Assisted living contracts have risks
Unlike insurance, service agreements loosely regulated

By Diane C. Lade
South Florida Sun-Sentinel
April 22, 2007
http://www.sun-sentinel.com/business...tory?track=rss

Sandra Leventhal, a Parkinson's disease patient whose late husband had a debilitating digestive disorder, was desperate for some peace of mind seven years ago when she stumbled across a company offering just that at a Boca Raton Parkinson's conference.

The retired Boynton Beach couple already had been turned down for long-term care insurance. But an assisted living service contract with a company called Homeward Bound offered similar coverage in their own home for a $5,500 annual fee, a salesperson promised at the conference's expo. No qualifying medical questions asked.

But Leventhal found out the hard way that assisted living contracts, which also are sometimes called long-term care service contracts, and discount plans are far more loosely regulated, and more risky, than traditional insurance. Her contract did not cover the home care bills, as promised, when she broke her foot last year, and now she owes $4,000 to a home health agency that Homeward Bound hired to help her.

"Initially, I assumed it was the same as long-term care insurance, although I should have seen the signals," said Leventhal, 73. She figures she also is out the almost $40,000 in fees she has paid Homeward Bound.

It isn't known how many companies are selling similar contracts or plans to Florida seniors because unlike those offering long-term care or Medicare supplemental health insurance, they don't have to file with the state insurance office. But some think more nontraditional options that skirt insurance guidelines are appearing, as the region's senior population grows and traditional insurance plan premiums get higher.

South Florida home health agency operators are increasingly reluctant to take elderly clients with contracts. They say agents, who often go door-to-door, are targeting very sick or very old seniors who already were turned down for long-term care insurance policies.

Virginia Rosen said the salesperson, who knocked on the door of her parent's Deerfield Beach home five years ago, persuaded her stepfather to drop the couple's long-term care insurance in favor of a Homeward Bound contract. Homeward Bound later wouldn't pay for a home health caregiver and then canceled the contract in June, said Rosen, of Port St. Lucie, even though the couple already had paid $26,000.

Because her stepfather now has Alzheimer's disease, they can't reinstate their original long-term care insurance policy, Rosen said.

Homeward Bound employees said President Mark Orth was out on medical leave, and refused to comment. One offered to forward the South Florida Sun-Sentinel's information request to the company's attorney, whom he would not name.

Gene Tischer, executive director of the Associated Home Health Industries of Florida trade association, thinks contracts and memberships requiring people to prepay for home health services they may or may not need later should be considered insurance. The companies themselves, however, have said they are not selling insurance products -- even though Pennsylvania-based Homeward Bound was required by insurance commissioners in several states, including California last year, to stop selling their contracts because they were not licensed as insurance carriers yet had similar products.

"If we don't start enforcing the law, you can bet your bottom dollar that more of these companies will be coming here," said Tischer.

To receive a license to sell long-term care insurance in Florida, carriers must have their rates reviewed annually and file paperwork proving their solvency, neither of which are required of companies selling contracts.

The Florida Attorney General has scrutinized three such companies for unfair or deceptive business practices, including Homeward Bound, within the past two years and filed a civil suit against one. The three were selling contracts or memberships offering nonmedical home care, such as help with bathing and dressing, designed to keep seniors at home and out of nursing homes.

Intrust Home Care, based in Clearwater but operating in at least three other states, peddled $146,000 in contracts to several dozen elderly residents but never arranged to get them assistance, according to investigators. Like Homeward Bound, Intrust also required a 6- to 12-month waiting period before sending in help; four Florida Intrust clients died before their wait time elapsed.

The state sued Intrust over the practices and, last October, Intrust settled the suit by agreeing to refund $125,000 to consumers. Additionally, the company was barred from selling future contracts.

The state still is investigating Sarasota-based Suncoast Home Care Inc. and its president, Joseph DeMarco, for selling "lifetime memberships" for thousands of dollars that guaranteed discounts on home health services. Corporate records show DeMarco dissolved the company, which primarily did business in southwest Florida, in 2005. The Attorney General received several complaints from consumers and home health providers who had not been paid.

State investigators began looking at Homeward Bound last month, focusing on "misrepresentation of in-home health care services as a form of insurance" and "failure to deliver in-home health services as agreed upon under contract with consumers," according to the attorney general's case filing. No action has been taken.

The company's literature states the contract is not an insurance policy, Leventhal said.

The attorney general began investigating Homeward Bound after receiving complaints from 12 home health companies, all in South Florida, that claimed Homeward Bound did not reimburse them after they sent caregivers to Homeward Bound clients. Most were owed around $11,000 although Elder Alternatives in Boca Raton is out $32,000.

"Homeward Bound told them don't worry, we will arrange everything if you get sick," said Kim Champion, owner of Champion Home Health Care in Boca, who is owed more than $11,000 from Homeward Bound and is suing on her own.

Some home health providers require clients to agree in writing to be the payer of last resort, and now are asking seniors to pay what Homeward Bound did not.

Elder Alternatives owner Rhonda Schroeder said most of her senior clients assumed their assisted living service contracts gave them the same benefit as long-term care insurance. "If you are paying someone to hold your money for a service you may or may not use in the future, what are you going to think?" she said.

In some cases, Schroeder said, seniors could have paid for home care services out of their pockets for the same price or less than what Homeward Bound charged. "I did not advise anyone to keep renewing with them," she said.