Friday, September 8, 2017

No. 233: Long-Term Care Insurance—Senior Health Insurance Company of Pennsylvania Settles a Claim

In No. 229 (posted August 8, 2017), I wrote about the case of Mary "Molly" White, an Ohio resident. In 1996 she purchased long-term care (LTC) insurance from a company that became Senior Health Insurance Company of Pennsylvania (SHIP). In 2013 Ruth White, a Maine resident who is Molly's daughter and holds power of attorney for her, filed a claim with SHIP for benefits under the policy; SHIP denied the claim. Ruth filed additional claims, most recently in 2016; SHIP denied the claims.

In June 2017 Ruth filed a breach of contract lawsuit against SHIP in an Ohio state court. On July 20 SHIP removed the case to federal court and filed its answer to the complaint. On July 21 the case was assigned to U.S. District Court Judge John R. Adams. He immediately scheduled a case management conference for July 31, ordered Ruth to make a settlement offer by July 27, and ordered SHIP to make a settlement offer by July 28. Ruth offered to settle for $118,300 including expenses. SHIP offered to settle for $17,500. (See White v. SHIP, U.S. District Court, Northern District of Ohio, Case No. 5:17-cv-1531.)

The Conference
On July 31 Judge Abrams held the conference. Because of the speed at which the case was moving, I felt that the judge must have taken a keen interest in the case. For that reason I wanted to know what happened at the conference. I purchased from the court reporter the 41-page transcript of the one-hour conference. Here I mention only three of many interesting aspects of the conference.

First, Judge Adams tried to be neutral. However, he was clearly concerned about the manner in which SHIP had handled Ruth's claims.

Second, at the beginning of the transcript, there is no list identifying all those in attendance. Instead, there is a list of only Ruth's attorney, SHIP's attorney, and the court reporter. The body of the transcript reveals that Ruth, who lives in Maine, attended by telephone.

Third, Kristine Tejano Rickard, SHIP's general counsel, attended. She said only one word, near the end of the conference:
THE COURT: I'll expect, counsel, you and—ma'am, do you have full settlement authority in this case?
THE COURT: Thank you for being here. We appreciate you doing that and being present during the course of the discussion. It's very helpful to the Court.
The Settlement
On August 8 Judge Adams scheduled another conference, for August 21. On August 10 the parties filed a joint motion to adjourn that conference, indicating they had reached a settlement and expected to finalize it within ten days. On August 11 the judge granted the motion, canceled the August 21 conference, and ordered the parties to file a joint status report by August 21 if the settlement has not been finalized. On August 14 Ruth executed a full and final release of all claims in exchange for a check from SHIP in the amount of $77,600. On August 21 the parties filed a joint status report indicating the case was settled. On September 1 the judge dismissed the case with prejudice (permanently). On September 6 he issued an order to that effect, and indicated that each party is to bear its own costs.

General Observations
I have written about this case because I think SHIP's handling of Ruth's claims was outrageous. In No. 229 I expressed the hope that the parties would settle quickly. I also hoped that the amount of the settlement would be close to Ruth's offer. However, I recognize the difficulties in settlement negotiations.

The role of Judge Adams in moving the case so quickly should be noted. For the settlement check to be in Ruth's hands only a few weeks after the judge was assigned the case is remarkable.

Unfortunately the case does not help other claimants who encounter SHIP's unconscionable LTC insurance claims practices. However, helping other claimants would have required a class action lawsuit. That could have involved such major steps as a motion to dismiss, summary judgment motions, a motion for class certification, a discovery process, settlement negotiations, mediation, a trial, and appeals. Thus a class action would have taken years rather than weeks.

Available Material
I am offering a 43-page complimentary PDF containing the transcript of the case management conference (41 pages) and the release Ruth executed (2 pages). Email and ask for the September 2017 package about the White v. SHIP case.