Quackenbush Overruled on Care Policies

Insurance Commissioner Chuck Quackenbush has been ordered to rescind a controversial directive that allowed insurance companies to sell long-term health care policies with benefit levels lower than previously permitted by California law.

Los Angeles County Superior Court Judge Robert H. O’Brien said Quackenbush violated state law late last year when he issued the directive, which had granted insurance carriers authority to sell the policies to the elderly and disabled. The ruling has no effect on policies that have already been sold, Quackenbush said.

During the past decade, long-term care policies have been sold in California to provide home health care services or nursing home care for people who become disabled. Most of the buyers have been retirees between 68 and 72 years old.

The current dispute has its roots in the passage last summer of a federal health care reform law. In the law, Congress attempted to encourage sales of lower-benefit policies by providing tax breaks for both buyers and sellers of long-term care coverage.

But that move created a conflict in California because policies that qualify for the tax deduction under federal law would not necessarily meet the standard set by state law, which requires companies to offer a greater array of benefits to the policyholder.

The judge’s ruling last week came in a legal challenge brought by two consumer groups. They alleged that Quackenbush overstepped his authority when he invoked the new federal health care law to issue the policies.

“I’m delighted,” said Ed Howard, an attorney who filed the suit on behalf of the Congress of California Seniors and Consumers for Quality Care. “What the court did was tell the insurance commissioner that before you go out and drastically curtail the ability of the elderly and the disabled to get insurance . . . why not let them have a word in edgewise,” Howard said Tuesday.

“This will protect consumers from having their insurance coverage changed to their detriment without having an opportunity to voice their concerns,” said Howard, executive director of the Center for Law in the Public Interest.

But Quackenbush and a spokeswoman for the industry viewed the ruling differently.

“They [consumer groups] won a procedural victory, which is relatively easy to do these days,” said Anne Eowan, a lobbyist for the Assn. of California Life and Health Insurance Companies.

Quackenbush, too, said the ruling was narrowly focused and ultimately would not prohibit him from allowing insurance companies to sell the new long-term health care policies.

“We just have to go through some administrative hoops to comply with the judge’s technical ruling, which is the way we consider this,” Quackenbush said.

“We’re pretty happy that the court upheld our authority to [issue] this product. All [the judge] said is that we have to use a different procedure,” said Quackenbush, who estimated that 15 carriers have been marketing the new, tax-deductible policies.

Lois Wellington of Burbank, president of the Congress of California Seniors and a plaintiff in the suit, has said that under the policies allowed by Quackenbush, the elderly who cannot walk or eat without supervision would not be eligible for benefits.

The controversy is not expected to be settled by the court ruling.