$15M Settlement Announced in Missouri Insurance Case

Three insurance companies have agreed to pay $15 million to settle a long-standing lawsuit over the sale of long-term care policies in Missouri.

The settlement covers 1,669 people who bought policies from Jacksonville, Fla.-based American Heritage Life Insurance Co. and Largo, Fla.-based Wakely and Associates. Mutual of Omaha Insurance co-insured the policies.

Two Macon residents sued the companies in 2002, claiming they sold the policies with very low initial premiums but didn’t tell customers they planned to add steep increases later.

Following a series of trips to the Missouri Court of Appeals and Missouri Supreme Court, Jackson County Circuit Judge Michael Manners certified the case as a class action in 2007.

Long-term care insurance covers the cost of nursing homes, assisted-living facilities, in-home care and chronic illnesses, such as Alzheimer’s disease, diabetes, Parkinson’s disease and multiple sclerosis. Medicaid provides some long-term benefits only after people have exhausted most of their assets.

American Heritage and Mutual of Omaha will pay a total of $11 million in insurance and other benefits for class members, while Wakely, which helped design the policies, will pay $4 million in cash. The three have denied wrongdoing.

“This settlement provides unprecedented long-term benefits to those who would otherwise receive nothing, or be forced to pay exorbitant rate increases just to keep their policies in force,” said Gregory Leyh, the plaintiffs’ lawyer. “Many current policyholders will receive long-term care benefits worth $35,000 or $40,000 without ever paying another nickel in premium.”

Leyh said the settlement allows policyholders to either continue with their policies or receive long-term benefits for the rest of their lives equal to the total amount of premiums they have paid so far.

The Kansas City Star, www.kcstar.com