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Klobuchar Calls for Investigation into Alleged Insurance Industry Fraud Against Seniors

Today's New York Times Reports Insurance Companies Refusing to Pay Claims That Seniors invested in for years

March 26, 2007

(Washington, D.C.) U.S. Senator Amy Klobuchar today called for an investigation into alleged wrongdoing by insurance companies in denying seniors their payment of claims for assisted living facilities and other benefits. Today's New York Times [1] reported that certain insurance companies are employing improper tactics to deny legitimate long-term care insurance claims made by seniors who have paid their premiums for years. One such insurance company, Conseco, has previously been fined $2.5 million by Minnesota Department of Commerce for deceptive marketing of annuities to seniors - the largest monetary penalty Minnesota has ever imposed against an insurance company.

"If these reports are true, and there are very real reasons to think they are, then these insurance companies have committed the very worst kind of fraud against our seniors, against their families, and against the American taxpayers," said Klobuchar. "After aggressively courting seniors to sign up for their long-term care insurance plans, and after happily accepting timely payments from these seniors over a period of years, these companies apparently are making up their own rules and breaking their promises. I addressed the growing problem of financial fraud against seniors as County Attorney, and I intend to get to the bottom of this issue as Senator."

Klobuchar has met with numerous care providers and seniors across Minnesota about long-term care issues. She has also proposed a $1,200 tax credit for families caring for aging loved ones. As Hennepin County Attorney, Klobuchar installed an "Elder Abuse Team" dedicated to prosecuting crimes against the elderly. Two prosecutors focused on fraud, theft, and other property related crimes.

Below is the text of the letter Senator Klobuchar sent today:

[1] Charles Duhigg. "Aged, Frail and Denied Care by Their Insurers." New York Times. March 26, 2007. http://www.nytimes.com/2007/03/26/business/26care.html

March 26, 2007

Senator Edward M. Kennedy

Chairman

Committee on Health, Education, Labor and Pensions

428 Senate Dirksen Office Bldg

Washington, DC 20510

Dear Chairman Kennedy:

I am growing increasingly concerned about abusive practices by the long-term care insurance industry. The New York Times today reported what I have been hearing from others for some time now: certain insurance companies are using improper tactics (some might call them cheap tricks) to deny legitimate long-term care insurance claims made by senior citizens who have conscientiously paid their premiums for years. Whether it is unduly complicated and burdensome claims procedures, unjustified rescissions, baseless rejections, or some other questionable method, these reports indicate that the end result is the same. The insurance companies get paid, the seniors get nothing, and their families (and taxpayers) are left scrambling to cover the costs of long-term care.

As the chief prosecutor for Minnesota's largest county - covering 1.1 million people and 45 cities - I confronted financial exploitation of seniors. My staff and I established a Senior Initiative to ensure the more effective investigation and prosecution of crimes, including financial crimes, committed against senior citizens. Our Elder Abuse teams aggressively prosecuted these cases and also promoted outreach and education activities to promote public understanding. We acted, and the results speak for themselves.

It is time for us - for this Congress - to investigate these recent reports of insurance abuse and to take any needed steps to protect our seniors and to punish any wrongdoers. The urgency of this issue cannot easily be overstated. At present, more than eight million seniors own long-term care insurance policies, and that number is growing rapidly as our population ages and life-saving and life-improving technologies become more prevalent. These eight million seniors have families. When they are denied insurance benefits, their families - middle-class folks already straining to make ends meet - have to help pay the skyrocketing costs of care. And this is not just a moral issue; it is a fiscal issue as well. When insurance policies fail, federal programs like Medicaid help fill the gaps, so taxpayers have to help pay for the insurance companies' refusal to live up to their promises.

We know enough to conclude that there is a real problem here. We know that in California alone, nearly one in every four long-term-care claims was denied in 2005. We know that thousands of grievances and lawsuits have been filed by seniors against long-term care insurers in recent years. We know the individual stories of seniors and their families who lived up to their bargain only to be left with nothing by insurance companies. And we know that at least one of the major insurance providers identified by the Times - Conseco - has been known to mislead its customers, especially seniors. Last year, Conseco was fined $2.5 million by the Minnesota Department of Commerce for deceptive marketing of annuities to seniors. It was reportedly the largest monetary penalty Minnesota has ever imposed against an insurance company.

We know all of these things, but we need to know more before we can act. That is why I respectfully request that the HELP Committee hold a hearing on this issue at the earliest possible opportunity. I would be happy to work with you to organize this hearing. I also look forward to working with you to address this issue in other ways.

Thank you for your consideration of this request.

Sincerely,

Amy Klobuchar