Conseco Insurance Scandal Follows Movie Plot

As I read the front page story in today’s New York Times on insurance companies that deny, deny, deny — waiting for the policy holder to either give up or die — I was reminded of a movie. The NYT focuses primarily on insurance giant Conseco continually denying claims for benefits based on long-term-care policies.

From the article:

In lawsuits, complaints and interviews, policyholders contend that Conseco, Bankers Life or Penn Treaty denied claims because policyholders failed to submit unimportant paperwork; because daily nursing notes did not detail minute procedures; because policyholders filled out the wrong forms after receiving them from the insurance companies; and because facilities were deemed inappropriate even though they were licensed by state regulators…

In a 2006 deposition, a Bankers Life and Conseco claims adjuster, Teresa Carbonel, testified that she denied claims because of missing records but was prohibited from calling nursing homes or physicians to request the documents. She also testified that when a claim was denied, she was forbidden to phone a policyholder, but instead used a time-consuming mailing system.

Where have we seen this scene before? In Francis Ford Coppola’s rendition of The Rainmaker (book by John Grisham), Matt Damon and Danny De Vito go to trial against an insurance company whose first, second and third courses of action are to deny a claim, hoping the people will give up. This is, apparently, very good for insurance company profits.

Perhaps Conseco took tips from the book or movie on how to run its business. This is the movie version:

Witness (reading): Great Benefit, July 7, 1996. Re: 7849909886. Dear Mrs. Black. On seven prior occasions this company has denied your claim in writing. We now deny it for the eighth and final time. You must be stupid stupid stupid. Sincerely, Evert Luftkin, Vice President, Claims Department.

And this is the real-life version from the article:

Conseco and Bankers Life [a subsidiary] “made it so hard to make a claim that people either died or gave up,” said Betty J. Hobel, a former Bankers Life agent in Cedar Rapids, Iowa.

The executives at Conseco must be very big film or pop literature fans to have followed the Grisham script so closely. It almost makes one wonder if they can be sued not only for benefits, breech of contract and bad faith, but on intellectual property grounds.

Conseco now joins the ranks of State Farm (State Farm to Pay Punitive Damages. Again.), Allstate (Is Allstate really Allsnake?), and Blue Cross of California (Insurer Fined for Dropping the Sick and the Pregnant) who have been exposed this year for improperly denying coverage or claims. And it’s only March.

(Eric Turkewitz is a personal injury attorney in New York)

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