ALF chartdepression remain on ALF chart

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A Cop, a TQ Policy and A Cop, a TQ Policy and DementiaDementia

• APS obtained at one year anniversaryAPS obtained at one year anniversary Dementia diagnosis remains on chart, noted to be oriented to Dementia diagnosis remains on chart, noted to be oriented to

person onlyperson only ““No need for medication at this time”, noted to be living No need for medication at this time”, noted to be living

comfortably in ALFcomfortably in ALF No mention of need for continual supervision, “depression lifting”No mention of need for continual supervision, “depression lifting”

• Onsite assessmentOnsite assessment Clamant found to be alert and oriented to person and place (not Clamant found to be alert and oriented to person and place (not

time)time) Affable, talkative, scored a 25/30 on MMSE (Masters level of Affable, talkative, scored a 25/30 on MMSE (Masters level of

education)education) No medication, easily distracted, talking at length about her careerNo medication, easily distracted, talking at length about her career Incomplete care notes at nursing station; RN supervisor maintains Incomplete care notes at nursing station; RN supervisor maintains

that claimant is unable to live alone independently and that her that claimant is unable to live alone independently and that her house was soldhouse was sold

• MD Letter advocates for claimant stating that she MD Letter advocates for claimant stating that she has moderate dementia, that she should be in an has moderate dementia, that she should be in an ALF and that she requires intermittent ALF and that she requires intermittent supervisionsupervision

• A meeting is heldA meeting is held

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A Cop, a TQ Policy and A Cop, a TQ Policy and DementiaDementia

• SIU Investigation consisted of staff and facility SIU Investigation consisted of staff and facility caregiver interviews – corroborate onsite caregiver interviews – corroborate onsite assessmentassessment Staff notes that she could leave if she wanted to but that she Staff notes that she could leave if she wanted to but that she

doesn’t leave, staff disagrees over whether she could manage her doesn’t leave, staff disagrees over whether she could manage her own medicationsown medications

Staff interviews indicate claimant at times cares for herself and at Staff interviews indicate claimant at times cares for herself and at other times chooses not tooother times chooses not too

• A case conference is heldA case conference is held

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• You are the Attorney, what is your You are the Attorney, what is your Recommendation?Recommendation?

Deny claim based on evidence that insured has Deny claim based on evidence that insured has recoveredrecovered

Continue to pay claim based on evidence that insured is Continue to pay claim based on evidence that insured is still benefit eligible; continue to gather information at still benefit eligible; continue to gather information at periodic intervals and monitor recoveryperiodic intervals and monitor recovery

Continue to pay claim under Reservation of Rights Continue to pay claim under Reservation of Rights while diligently seeking additional informationwhile diligently seeking additional information

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• You are the Attorney, what is your You are the Attorney, what is your Recommendation?Recommendation?

Deny claim based on evidence that insured has recoveredDeny claim based on evidence that insured has recovered

(Probably not)(Probably not) Continue to pay claim based on evidence that insured is still Continue to pay claim based on evidence that insured is still

benefit eligible; continue to gather information at periodic benefit eligible; continue to gather information at periodic intervals and monitor recoveryintervals and monitor recovery

(Possibly – More conservative approach)(Possibly – More conservative approach) Continue to pay claim under Reservation of Rights while Continue to pay claim under Reservation of Rights while

diligently seeking additional informationdiligently seeking additional information

(Possibly – Less conservative approach)(Possibly – Less conservative approach)

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Legal Considerations (Case Legal Considerations (Case Study # 3)Study # 3)

• Difficult situation to evaluateDifficult situation to evaluate• Maintain objectivityMaintain objectivity

Not every “suspicious” case is a fraudNot every “suspicious” case is a fraud Legal focus shifts from considering fraud, to making Legal focus shifts from considering fraud, to making correctcorrect

and and defensibledefensible decision decision under the policyunder the policy• Ok to protect the company’s rights/interests, but Ok to protect the company’s rights/interests, but

do so thoughtfullydo so thoughtfully No arbitrary decisionsNo arbitrary decisions No inaccurate or misleading communicationsNo inaccurate or misleading communications What would a jury do?What would a jury do?

• ““When all else fails, read the directions”When all else fails, read the directions” What does the policy say?What does the policy say? What do your SOPs say?What do your SOPs say?

• Pitfall: Seeing all claims in black and whitePitfall: Seeing all claims in black and white