You have been accepted to …
LTC
Dr. Stephen Holland
Univita
Robert Russ
Prudential
Michael Rafalko
Drinker Biddle & Reath LLP
Welcome to Training
Roll Call
● Your Instructors (LTC Police Officers)
● Goals for training
- Examine real life case studies
- 3 perspectives: claims, SIU, legal
- Identify red flags, surveillance tactics, and legal
hazards associated with LTC claims
● Promotion from cadet to officer
- Prizes for completion of examinations
● Promotion to Commandant for one lucky cadet
1
First Case Study . . .
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Mr. Everett, 70 year old retired plumber
– LTCI policy effective date June 15, 1995
– Cash benefit: $130/day, TQ, comprehensive coverage, 30 day EP
Claimed for benefits in June 2007 describing significant
dementia
• In-person assessment: MMSE 15/30, lethargic, mumbling
incoherently in a foreign language
• Approved for benefits on June 25, 2007, cash benefits begin
after EP
• Subsequent assessments showed claimant to be disoriented and
confused, very lethargic, MMSE always less than 15/30, noted
to be 2-4 ADL dependent
•
2
First Case Study . . .
At 24 months, inconsistent marital status on claim renewal form
identified, further investigation into careplan noted that
claimant was being cared for my his daughter, who is confined
to wheelchair
• APS ordered – very little corroboration of a significant
cognitive impairment or ADL deficits
• A meeting is held
•
3
A Plumber, a Cash Policy and Dementia
SIU involvement is requested – first step, Activity Check
•Activity check revealed home phone number is for an active
plumbing business
– Confirmed with Better Business Bureau
– Business re-bonded while claimant in payment
– Called business number and claimant answered phone and identified
himself by name
•Escalated
to surveillance
– Plumbing services requested by SIU
– Videotaped responding to service call
4
• 2 days later SIU arranged for in home interview with
claimant and caretaker
- Claimant found bedridden, starring at ceiling mumbling in foreign
language
- Daughter stated that he was semi-comatose 85% of the time, needing
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 Recommendation?
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Deny claim; seek to rescind the policy.
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Deny claim; file civil suit for fraud to recover benefits paid.

Deny claim; refer case to state authorities for consideration.
6
•
You are the Attorney, what is your Recommendation?

Deny claim; seek to rescind the policy.
(Probably Not)

Deny claim; file civil suit for fraud to recover benefits paid.
(Possibly Yes)

Deny claim; refer case to state authorities for consideration
(Probably Yes)
7
Legal Considerations (Case Study # 1)
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The answer is almost always “it depends”
Recession
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Contestable period
Policy language
State law
Voluntary recession
Return of premium
No apparent problem with “contract formation”
Pitfall: Attempts to “unilaterally” unwind Policy
8
Legal Considerations (cont.) (Case Study # 1)
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File suit for fraud to recover benefits paid
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State law
“it’s not what we know, it’s what you can prove”
Amount in controversy
Damages unrecoverable
Send message to the marketplace
Open door for counterclaims?
Possible media exposure/industry perception
Potential Pitfall: “The game isn’t worth the candle.”
9
Legal Considerations (cont.) (Case Study # 1)
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Refer case to state authorities for consideration
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State law – mandatory fraud reporting requirement?
What does the evidence show
Send message to marketplace
Restitution order possible (but probably unlikely)
Industry/marketplace perception
Utilize in-house/outside counsel
Possible pitfall: not having your ducks row; privilege
considerations
Note: This is not an exhaustive list of options; each
case is unique
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Case Study #2
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Ms. P.N. Tush, 75 year old, retired school teacher
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LTCI policy effective date 2003
Cash benefit: $120/day, TQ, comprehensive coverage, 60 day EP
Claimed for benefits based with diagnosis of frozen shoulder s/p bilateral
rotator cuff reconstruction complicated by fibromyalgia
In-person assessment showed insured to be 4 ADL dependent needing
assistance with bathing, dressing, toileting and transferring, walked with
shuffling gait, very lethargic. Assessing nurse stated that she will likely
need help for the “rest of her life”.
Approved for benefits on April 15, 2006, cash benefits begin after EP
Subsequent assessments by different assessor documented no
improvement, though assessor noted movement or lack of movement to
be very exaggerated
APS obtained – very little to corroborate level of disability and
dependency; no evidence of past rotator cuff repairs in records
A meeting is held
11
A Teacher, a Cash Policy and
Frozen Shoulders
SIU begins investigation – surveillance and an in-person nursing
assessment
•Surveillance initiated around the in-person nursing assessment
•The day before assessment claimant documented:
 Driving,
walking without an aide, hesitation or equipment, shopping
 Good ambulation and upper extremity range of motion and strength
•On
the day of assessment she is not observed outside
•The assessment report documented :

Claimant in severe pain, confined to chair, needing caregiver (friend) to help her transfer
and ambulate, described severe limitations with dependencies in all IADLs as well as
bathing, dressing and toileting
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Stated that she pays friend to help her with ADLs every day, friend agrees
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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
13 13
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You are the Attorney, what is your Recommendation?
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Company should strongly consider resuming payment because insured
has retained counsel and is “lawyered up.”
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Company should file declaratory judgment action seeking declaration as
to eligibility for benefits.
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Company should engage in discussions with insured’s attorney and should
render decision on appeal based on all information available.
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Company should deny appeal outright because of overwhelming evidence
of fraud.
14
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You are the Attorney, what is your Recommendation?

Company should strongly consider resuming payment because insured
has retained counsel and is “lawyered up.”
(Probably not)

Company should file declaratory judgment action seeking declaration as
to eligibility for benefits
(Possibly – conservative approach)
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Company should engage in discussions with insured’s attorney and should
render decision on appeal based on all information available.
(Probably)
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Company should deny appeal outright because of overwhelming evidence
of fraud?
(Possibly – aggressive approach)
15
Legal Considerations (cont.) Case Study # 2
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Facts not a “slam dunk” as in case study #1
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Probably not a strong case to file civil suit for damages
Be wary of attorney involvement
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Assessments say insured is eligible for benefits
Video suggests insured is not eligible for benefits
Insured will claim she has good days and bad days
Goal to appropriately deny claim without being sued
What state are we in?
If breach of contract, then bad faith
Communicate carefully and diligently
Pitfall: Failing to position company favorably in case of legal
action
16
Case Study #3
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Ms. Simpson, 69 year old retired policewoman
 LTCI policy effective date 1997
 Indemnity, reimbursement, $150/day, TQ, comprehensive, 90 day EP
Found by daughter at Christmas
 Confused, disoriented, depressed, 5/6 ADL dependencies, unsafe house
MD Evaluation: Dementia, unspecified, depression, MMSE 15/30
 Begun on Aricept, Namenda and antidepressant
 Admitted to a locked dementia unit
 Approved for benefits, deductable begin
At 30 days, ADL independent, begins to socialize
At 45 days, transferred to the ALF from dementia unit, only on antidepressant
At 90 days, stopped all medications, socializes with residence and staff, needs
to be cued for meals, bathing and dressing, mostly stays close to room, never
leaves facility, all medications stopped, diagnosis of dementia and depression
remain on ALF chart
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A Cop, a TQ Policy and Dementia
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APS obtained at one year anniversary
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Dementia diagnosis remains on chart, noted to be oriented to person only
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“No need for medication at this time”, noted to be living comfortably in ALF
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No mention of need for continual supervision, “depression lifting”
Onsite assessment
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Clamant found to be alert and oriented to person and place (not time)
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Affable, talkative, scored a 25/30 on MMSE (Masters level of education)
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No medication, easily distracted, talking at length about her career
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Incomplete care notes at nursing station; RN supervisor maintains that claimant is unable
to live alone independently and that her house was sold
MD Letter advocates for claimant stating that she has moderate
dementia, that she should be in an ALF and that she requires
intermittent supervision
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A meeting is held
A Cop, a TQ Policy and Dementia
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SIU Investigation consisted of staff and facility caregiver
interviews – corroborate onsite assessment
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Staff notes that she could leave if she wanted to but that she doesn’t leave, staff
disagrees over whether she could manage her own medications
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Staff interviews indicate claimant at times cares for herself and at other times chooses
not too
A case conference is held
19
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You are the Attorney, what is your Recommendation?
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Deny claim based on evidence that insured has recovered
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Continue to pay claim based on evidence that insured is still benefit
eligible; continue to gather information at periodic intervals and monitor
recovery
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Continue to pay claim under Reservation of Rights while diligently
seeking additional information
20
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You are the Attorney, what is your Recommendation?

Deny claim based on evidence that insured has recovered
(Probably not)
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Continue to pay claim based on evidence that insured is still benefit
eligible; continue to gather information at periodic intervals and monitor
recovery
(Possibly – More conservative approach)
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Continue to pay claim under Reservation of Rights while diligently
seeking additional information
(Possibly – Less conservative approach)
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Legal Considerations (Case Study # 3)
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Difficult situation to evaluate
Maintain objectivity
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Ok to protect the company’s rights/interests, but do so
thoughtfully
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No arbitrary decisions
No inaccurate or misleading communications
What would a jury do?
“When all else fails, read the directions”
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Not every “suspicious” case is a fraud
Legal focus shifts from considering fraud, to making correct and defensible
decision under the policy
What does the policy say?
What do your SOPs say?
Pitfall: Seeing all claims in black and white
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