Letter to Insurance Providers Re: Long-Term Care

Letter

GRASSLEY SEEKS INFORMATION FROM LONG-TERM CARE INSURANCE PROVIDERS

Sen. Grassley is asking the nation's top providers of long-term care insurance to provide information about how claims are processed in order to learn more about how effectively the sector is meeting the needs of Americans who have purchased such policies, which has been encouraged through federal tax incentives.

"Preparing for long-term care needs can make a big difference in both the quality of life for individuals and the solvency of Medicaid," Grassley said. "Long-term care insurance products are fairly new to the marketplace, so it's important that policy makers continue to assess how they are working to meet needs and how their success is affecting public programs."

In April, Grassley asked the independent Government Accountability Office to conduct a review of the long-term care insurance industry following a New York Times story about rejected claims by policy holders. In August, the Des Moines Register ran a series of stories about whether long-term care insurance policies are providing the coverage purchasers expect. Grassley said he is asking providers for information today based in part on the response he received recently from the National Association of Insurance Commissioners to questions about trends in the industry.

Grassley is a long-time advocate for enhancing retirement security with incentives for long-term care coverage and has exercised oversight of the long-term care insurance industry on behalf of policy holders. As Chairman of the Senate Special Committee on Aging during the late 1990s, he first sponsored legislation to expand long-term care insurance opportunities for individuals and held hearings on a range of retirement security issues. He undertook several initiatives to improve the quality of long-term care services.

As Chairman of the Finance Committee for four and a-half years between 2000 and 2007, Sen. Grassley continued his efforts to promote awareness about long-term care insurance by working to create a long-term care information clearinghouse at the Department of Health and Human Services. He also expanded the partnership program, which is intended to encourage people who might otherwise rely on Medicaid to purchase long-term care insurance, in the Deficit Reduction Act of 2005.

The text of Grassley's letter to 11 insurance providers follows a list of those who received the letter.

September 27, 2007

Chairman, President and Chief Executive Officer

Genworth Financial, Inc.

6620 W. Broad St.

Richmond, VA 23230

Dominic D'Alessandro

President and Chief Executive Officer

Manulife Financial Corporation

200 Bloor Street East,

Toronto, ON, M4W 1E5

C. James Prieur

Chief Executive Officer

Conseco, Inc. / Bankers Life and Casualty

11825 N. Pennsylvania Street

Carmel, IN 46032

Stephen W. Lilienthal

Chairman and Chief Executive Officer

Continental Casualty Company

333 S. Wabash Ave

Chicago, IL 60604

Robert C. Henrikson

Chairman of the Board, President and Chief Executive Officer

MetLife, Inc.

One MetLife Plaza

27-01 Queens Plaza North

Long Island City, NY 11101

William W Hunt, Jr.

President and Chief Executive Officer

Penn Treaty American Corporation

3440 Lehigh Street

Allentown, PA 18103

Thomas R. Watjen

President and Chief Executive Officer

Unum Group

1 Fountain Square

Chattanooga, TN 37402

Timothy Francis Kneeland

President

Life Investors Insurance

4333 Edgewood Rd NE

Cedar Rapids, IA 52499

Dan Neary

Chief Executive Officer

Mutual of Omaha Insurance Company

Mutual of Omaha Plaza

Omaha, Nebraska 68175

Arthur Ryan

President and Chief Executive Officer

Prudential Financial, Inc.

751 Broad Street

Newark, NJ 07102

Sy Sternberg

Chairman of the Board and Chief Executive Officer

New York Life Insurance Company

51 Madison Avenue, Suite 3200

New York, NY 10010

Dear :

The United States Senate Committee on Finance ("Committee") has exclusive jurisdiction over the Medicare and Medicaid programs and, accordingly, the duty to ensure that these programs are fiscally sound. As a senior member of the United States Senate and Ranking Member of the Committee, I have a special responsibility to ensure that programs such as Medicare and Medicaid are not unnecessarily burdened. It is for this reason that I have been interested in learning more about long term care insurance ("LTCI").

As you know, LTCI is an invaluable tool to millions of Americans planning for their long term needs. Furthermore, the Federal Government has a significant interest in the LTCI industry's partnership with the Medicaid program. As part of the Deficit Reduction Act of 2005, Congress allowed for the expansion of the long term care insurance partnership program to all 50 states. The purpose of the partnership program is to encourage people who might otherwise rely on the Medicaid program to purchase LTCI to help meet their long term care needs. However, if more claims for long term care related expenses are denied, there could be a substantial and perhaps unnecessary financial burden placed on Medicaid.

As you are likely aware, earlier this year the New York Times NYT published an article critical of the long term care insurance industry. The article focused on reports that a growing number of LTCI policyholders are experiencing greater difficulty in recovering claims for long term care expenses. The article also suggested that some LTCI providers have made it more difficult for policyholders to be paid for legitimate claims.

In response to my growing concern over this matter, I asked the Government Accountability Office ("GAO") to perform an extensive review of the long term care insurance industry. I also contacted the National Association of Insurance Commissioners ("NAIC") to gather its insight on these matters.

While the GAO review is ongoing, I have received the NAIC's response and it contains some troubling data. In my letter to the NAIC, I asked a number of questions, including whether or not there were any notable trends in the industry. Specifically, I was concerned with reports of an increasing number of claim denials. In its response, the NAIC reported that there has been a 92% increase in the number of long term care complaints nationally from 2001 to 2006. The NAIC also conveyed that it had identified a steady increase in the number of complaints regarding claim denials, including a 74% increase in the number of claim denial related complaints between 2003 and 2006. While this may be explained by the increasing number of people purchasing LTCI, the relationship remains unclear. Furthermore, the NAIC reported that over 70% of claim denials are overturned in favor of the policyholder upon appeal. The NAIC noted that this is "a pattern of error not typically found in other lines of health-related insurance."

As part of the Committee's ongoing inquiry into these important matters, I am interested in learning how LTCI providers manage their policies and serve their beneficiaries. I am also interested in learning how providers decide which claims to approve and which to deny. Accordingly, I would appreciate your answers to the following questions regarding your company's policies and practices:

Please describe, in detail, the process Unum Group utilizes when receiving a claim for payment of a LTCI policy. Specifically, I am interested in learning:

How a claim is handled from the moment it is first received to when it is paid to the policyholder;

What requirements must be fulfilled in order for a claim to be paid, including any documents needed for submission;

The process by which it is determined that additional information is needed to complete a claim and the process for communicating this additional information to the policyholder (e.g., via telephone, postal mail, electronic transmission, etc);

The process by which a claim is denied and the process for communicating the denial to the policyholder (i.e., telephone, postal mail, electronic transmission, etc);

The process, if any, for a policyholder to appeal a claim denial;

The process by which policyholder inquiries are handled; and

The process by which persons responsible for claims processing are reviewed for performance. Please include a list of any and all performance incentives for which the aforementioned persons are eligible (e.g., bonuses, deferred compensation, etc). Also, please identify whether these employees have denial or approval targets and, if so, what those targets are.

Please provide a copy of the current Unum Group employee manual for persons responsible for claims processing and any documents related to mandatory training for these employees.

Please provide to the Committee the following information concerning LTCI claims at Unum Group:

The number of LTCI policies sold per year for calendar years 2001 - 2006;

The number of LTCI claims submitted per year for calendar years 2001 - 2006;

The number of LTCI claims that were denied in whole or in part by Unum Group per year during calendar years 2001 - 2006, including a breakdown of the most common reasons for denial;

Of those denied, the number that were appealed per year from 2001 - 2006, and the number of appeals that were resolved in favor of the policyholder;

The average amount of time between a claim being filed and its payment or denial;

For claims that are appealed, the average amount of time between the filing of an appeal and its resolution.

Please provide the information and documents requested by October 19, 2007. In complying with this request, respond by repeating the enumerated request, followed by the accompanying response; attach and identify all relevant documents or data by title and the number(s) of the enumerated request(s) to which they are responsive. Secondly, in complying with this request, please refer to the attached definitions concerning the questions set forth in this letter. Finally, in cooperating with the Committee's review, no documents, records, data, or other information related to these matters, either directly or indirectly, shall be destroyed, modified, removed, or otherwise made inaccessible to the Committee.

Sincerely,

Chuck Grassley of Iowa

United States Senator

Ranking Member of the Committee on Finance

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