In at least one state, California, the answer to the question of “Do issues related to long-term care and elder abuse intersect?” is yes. The California Welfare and Institutions Code defines “financial abuse” of an elder adult to include an “entity” depriving an elder adult “of any property, including by means of an agreement, donative transfer, or testamentary bequest, regardless of whether the property is held directly or by a representative of an elder or dependent adult.”
In Crawford v. Continental Casualty Co., the district court found that the plaintiff had stated a claim for financial elder abuse under California law and denied the insurer’s motion to dismiss. The insured made a claim for benefits under a long-term care policy for benefits related to a hip injury. When the benefits were denied, the insured alleged that Continental Casualty denied his claim in bad faith and in breach of the policy. Continental moved to dismiss the insured’s claim for financial abuse of an elder, brought pursuant to Cal. Welfare & Inst. Code § 15610.30, stating that the statute “simply [did] not apply to standard breach of contract claims.” In reaching its decision that the insured had stated a claim, the court found that the California Elder Abuse Act was broad enough in scope to encompass breach of contract and bad faith claims. In reaching its decision, the court also noted that if the breach of contract was in bad faith, then the insured “could [also] show that [he] had an entitlement to policy benefits which Continental unlawfully withheld—or in the language of the statute, improperly ‘retained’” (noting that “the statute is not limited to just the wrongful ‘taking’ of property, but also includes the wrongful retention of such property”).
Not all California courts are in agreement with the Crawford court’s interpretation of California law on the issue, and the court itself recognized that not all courts analyzing the California statute agreed with this interpretation (citing cases going both ways). For example, the district court in O’Brien v. Continental Casualty Co., concluded that the insured plaintiff had not stated a claim for financial elder abuse under the California statute. The point though is that until this issue is settled by the California Supreme Court there is a risk that an insurer could be found to be in violation of California’s elder abuse statutes when there is a denial of long-term care benefits.
For long-term care insurers, there are certain factors that should be considered in the claims handling process:
What is the basis for the interpretation leading to the denial of benefits?
Has the interpretation changed over time and, if so, why?
Is the interpretation of the policy provision leading to the denial of benefits more favorable to the policyholder or to the company?
If there is something the policyholder could do to remedy the basis for the denial, such as changing facilities, and has that possible solution been brought to the policyholder’s attention? If not, then why not?
We will continue to update the blog as this area of the law continues to evolve.