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Long-Term Care Policyholder Wins Lawsuit Against Insurance Company

Posted by Brad Sarkauskas | Apr 22, 2018 | 0 Comments

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From time to time, insurance companies have implemented deceptive practices to get individuals seeking long-term medical coverage to enroll. However, these companies are rarely held responsible for their behaviors as many have accepted misleading ads and false promises to be a part of the process. Join us as we explore a case where a policyholder took action against her insurance company for their shady practices.

The Case

At the age of 56, Margery Newman invested in a long-term care insurance policy from Metropolitan Life Insurance Company (Metlife). The plan she found most appealing was the “Reduced-Pay at 65” plan. Policyholders with this plan agree to pay a set premium until they turn 65, which is when it gets cut in half. The contract mentioned that Metlife could increase premiums of individuals who were of the same class.

Newman signed the contract and agreed to pay the higher premium until the reduced premium kicked in. When she turned 65, the promotion kicked in, and her premium was cut in half. However, two years later, she was informed by Metlife that her premium would double. Newman filed a lawsuit against Metlife for a slew of offenses including, fraudulent and deceptive business practices and breach of contract.

Metlife defended against the charges by contesting that the increase occurred on a class-wide basis to all policyholders over 65-years-old. This included those who signed up for the “Reduced-Pay at 65” plan. Metlife proceeded to request that the case be dismissed and the federal district court concurred stating that the Metlife contract permitted a premium increase.

Newman appealed the decision to a higher court, holding the position that it was a breach of contract when Metlife raised her premium. The court of appeals ultimately ruled that a reasonable person would believe that they were not at risk of a premium increase by signing up for the reduced-pay option. The court also upheld the claim of fraudulent and deceptive practices as they ruled that the way that Metlife marketed the policy was unfair and deceptive.

5 Facts About Long-Term Care Insurance

It is not uncommon for insurance companies to sell long-term care policies by offering low-cost plans and drastically increasing rates once individuals become policyholders. Avoid getting caught in this trap by taking heed to these five facts about long-term care insurance:

  • Traditional long-term care policies have suffered as premium spikes and insurer losses have risen
  • Long-term care policies, per se, are not a necessity, but you do need to have a plan in place
  • Whole life insurance in which you can pull from for long-term care has risen in popularity and, in some cases, has overtaken actual long-term care policies
  • Long-term care insurance is most appealing when purchased at a younger age due to its affordability
  • Shopping for insurance is best done sooner than later as the cost of such insurance will increase with age

Discover everything you need to know about long-term care insurance from an experienced elder law attorney.

Help From an Experienced Elder Law Attorney

The Milwaukee elder law attorneys at Heritage Law Office of Milwaukee are experienced lawyers with extensive knowledge of long-term insurance. We understand that traditional policies have their pitfalls and can make you aware of alternatives planning methods which may include Medicaid and other favorable means of coverage. Contact us today at 414-253-8500 for a free case evaluation.

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Bradley J. Sarkauskas, Attorney-at-Law

About the Author

Brad Sarkauskas

As the founding member of the Heritage Law Office of Wisconsin, LLC, attorney Brad Sarkauskas is equipped with the tools--through his extensive background in finance--to effectively represent his clients legal economic interests. With over 20 years of experience in finance, insurance, and taxati...

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