California Settles Complaints Against Ex-Conseco LTC Unit

California insurance regulators announced a $500,000 settlement with the former Conseco Senior Health Insurance Co. to settle charges of unfair claims handling practices in handling long-term care insurance policies.

The Department of Insurance issued a statement saying the company had been the subject of numerous consumer complaints for improperly denying claims on long-term care policies and engaging in "confusing and onerous" claims-handling practices. A departmental investigation discovered additional cases that violated state law as well as unfair denials of benefits.

"Conseco's practices showed a callousness or carelessness toward vulnerable policyholders from whom it was more than happy to accept premiums month after month. Conseco Senior appeared to violate its contracts and California law without much concern for the results of its actions," Insurance Commissioner Steve Poizner said.

Now known as Senior Health Insurance Company of Pennsylvania, the insurer is an independent trust under the authority of the Pennsylvania Department of Insurance. The trust is to manage Senior Health in order to satisfy the obligations of the insurance coverages it underwrites. The insurance department oversees Senior Health and the trust (BestWire, Nov. 13, 2008).

Under the settlement agreement, the company agreed to pay a $500,000 penalty and will retroactively readjust certain policyholder claims back to Jan. 1, 2004, which will be paid with interest.

Senior Health Insurance Company of Pennsylvania could not immediately be reached for comment.