34 Attorneys General Say Conseco LTC Settlement Needs More Input

Most policyholders chose to retain their policies, according to a Conseco spokeswoman. A specific breakout of options chosen was expected to be available shortly, she adds.

When asked about the letter from the attorneys general, the Conseco spokeswoman said the company had no reaction and that the letter was part of the court discussion.

Among the options available to contract holders are accepting a new Conseco policy, accepting a nonforfeiture benefit or holding on to their existing Conseco LTC policy.

Additionally, these policyholders can also purchase a new Conseco annuity contract or indexed universal life policy. The right to purchase the annuity or UL policy can also be passed on to family members.

Those who chose the option to replace their current Conseco LTC policy with a new Conseco policy will receive a contract that is based on attained age and current medical underwriting.

The letter from the state attorneys general follows strenuous objections from individual AGs such as the office of the Texas Attorney General in Austin. The Texas AG is objecting to the proposed settlement and the AARP has joined in a memorandum opposing it.

Texas Attorney General John Cornyn said in papers filed with the Philadelphia court that "the proposed class action settlement before this court is seriously flawed and undeserving of this court's imprimatur."

Cornyn also noted that the settlement impacts "the business of insurance" and the regulatory and enforcment efforts of state government entities and has importance that goes "beyond the parties to the litigation."

The Attorney General requested that the court reject the class action settlement to the extent that it affects Conseco's 65,000 policyholders in Texas and that it allow Texas policyholders' interests to be represented in a lawsuit filed in Texas by the AG's office.

Texas filed a lawsuit in district court in Travis County against Conseco Senior Health Insurance Company. The policies were originally sold by American Travellers Life Insurance Company, the company named in the Pennslyvania action. The suit states that the AG believes Conseco "has engaged in and will continue to engage in unlawful practices"

The Texas amicus brief in the Pennsylvania hearing states that the parties have "failed to sustain their burden of establishing the fairness, reasonableness, and adequacy of the proposal"

Deborah Zuckerman, an attorney with the AARP Foundation that filed the memorandum supporting objections to the class settlement, says that if objections of class members are overridden, those members can file a court appeal. AARP appeared on behalf of three AARP members on Feb. 13. The organization's future involvement in the action will depend on the action its members decide upon, she says.

Reproduced from National Underwriter Life & Health/Financial Services Edition, February 18, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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