Morrison explains details of Conseco settlement proposal
Clarifies options available to policyholders
Nearly 6,200 Montanans, primarily senior citizens, recently received a settlement proposal in a class action lawsuit involving Conseco, a Pennsylvania-based company. This settlement proposal has left Montana consumers with more questions than answers.
Conseco Senior Health Insurance, American Travellers Life Insurance Co. and ATL Life Insurance Co. are the subject of a lawsuit alleging that they did not properly disclose certain problems with their long-term care and home-health care policies that likely would cause premium rates to increase. Conseco has issued a settlement proposal that policyholders must sign and return by Jan. 22, 2002.
"We have received dozens of calls from concerned consumers who are confused by the wording of the document," said John Morrison, Montana State Auditor and Insurance Commissioner. "These options could have a significant impact on the insurance policies of these elderly individuals and yet most would need an attorney to help decipher them. Our office can't advise policyholders on which option to choose, but we can offer an explanation of what their choices are."
Montanans can contact the State Auditor's Office at 1-800-332-6148 or visit its Web site at www.discoveringmontana.com/sao for a summary of the settlement options. (NOTE: The summary is attached to this release.)
Of the 6,159 Montana class members, 1,581 have active long-term care or home health care policies.
It is important that people who receive notices from Conseco read them carefully, Morrison said. First individuals must determine whether they are members of the class involved in the lawsuit. Then they must decide which option to choose or they can opt out of the settlement altogether.
Consumers can discuss their options with their insurance agent or attorney.
"Policyholders must submit a written request to Conseco to opt out of the proposed settlement by Jan. 22," Morrison said. "Taking no action is not the same as opting out."
A hearing for final approval of the settlement is scheduled for Feb. 13, 2002, in Philadelphia Court of Common Pleas.
Conseco LTC/HHC Settlement
SUMMARY OF CONSECO CLASS ACTION REGARDING
LONG TERM HEALTH CARE AND HOME HEALTH POLICIES
The purpose of this summary is to clarify the options available to policyholders under the proposed class action suit against Conseco. It is important to remember, when reviewing the options in the proposed settlement agreement, that a policyholder need not accept any of the options and may choose to "opt out" of the proposed settlement. If the opt out decision is made, the policyholder's current policy will remain in effect. This office, however, cannot advise policyholders on which option to choose.
Options for those with ACTIVE policies: The proposed settlement offers three choices to active policyholders who want to participate in the settlement:
1. Replace the current policy with a new policy. Rates are based upon the policyholder's current age, with a 5 percent discount over the life of the policy. Policyholders must evaluate their own policies to determine if this is a savings.
2. Exchange the current policy for an option allowing Conseco to retain an amount of money equal to all of the premiums paid, less any claims paid under the policy. Policyholders can file claims under the current policy.
3. Keep the current policy, but if rates increase above those set by the National Association of Insurance Commissioners, the policyholder will receive another notice allowing him or her to choose option 2 listed above. Selection of option 3 is considered an acknowledgment that there may be future rate increases.
If a policyholder does not notify Conseco that he or she is opting out of the proposed settlement, then the policyholder automatically will be given option 3 - keeping the current policy and acknowledging rate increases. By opting out, the policyholder would be preserving his or her right to later challenge any rate increases that were the subject of the class action. To opt out, the policyholder must send a written request for exclusion from the settlement postmarked January 22, 2002, to:
P.O. Box 455
Excelsior, MN 55331-0455
Options for those with lapsed or cancelled policies: People who previously had policies covered by the proposed settlement but let the policy lapse or had it cancelled because of premium increases are eligible to receive option 2. People who had their policies lapse or cancelled for reasons other than high premiums can only select those policies described in the settlement that are not related to long-term care or home health care.