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Eric Turkewitz

Conseco Insurance Scandal Follows Movie Plot

Cross-posted from New York Personal Injury Law Blog

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.

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Posted at 6:31 PM, Mar 26, 2007 in
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Comments

Thanks! I spent about ten minutes scratching my head today after reading the NYT article trying to remember what the name of that movie was!

Posted by: Adam | March 26, 2007 8:09 PM

I am a lawyer who spent over a year doing battle with Banker's Life (Conseco subsidiary)to collect $5,000. They made it impossible to call any humans and then stretched everything out with non-stop almost silly requests for information. It was clear to me that they intentionally made it nearly impossible to collect and stalled for time.

Posted by: David Deluth | March 28, 2007 4:44 PM

I have a $5000 life insurance policy with Banker's Life and Casualty at 222 Merchandise Mart Plaza Chicago, Il 60654. $30.13 is taken from my banking account monthly. I am wondering if this company is reliable. Will it pull the same tricks of not allowing my children to make a claim when I die or if they will continue asking silly questions, as the person in the above article, and not allow them to collect but continue to try to collect until they die.

Posted by: Jeanette Eileen Lindhorst | April 4, 2007 7:47 PM

I am also a lawyer with a client who is fighting to obtain benefits from Conseco. We are looking at bringing a bad faith claim and would like to hear from as many others as are out there about similar experiences. We have an elderly woman who purchased long term and assisted living coverage and who can't get paid. It is clear this company has adopted a deliebrate pattern of denying legitimate claims to benefit earnings. Please send me anything you have at sgb@buchlaw.com.

Posted by: Scott Buchanan | April 19, 2007 2:16 PM