Hull et al v. Ability Insurance Company
Filing
1
COMPLAINT CASE NUMBER IS CV-10-116-BLG-RFC against All Defendants filed by Diana Hull Senne, Arlene Hull. (Attachments: # 1 Civil Cover Sheet, # 2 Civil Cover Sheet Attachment, # 3 Exhibit A, # 4 Exhibit B) (ACL, )
Daniel B. Bidegaray
Anna M. Bidegaray
BIDEGARAY LAW FIRM, LLP
2042 Stadium Drive, Suite 1
Bozeman, MT 59715
Phone: (406) 522-7744
Fax: (406) 522-8244
Daniel@BidegarayLawFirm.com
Attorneys for Plaintiffs
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA, BILLINGS DIVISION
ARLENE HULL, and DIANA HULL)
)
SENNE,
)
Plaintiffs, )
)
)
vs.
)
)
ABILITY INSURANCE COMPANY, )
)
f/k/a MEDICO LIFE INSURANCE)
COMPANY, ABILITY RESOURCES,)
)
INC., ABILITY REINSURANCE )
HOLDINGS LIMITED, a Bermuda)
)
Limited Company, ABILITY
)
REINSURANCE LIMITED, a
)
)
Bermuda Limited Company,
)
and MEDICO INSURANCE
)
)
COMPANY,
)
)
Defendants. )
Cause No.
COMPLAINT
Plaintiffs, through counsel, state as follows:
1.
Plaintiffs are residents of Montana.
2.
Defendants are corporate entities with their
principal place of business outside the state of
Montana.
3.
The amount in controversy exceeds $75,000.
4.
There is diversity of citizenship and
jurisdiction is based on 28 U.S.C. §1332.
ARLENE HULL
5.
Arlene Hull (Arlene) is 88 years old and
resides at St. John’s Lutheran Home (St. John’s), a
supervised, assisted care facility, in Billings,
Montana.
6.
Arlene married Bill Hull (Bill) on December 7,
1940, one year before the bombing of Pearl Harbor.
7.
Arlene and Bill farmed and ranched outside of
Joliet and raised their family in that area.
8.
As Arlene and Bill began to grow old together,
they decided to purchase long term care insurance.
It
is believed they purchased a policy of long term care
insurance in the 1980s from Western Farmers-Stockman.
This policy was ultimately bought by the Defendants in
this case.
A more detailed explanation of Defendants
purchase of this policy is set forth below.
Complaint
2
9.
The long term care insurance at issue promised
to pay daily benefits in the event that the
policyholder became eligible and required long term
care services.
10. In an undated letter from Farmers Stockman, it
stated:
Dear Policyholder:
Your new insurance coverage is enclosed. This
insurance should give you much peace of mind when
you find it necessary to file for benefits. . . .
Attached as Exhibit “A”.
11. Arlene and Bill sold their farm and ranch and
were using money from this sale and other savings to
pay for expenses as they aged.
12. On May 17, 1998, Bill passed away before
needing long term care assistance.
13. Arlene continued to pay the premium for her
long term care policy every year to ensure she would
have this coverage, if she needed it in the future.
Arlene wanted to make sure that her children would not
have to pay for her care if she used up her savings.
Complaint
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She was also hopeful that she would be able to have
money left over for her children.
14. Arlene was diagnosed with dementia by Dr.
Robert Ulrich in 2007.
15. For about one year after this diagnosis, Arlene
continued to live in her home with assistance from her
children and friends.
16. Her dementia continued to progress on a steady
basis.
17. Arlene had experienced multiple lacunar
strokes, suffered from hypertension, depression,
hyperthyroidism, hyperlipidemia and had a history of
colon cancer.
18. It was necessary for Arlene to receive
assistance with meal preparation and dietary needs,
administration of her multiple medications, bathing and
hygiene, laundry, paying bills and a variety of other
personal needs.
19. During 2007, Arlene was a danger to herself
without the daily assistance of her family and friends.
Complaint
4
She would leave empty pots on the burning stove, forget
to eat food that had been set out for her, boil her tea
pot dry, leave her coffee pot on so long that the pot
would burn, and she would regularly forget to take her
medications.
She also fell multiple times.
20. Arlene used to knit afghans every winter, but
stopped because she no longer remembered how to knit.
She also routinely attended church on Sundays, but her
memory was so affected that she could no longer
remember to go.
21. Arlene loves music.
She would listen to the
radio or watch television, but again, because of her
failing memory, she could not remember how to properly
work the electronic devices.
Her family members would
repeatedly explain how to operate the electrical
devices, but Arlene simply could not remember the
instructions.
22. Arlene also forgot how to operate her
microwave.
Complaint
5
23. Because of Arlene’s failing ability to care for
herself, her family ultimately had to make the
difficult decision of seeking the aid of an assisted
living facility in Billings.
24. Arlene applied and qualified for long term care
benefits under her long term care policy and was
admitted into St. John’s on January 17, 2008.
25. After living at St. John’s for almost 21
months, Ability Insurance Company (Ability) decided to
implement independent nurse assessments to evaluate
Arlene’s continued benefit eligibility, which were
conducted on November 11, 2009, and December 10, 2009.
26. By this time, Arlene could not walk
independently, her dementia was progressing and she was
in need of care more than ever.
27. Despite Arlene’s condition, Ability determined
that she was independent and did not require continual
supervision.
Ability also concluded that Arlene had
rehabilitation potential.
Complaint
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28. On January 31, 2010, Ability informed Arlene
and her daughter Diana Hull Senne (Diana) that it would
no longer pay for Arlene’s assisted living benefits
because she no longer qualified under her long term
care policy.
29. In other words, Arlene now had to pay for her
assisted living expenses at St. John’s without the help
of Ability.
30. This decision did not make sense to Arlene’s
daughter, Diana, who spends substantial time with her
mother and continually helps her.
Diana is Arlene’s
power of attorney.
31. Because Diana felt that Ability’s decision was
wrong, she began to comply with Ability’s appeal
process.
32. Diana also contacted the Montana Insurance
Commissioner’s Office and was told that Arlene should
have a mental assessment to verify her impaired mental
status.
Complaint
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33. Diana obtained a mental evaluation of Arlene
which supported Diana’s contention that her mother
needed long term assisted care.
34. Diana sent Ability this report and other
corroborating information to Ability in compliance with
its appeal process so that Ability could understand the
mistake that it had made.
35. Despite Diana’s efforts, Ability continued to
refuse to pay benefits.
Ability denied each request
for reconsideration and continues to deny coverage for
Arlene’s residence at St. John’s.
36. No reasonable basis exists for denial of
Arlene’s claim.
37. Defendants know that no reasonable basis exists
for denial of Arlene’s claim.
ABILITY INSURACE COMPANY
38.
All Defendants, with the exception of Medico
Life Insurance Company (Medico), are an association of
entities acting together for the purpose of providing
Complaint
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long term care insurance under the name Ability and
also act as the alter egos and/or agents of each other.
39. On August 16, 1996, Mutual Protective/Medico
Life Insurance Companies wrote to Arlene and Bill
stating:
TO: Western Farmer-Stockman Clients
Mutual Protective Insurance Company has made the following agreement with
Western Farmer-Stockman Insurance Service
If you purchase a Mutual Protective Insurance Company Long Term Care or Home
Health Care policy from Western Farmer-Stockman Insurance Service the insurance
company agrees to the following:
If at any time in the future you wish to convert your coverage, through Western
Farmer-Stockman, to another Mutual Protective like plan or to increase the
benefits on your existing Mutual Protective policy, we will use your age at the
time of issue of the original policy to calculate the premium.
Any increase in coverage would be subject to underwriting.
40. In 1996 or 1997, Mutual Protective/Medico Life
Insurance Company acquired a block of long term care
policies that included Arlene and Bill’s policy.
41. Ability purchased the block of Medico policies
in 2007, and changed its name to Ability Insurance
Company (Ability).
At the time Ability purchased the
Medico block of business, Medico had been losing money
on these policies for several years and the company was
in financial trouble.
Complaint
9
42. Before Ability purchased the Medico block of
business, State regulators had ordered Medico to stop
writing new business.
Ability purchased Medico with
the objective of making those policies profitable by
paying less in claims than Medico had been paying.
43. According to Plaintiff’s Pre-Hearing Brief in
Beyer v. Medico, et al, case number 08-5058, United
States District Court of South Dakota, Western
Division:
Ability Insurance started out as the
brainchild of two individuals, Donald Charsky
and Eileen Sweeney. . . .
Charsky and Sweeney devised a plan to
generate a 1000% return on investment in five
years. But first they needed start-up capital.
For that they located a small group of a dozen
or so individuals, who call themselves Oak Hill
Investors. These individuals have accumulated
hundreds of millions of dollars in off-shore
accounts located in Bermuda and the Cayman
Islands. Charsky and Sweeney proposed a plan
to these investors in which the group would
form a new company. That company later became
“Ability Insurance Company.” Ability would
purchase blocks of “closed” long term care
policies, no longer profitable, from the
insurance companies that had sold the policies
to elderly policyholders. . . .
Complaint
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Prior to acquiring a block of business,
Ability would conduct studies to generate
estimates of how much it can reduce claim
payments. Ability’s management was so
confident of its plan to transform unprofitable
policies into profitable ones, that it
projected going from total assets of $50.7
Million in August of 2007, to $3,990.4 Million
(3.998 Billion) in total assets by the year
2012. . . .
Ability also projected it would increase
net assets from the original $50.7 Million in
2007, to $623.5 Million in 2012, an amazing
return of over 1000 percent profit in a span of
five years. Finally, Ability’s financial plan
calls for funneling the sizable profits from
this scheme back to off-shore bank accounts in
Bermuda and the Cayman Islands. Ability
accomplishes this by setting up a Bermuda based
affiliate company, named “Ability Reinsurance
Holdings.” Ability Insurance buys
“reinsurance” from Ability Reinsurance
Holdings, and those premiums consume most of
its revenues. Hence, most of the profits
accumulated by these “robust claim practices”
are moved right back out of the country.
Attached as Exhibit
citations omitted).
“B”,
pp
3-6
(internal
44. After acquiring Medico in 2007, Ability began
looking for ways to increase denials.
Complaint
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45. Defendants have engaged in a pattern and
practice of illicit and invalid claim handling for the
purpose of increasing profits at the expense of
legitimate claims made by deserving policyholders.
46.
Defendants have aided and abetted each other
for the purpose of improperly denying insurance claims,
including Arlene’s claim, without a legitimate basis.
47. Defendants’ conduct is a violation of common
law and statutory bad faith laws or claims handling
rules, practices and/or policies and is a breach of
Arlene’s policy.
48.
Defendants have acted with actual malice,
actual fraud as defined by Section 27-1-221, Montana
Code Annotated, making punitive damages appropriate in
order to deter this type of conduct from occurring in
this case and in others.
49. As a result of the unreasonable denial of
benefits, Defendants have withheld benefits owed to
Arlene causing loss of use of her money, emotional
distress, wasted time and other harms.
Complaint
12
50. Defendants’ conduct has also caused emotional
distress to Arlene’s daughter, Diana.
PRAYER FOR RELIEF
WHEREFORE, Plaintiffs demand judgment of and from
the Defendants for all damages allowed by law, together
with costs of suit and for all such other and further
relief to which Plaintiffs may be entitled, including
but not limited to:
1.
All damages, special and general, recoverable
under Montana law, including but not limited to all
economic and non-economic damages, and punitive damages
in a reasonable sum to be proven at trial;
2.
All allowable prejudgment interest;
3.
All recoverable costs; and
4.
Such other relief as may be just and equitable.
DATED this 27th day of September, 2010.
BIDEGARAY LAW FIRM, LLP
/s/Daniel B. Bidegaray
Daniel B. Bidegaray, Attorney
Bidegaray Law Firm, LLP
Attorney for Plaintiffs
Complaint
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