Non-profit health insurer surplus legislation advances in WA legislature

Non-profit health insurer surplus legislation advances in WA legislature

A bill we requested, Senate Bill 5247, was approved by a key state Senate committee last night.

The bill would allow us, when considering premium rates proposed by non-profit health insurers, to take into account the large surpluses that the companies have built up in recent years. (Surpluses are not the same thing as reserves. Theres' been some confusion out there on this point.)

These surpluses have grown dramatically over the past decade. The state's three major nonprofit health insurers together now have more than $2.4 billion in surplus.

Meanwhile, the cost of individual health policies more than doubled from 2005 to 2011.

At least 11 other states, including neighboring Oregon, have the authority to consider surpluses when reviewing rates. We think it's time Washington did the same.
What's a health care exchange?

What's a health care exchange?

Stateline, a news service that covers state government, put together a story summarizing the new health care exchanges scheduled to launch in 2014, how they work, and the status of the efforts to create them at the state level. From the article:

Considered the engines of the national health law, state exchanges are online marketplaces designed to make it easier for individuals and small businesses to shop for insurance policies. They will also be one-stop enrollment centers for low-income people who qualify for Medicaid and moderate income individuals who qualify for federal tax credits.

There's a tremendous amount of behind-the-scenes work taking place in Olympia in preparation for these exchanges. Again, from Stateline's article:

One small group of states — led by Maryland, Washington, Oregon, Rhode Island and California — is running significantly ahead of the rest. Statutes have been enacted to create the exchanges and the basic decisions about how to run them have already been made.
Our office and Gov. Chris Gregoire have also requested additional exchange legislation in Washington this year.
Tacoma insurance agent sentenced for stealing from clients

Tacoma insurance agent sentenced for stealing from clients

An insurance agent in Tacoma has pleaded guilty to second-degree theft for misappropriating checks from dozens of policyholders.

Michel Anthony James, an independent contractor who was working for State Farm, is believed to have deposited checks from more than 40 policyholders into his own business bank account. State Farm discovered the problems when it audited James' accounts. It subsequently terminated its contract with James.

Based on a subsequent iinvestigation by Insurance Commissioner Mike Kreidler's Special Investigations Unit, James:
• failed to apply premiums to policies,

•wrongly withdrew cash from his premium fund account (which is where those policyholder checks were supposed to go),

•failed to refund overpayments to policyholders,

•and violated contractual agreements with State Farm.

The theft added up to $23,926.87.

On Jan. 13 in Pierce County Superior Court, he pleaded guilty to second-degree theft. He was sentenced to community service, electronic home monitoring and $1,800 in costs and assessments. He has also paid back the misappropriated money.

(Updated Feb. 1 to note that James no longer works for State Farm.)
Tacoma man pleads guilty to forgery and insurance fraud

Tacoma man pleads guilty to forgery and insurance fraud

A Tacoma man has pleaded guilty to two counts of forgery and one count of felony insurance fraud for filing a false auto insurance claim.
Cash B. Knott, 46, pleaded guilty Jan. 13 in Pierce County Superior Court.
On Nov. 6th, less than a month after getting coverage from Progressive Direct Insurance Co. for his 1992 Ford Ranger pickup, Knott filed a $5,674 insurance claim with Progressive. He said someone had scratched the paint, stolen his chrome wheels and tires, and stolen his navigation and entertainment system, 1,000 watt amplifier and other electronic components.

He provided Progressive with a Sept. 2 stereo shop invoice for $4,547.84 worth of stereo equipment, a copy of his check, and a bank statement showing the withdrawal from his checking account.
The problem: When contacted by an insurance adjuster, the stereo shop said it had no record of such a purchase. All they could find was that Knott had bought an amplifier -- for $109 -- on Sept. 2.
Insurance Commissioner Mike Kreidler's Special Investigations Unit obtained a search warrant for Knott's bank records. The bank found no checks written to the stereo shop, and none whatsoever for $4,547.84.
He's slated for sentencing on Feb. 17th. The standard range for the charges are 22 to 29 months in prison.
What are my odds of dying from...?

What are my odds of dying from...?

The Insurance Information Institute has released some interesting data about the odds of dying in a wide variety of accidental (or sometimes not-so-accidental) injuries.

According to the III, your odds of dying from:

  • A car accident: 1 in 303.
  • Being shot: 1 in 306.
  • Falling down the stairs: 1 in 2,018.
  • An airplane crash: 1 in 7,032.
  • Falling off a ladder: 1 in 8,912
  • A lightning strike: 1 in 84,079.

See the link above for more examples.
Anti-fraud group releases its "Hall of Shame" for 2011

Anti-fraud group releases its "Hall of Shame" for 2011

The Coalition Against Insurance Fraud has compiled its annual "Insurance Fraud Hall of Shame" list. And this batch is pretty horrifying:


  • A Rhode Island radio DJ who wanted to upgrade her home and pool had several friends simulate storm damage to her home -- smashing a hole in her roof with a tree limb, messing up the pool, etc. The problem: The weather was fair and in the 70s that day. And one of the DJ's accomplices was caught on an unrelated federal wiretap bragging about the job.

  • Another home-arson case involved a California couple who hired a man to burn down their home. The man used a lot of gasoline, leading to a blast that left him horribly burned. He died later that day. The couple went to prison.

  • There are several others, but we'll end with what's probably the strangest case. A mortuary workers and medical worker faked the death of a man who'd never existed. There was even a grave. And a funeral service. Using forged documents, the workers and accomplices had taken out $950,000 in life insurance policies on the fictitious man.
When one company had doubts, the workers exhumed the coffin, filling it with a mannequin, cow meat, and bones before hauling it to a crematorium. But when they tried to bribe a doctor to forge medical records, he instead cooperated with investigators and recorded the conversations. One of the workers was sentenced to two years in prison, the other other is awaiting sentencing.
Long-term care insurance: Is it right for you?

Long-term care insurance: Is it right for you?

Kaiser Health News and the Washington Post have an article today on the pros and cons of long term care insurance. From the article:
The question of whether to get long-term care insurance bedevils consumers and their advisers. Unlike medical insurance, it is intended primarily to cover people who need assistance with so-called activities of daily living -- for example, the care of a dementia patient or someone recovering from a broken hip. It can be expensive: Premiums range from $1,000 to $5,000 a year, depending on the age, sex and health of the purchaser as well as the extent of the coverage. And policy details can be confusing.
Even advocates acknowledge that it isn't for everyone. Jesse Slome, executive director of the American Association for Long-Term Care Insurance, an industry group, sums it up well: "Long-term care is a universal issue facing all Americans who are getting older. But long-term-care insurance is not a universal solution."
Many people think that their health insurance will cover long term care, but most don't. Nor do Medicare or Medicare supplemental policies. Medicaid will pay, but to qualify for Medicaid, your assets must dwindle away to almost nothing.

In recent years, we've received numerous complaints about the cost of the policies. Long term care insurance is a fairly new product, with many companies not offering it until the early 1990s. As a result, they had little experience to base their prices on, and early policies were priced significantly lower than they should have been, based on how the cost of claims and the fact that -- unlike life insurance, for example -- few people cancel the policies.

As a result, most long-term care insurers have bumped up their premiums sharply in the past few years -- in some cases 40 percent or more -- angering customers who signed up for policies at relatively low cost years ago. This is a problem across the country. Again, from the article:
"It's probably the most frequent complaint I hear," says (Kansas Insurance Commissioner Sandy) Praeger, who heads the National Association of Insurance Commissioners' health and managed care committee. "The problem is, the older policies weren't priced right to begin with. Companies expected about 8 percent of customers to stop paying their premiums, when, in fact the lapse rate is closer to 2 percent." That meant the insurers had to cover more beneficiaries than they expected at a time when the economic downturn has meant less returnon their investments.

Praeger acknowledges that rate increase requests have posed a dilemma for insurance commissioners. "If we don't give them the rate increase they need, the insurance carriers could become financially impaired, and that doesn't help people," she says. In fact, in recent years, a number of companies have stopped selling policies. As a result, she adds, it's hard to turn the increases down.
Insurer fined $100,000

Insurer fined $100,000

A company that issued thousands of medical insurance policies to college students has been fined $100,000 for charging unapproved rates, as well as other violations.

Indiana-based Unicare Life and Health Insurance Co. has agreed to pay the fine.

Between mid-2004 and mid-2009, Unicare sold thousands of medical insurance policies to students at community colleges, technical schools, colleges and universities across Washington state. Insurance Commissioner Mike Kreidler’s office later determined that there were substantial problems with the coverage. Among them:

• For more than six years, the company used unapproved methods to set its rates.

• Unicare continued to wrongly cite a policy exclusion for 5 years after the law had changed to ban insurers from using the exclusion.

• Unicare allowed unlicensed insurance agents to market and sell the policies. The primary company marketing the policies was not licensed to do business in Washington until June 2009. At that point, it had been selling the policies for four years.

The company was unable to respond to Kreidler’s requests for supporting documentation on rates at specific colleges, saying that the documents were prepared by employees who no longer worked there.

Fines collected by the insurance commissioner’s office do not go to the agency. The money is deposited in the state’s general fund to pay for other state services.

The policies included international students at the University of Washington, Washington State University, Bellevue Community College, Seattle Pacific University, Shoreline Community College, Tacoma Community College and South Puget Sound Community College, among others.
Advancing a claim for Contribution and Indemnity as Equitable Set-off

Advancing a claim for Contribution and Indemnity as Equitable Set-off

Goma v. Raghunanan [2011] O.J. No. 4916

Motion to amend Statement of Defence

This was a very clever motion by defendant’s counsel to add a claim for contribution and indemnity where the limitation period to start a counterclaim had passed.

This case involves a motor vehicle accident where there were two injured plaintiffs, the driver and a passenger. The defendants pleaded contributory negligence against the driver but neglected to counterclaim for contribution and indemnity against the passenger for her injuries.

When they realized the oversight, the plaintiff’s refused to consent to adding a counterclaim; the limitation period to counterclaim had passed.

The defendants decided to bring a motion to amend the statement of defence to add a claim for equitable set-off against the plaintiff. They assert that the s.18(1) Limitations Act limitation period does not apply.

Master Dash was bound by the decisive statements of a superior court, which held that claims for equitable set-off are not subject to limitation periods. See Canada Trustco Mortgage Co. v. Pierce Estate, [2005] O.J. No. 1886, 197 O.A.C. (C.A.) and Spiral Aviation Training Co. v. Attorney General of Canada, 2010 ONSC 2581.

However, after examining the test for equitable set-off and the case law presented by counsel, Master Dash held that the defendant’s could not meet the test. Specifically, the claim for contribution does not go to the root of the plaintiff’s claim for damages.

He concluded that a defendant cannot claim contribution and indemnity against one plaintiff for damages awarded to another plaintiff by pleading equitable set-off in the statement of defence; this must be done by counterclaim, and the defendants were out of time to advance a counterclaim.

Rule 26.01 allows for amendments that are “legally tenable”. Amendments must be granted “unless the claim is clearly impossible of success”. Master Dash determined that because the claim for equitable set-off cannot succeed, the motion must be denied.

- Alison McBurney


Tips on winter storm-related insurance claims

Tips on winter storm-related insurance claims


As this week's snowstorm turns into an ice storm, we figured that it would be a good time for a Q&A re: winter storms and insurance claims. For more, please see our winter weather page.

My neighbor’s tree fell on my house. Who pays?
Usually your insurance, even if it was the neighbor's tree. And you’ll be responsible for the deductible.
Sometimes your insurer can prove the neighbor was at fault (diseased tree, etc.) and make their insurer pay. But that can be hard to prove.
If possible, take steps to prevent further damage. For example, you might try to cover holes in walls or the roof, but only if it's safe to do so. Beware of snow, ice, and falling limbs.
And save your receipts: Your insurer may reimburse you for those costs.

A tree fell on my car or carport. Am I covered?
Car: Yes, if you have comprehensive coverage.
Carport: Yes, usually your homeowners coverage will usually cover the damage. But unattached buildings – like a garden shed – are often not covered.

Lots of limbs fell in my yard. Will an insurance company pay for cleanup?
Usually not. Homeowners insurance is mainly for the home.

Lost power and freezer thawed. Am I covered?
Most homeowners policies cover this, but it may not be worth filing a claim, esp. if you have a high deductible.

I’m concerned about flooding. Will I be covered?
Probably not. A standard homeowners insurance policy doesn't cover floods. You have to buy a separate policy, usually through the National Flood Insurance Program (NFIP).

My television set was ruined when the power came back on. Am I covered?
Most homeowner policies do cover appliances ruined by power surges. But consider your deductible -- in many cases, it may be more than the cost of simply replacing the damaged equipment.

Tips on auto insurance claims

Tips on auto insurance claims

After this week's record-setting snowstorm, it seemed like a good time to post some tips on auto- and homeowners claims. We'll start with auto, and then put up a second post specifically about homeowners claims. For more, please see our auto claims web page.


Claims process
Get the name, contact info and insurance info of the other driver.
Get the names and contact info of anyone in the other car. We've seen fraud cases in which friends of a car's sole occupant claim that they were in the car, too, so they can file claims.
Call your agent or the company. They’ll walk you through the process.
That said, if it’s just your car and the damage is minor, you may want to just pay for repair yourself., especially if you have a high deductible.

Repairs
In Washington state, you can generally choose which shop to take your car to, but the shop and the insurer must agree on price. If they can't agree, you may be stuck paying the difference.

Who pays
If you have collision coverage, the fastest thing may be to file a claim to your own insurer.
•      There’s often disagreement over who’s at fault. Unfortunately, these disputes fall outside our administrative authority. Work with the person processing the claim. In major disagreements, you may want to seek legal advice.
But if you’re confident that another person was at fault, you may want to wait for their insurance to pay. That way you won’t have a claim on your record
If the other person’s at fault, your insurer can also recover its costs from their insurer. This is called subrogation. If you file the claim against your insurer and they get the other driver's insurer to pay, you may get your deductible back.

Rental car?
If other person was at fault, their insurer will negotiate with you to pay for a rental car.
Or your policy might pay it for you.
Pay attention to the limitations, though: Rental car coverage is often limited to a short period of time. We often get complaints from people about this.

Diminished value
This is the difference in value between a repaired car and one that was never damaged. See if your policy covers this.
If you're making claim to other driver’s insurance, you need to prove that the value is diminished. This can be tough to do.
Our offices will remain closed today

Our offices will remain closed today

Our Thurston County and Seattle locations will remain closed today due to the the road conditions as the yesterday's snowstorm became today's ice storm. Sorry for the inconvenience; we just want to keep our staff safe today. 


All online services are still available at our website at http://www.insurance.wa.gov.


We expect to be fully operational during regular business hours starting tomorrow morning. We'll let you know here. Be safe!
OIC closes offices in Thurston County due to snow and ice

OIC closes offices in Thurston County due to snow and ice

We've had to close our Thurston County offices this morning due to lots of snow and ice on the roads (and more coming down). This includes our office in the Insurance Building on the state capitol campus and our largest office, which is in Tumwater. We're sorry for the inconvenience, but conditions are pretty bad out there right now.

The good news: You can still:
Limitation Period Expired – Discoverability Principle Not Applicable

Limitation Period Expired – Discoverability Principle Not Applicable

In Muirhead v. Coulas [2011] OJ No. 4908 (S.C.J.), the defendants moved for summary judgment dismissing the action as statute barred. The action arose from a slip and fall in July 2005 and a claim was not commenced until July 2010.

The plaintiffs took the position that the limitation period did not begin to run until June or November 2009 when two medical opinions were received following another slip and fall in February 2006 when the plaintiff injured her same knee. They claimed that it was not until they received these reports that they discovered the 2005 injuries were ongoing and permanent.

The defendants took the position that there was no issue with respect to discoverability as the plaintiff knew she hurt her knee and she underwent surgery on her knee three days later and was unable to work for several months following.

Justice Mackinnon held that the defendants met their initial burden as they had led evidence that the plaintiff knew of her injury, it was serious enough to require surgery, she could not walk for two months after, she still had pain and restriction in movement six months later and had not been able to return to work by then. Justice Mackinnon also relied on section 5(2) of the Limitations Act , 2002 which sets out a presumption that a plaintiff has the requisite knowledge as of the day the act took place, “unless the contrary is proved”.

Addressing the plaintiffs’ submission that a proceeding would not have been an appropriate means to remedy the injury sustained as the plaintiff believed her injuries were resolving and would not be permanent, Justice Mackinnon stated that section 5(1)(a)(iv) “does not amount to a bar to an action for recovery in tort” and held that the cause of action was complete, even if the complete extent of damages was not fully known.

Justice Mackinnon agreed with the plaintiffs’ submission that an individual should not be required to commence an action where there is no reasonable prospect of recovery, but found there to be no such facts in the case at hand.
In response to the plaintiffs’ submission that the true nature of the loss from the 2005 slip and fall was not knowable until after the second incident, Justice Mackinnon held that the plaintiff clearly had a claim arising from the first incident and “the facts learned subsequently that the injury was permanent and contributed to her current severe condition may have been a basis to increase the quantum of damages sought but is not a new or different claim”.

Lastly, the plaintiffs attempted to rely on cases that extended the running of the limitation period because a medical opinion was required in order to know whether a cause of action existed. Justice Mackinnon pointed out that in all of these cases, the court had referred to the requirement that the plaintiff acted with due diligence in acquiring facts in order to be fully apprised of all material facts upon which a negligence claim can be based, including being diligent in requesting and receiving a medical opinion, if required. The plaintiffs in this case did not provide evidence as to why they did not seek out the medical reports sooner that were ultimately obtained in 2009. Also, there was evidence to suggest that there was an operative report available in March of 2007 that the plaintiffs did not request until later.

It was held that there was no genuine issue requiring a trial.

- Kristen Dearlove, Student-at-Law
Having some phone system problems this morning

Having some phone system problems this morning

Just fyi: We're having some trouble with our telephone network this morning. Callers may get just a steady busy signal or will hear the phone ringing but the call won't go to voicemail.

This affects many of our lines, including our consumer hotline (1-800-562-6900) and our main number (360-725-7000).

The folks who maintain the network are aware of the problem and are working to fix it now.

Update (11:30 a.m.) We believe everything's fixed and working now. Thanks for your patience.
Sensible Home Warranty ordered to stop selling insurance in WA

Sensible Home Warranty ordered to stop selling insurance in WA

A New York-based home warranty company has been ordered to stop selling insurance in Washington state.

Sensible Home Warranty LLC, formerly known as CHW, LLC, sold Washington consumers approximately 142 home warranty service contracts since 2009. The contracts were for parts and labor necessary to fix major systems and appliances that failed in a consumer's home. The company solicits customers through telemarketing and through a website: http://www.sensiblehomewarranty.com/.

In Washington, service contracts like the ones sold by Sensible Home Warranty are considered insurance. But neither the company nor its principals, Harrison Gindi and Elliot Dabah, are authorized to transact insurance in Washington state. Nor are they registered as service contract providers.

Nothing in the order, which took effect immediately Jan. 6, 2012,  prevents the company from fulfilling the terms of its contracts or providing a refund to Washington consumers who ask for one.

The company has the right to demand a hearing.

Note: The company's registered office address is in Sparks, Nev., but its principal place of business and sales office is 1724 E. 12th St., Brooklyn, NY.
Kreidler on nonprofit health insurer surpluses: "How much is enough?"

Kreidler on nonprofit health insurer surpluses: "How much is enough?"

Commissioner Kreidler recently had an op-ed in the Seattle Times, talking about the large surpluses that have been built up by non-profit health insurers in recent years. From it:
In Washington, the three major health insurers — Premera Blue Cross, Regence BlueShield and Group Health Cooperative — are sitting on a total of more than $2.4 billion above and beyond what they expect to ever pay out in claims. All of them are not-for-profits. And they continue to propose substantial rate increases.
He is proposing legislation that would give the insurance commissioner's office explicit authority to consider those surpluses when reviewing rate requests.

We're working on a web page that explains this issue in more detail, and includes charts of the major insurers' surpluses over the past decade. Stay tuned...
Summary Judgment - Costs

Summary Judgment - Costs

We continue our discussion of the Court of Appeal's decision in Combined Air Mechanical Services Inc. v. Flesch, 2011 ONCA 764.

The former r. 20 provided that a party that was unsuccessful on a summary judgment motion was liable to pay substantial indemnity costs. The 2010 amendments eliminated the presumption of substantial indemnity costs.

The Court of Appeal commented on the costs rule as follows:

[67] As a result of the amendments to rule 20.06, the onus is now on the party seeking substantial indemnity costs to convince the court that the other side acted unreasonably or in bad faith for the purpose of delay in bringing or responding to a motion for summary judgment. This amendment removes a disincentive to litigants from using Rule 20 by eliminating the presumption that they will face substantial indemnity costs for bringing an unsuccessful motion for summary judgment. However, as the jurisprudence becomes more settled on when it is appropriate to move for summary judgment, the reasonableness of the decision to move for summary judgment or to resist such a motion will be more closely scrutinized by the court in imposing cost orders under rule 20.06.

It seems that this paragraph suggests that courts will revert back to substantial indemnity costs as a body of case law develops. This will be an important consideration when deciding whether to bring a summary judgment motion or not.

- Tara Pollitt
Summary Judgment - Simplified Rules

Summary Judgment - Simplified Rules

This is our third post on the Court of Appeal's decision in Combined Air Mechanical Services Inc. v. Flesch, 2011 ONCA 764.

The Court seems to suggest that summary judgment may not be appropriate generally in Simplified Rules actions. The Court stated that although in appropriate cases, a motion for summary judgment in a r. 76 action may be a useful tool to promote the efficient disposition of cases, "it will often be the case that bringing a motion for summary judgment will conflict with the efficiency that can be achieved by simply following the abridged procedures in Rule 76." The Court held that summary judgment in r. 76 cases should be discouraged where there is competing evidence from multiple witnesses, the evaluation of which would benefit from cross-examination, or where oral evidence is clearly needed to decide certain issues. In many cases, the better course is to proceed to a speedy trial.

The Court did qualify its comments by indicating that it was not stating that summary judgment could never be used in Simplified Rules actions; in a document driven case, or in a case where there is limited contested evidence, both the full appreciation test and the efficiency rationale may be served by granting summary judgment in a simplified procedure action.

Given the Court's comments, it would seem that few summary judgment motions will be brought in Simplified Procedure actions.

- Tara Pollitt