Agency Checklists insurance news massachusetts Insurer News Law Alerts MA Insurer News massachusetts insurance news news

Genworth Loses Appeal Over The Denial Of Its 134% Rate Increase On Long-Term Care Insurance

Genworth Loses Appeal Over The Denial Of Its 134% Rate Increase On Long-Term Care Insurance

On June 3, 2019, the Appeals Courtroom rejected the attraction of the Genworth Life Insurance Company (“Genworth”) towards the Massachusetts Commissioner of Insurance (“Commissioner”).

In 2017, the Commissioner had rejected Genworth’s 2012 price filings growing the premium on long-term care insurance insurance policies affecting approximately 14,500 policyholders in Massachusetts. At the time the Commissioner denied the insurer’s price will increase, Genworth had already sued the Commissioner, arguing that underneath the relevant fee statute its filings have been deemed authorised in 2016, by operation of regulation.

If Genworth’s price will increase had taken effect, a number of the policyholders affected would have had price increases of up to 134%.

The Appeals Courtroom choice, Genworth Life Insurance coverage Company v. Commissioner of Insurance coverageaffirmed a 2017 determination of the Enterprise Litigation Session of the Superior Courtroom that sustained the Commissioner’s place that Genworth had improperly filed its discover to initiate a 30-day statutory interval for the Commissioner to behave on Genworth’s pending price increases earlier than they have been “deemed” permitted routinely.

The “deeming statute” and the commissioner’s 2008 bulletin on filing discover by way of SERFF

Lengthy-term care insurance insurance policies are purchased by insureds to finance or defray the price of long-term care wants if they turn into disabled later in life. Long-term care insurance pays for residence well being care, assisted dwelling amenities, and nursing residence care. The Commissioner has exclusive authority to assessment and approve or disapprove rate-increase requests for long-term care insurance insurance policies and to withdraw approval of beforehand accepted charges underneath Massachusetts regulation.

Due to several elements, including elevated longevity, worth inflation in nursing residence costs, and incorrect actuarial assumptions, long-term care insurance has generated substantial losses to carriers. Consequently, insurers that wrote long-term care insurance coverage have sought vital fee increases that regulators have resisted.

Since 2009, the Commissioner has required price submissions via the SERFF system

Since 2009, the Division of Insurance coverage (“Division”), by way of its Bulletin 2008-08, has suggested carriers to submit all varieties and rates electronically, by way of the Division’s System for Digital Fee and Type Filing (“SERFF”). SERFF changed the prior paper-based process and allowed insurers to electronically submit varieties, insurance policies, and endorsements to the Commissioner and allowed the Division to manage the regulatory evaluate process on-line with larger effectivity and velocity.

The Commissioner’s SERFF Filing Directions suggested carriers that any charges submitted for approval with an implementation date “on approval” usually are not eligible to be deemed accepted. Any time after submitting its price “on approval” a service might subsequently amend its submitting and request an efficient date. This modification of the submission from “on approval” to a specified date, leads to the filed price’s automated approval if the Commissioner takes no action with the 30-days earlier than the rate is deemed efficient. Nevertheless, beneath the Division’s SERFF instructions the service should file the effective date for its price to take impact by means of the Division’s SERFF System.

Genworth price improve request in limbo from 2012 till 2016

In December 2012, Genworth filed proposed price increases on its Massachusetts long-term care insurance policies issued between September 1988 and September 2005. Genworth sought premium will increase of as much as 134 % over present premium charges on a few of 14,500 of Genworth’s long-term care insurance policies. Genworth filed for its fee increases via the Division’s SERFF system beneath the statute giving the commissioner authority to approve or disapprove long-term care insurance coverage charges. Beneath that regulation, if the Commissioner doesn’t reject a price submitting within thirty days, the filing is ‘deemed’ authorised.

Because the thirty day period does not permit sufficient time for the Division to guage some fee filings, the Agency Checklists, MA Insurance News, Mass. Insurance News, Mass. Division of Insurance News, DOI News, Massachusetts insurance regulationsCommissioner encourages carriers to choose out of the “deemer” mechanism of the statute and submit rate-increase requests to turn out to be effective, “on approval.” When Genworth filed its proposed fee improve in 2012, it didn’t set an effective date however as an alternative made the charges effective “on approval.”

Throughout the following four years, the Division of Insurance raised questions and sought further information about the filings by means of “Objection Letters” filed by way of the SERFF system. Info was exchanged, and negotiations between Genworth and the Division of Insurance followed. Additionally, during this period, Genworth amended its filings twice by way of the SERFF system, changing the speed improve it was requesting. Nevertheless, Genworth didn’t make any post-submission submitting via the SERFF system looking for to impose a selected approval deadline.

Lastly, after discussions with the Division, on October 21, 2016, Genworth sent notices advising the Commissioner that it might deal with its rates as deemed authorised in thirty days underneath M.G.L. c. 175, § 108(2)(a), until the Commissioner disapproved the filings in writing within the interim. Genworth emailed the letters to the Commissioner, with copies sent by Federal Categorical overnight delivery. The commissioner acquired the notices on October 21, 2016, and requested extensions of the thirty-day deadline, which Genworth granted. Genworth’s last extension expired on December 16, 2016, with the Commissioner having neither accredited nor disapproved Genworth’s filings.

At the time Genworth despatched its notice, the Commissioner was negotiating with sixteen different long-term care insurance carriers over proposed price will increase and reached agreement with these other carriers to implement extra modest fee will increase. See Company Checklists’ article of January 24, 2017, “Long-Term Care Policyholders’ Rates Might Rise 40% Underneath Agreement With 16 Carriers.”

Genworth was not one of many 16 carriers agreeing to the speed improve limitations for its long-term care insurance policies.

On January 9, 2017, Genworth filed go well with in the Superior Courtroom for Suffolk County in search of a declaration that its filings had taken impact based mostly upon its discover to the Commissioner of when its charges would take effect, and the Commissioner’s lack of action.

On February 21, 2017, the Commissioner rejected Genworth’s 2012 price filings and claimed that Genworth’s notices by letter in search of to have the filings deemed authorised weren’t valid as a result of Genworth had not filed these notices by means of SERFF.

Superior Courtroom determination in favor of the Commissioner

Within the Superior Courtroom, the Commissioner restated his argument that since Genworth only despatched its requests by in a single day mail and e­mail and had not filed any notices by way of SERFF, Genworth’s notices have been inadequate to trigger any statutory approvals of Genworth’s filings.

The Superior Courtroom discovered that the Commissioner’s administrative instructions “requiring that the applicant set a selected Efficient Date in its submitting and that any change to that submitting be made via SERFF” have been valid.

The Superior Courtroom decide ruled Genworth’s failure to comply with these directions meant the rate improve notice to the Commissioner by no means took impact. As an alternative, Genworth’s 2012 filings remained subject to the Commissioner’s disapproval authority, which the Commissioner validly exercised in February 2017. See Agency Checklists’ article of October 3, 2017, “No 134% Price Improve For Genworth Life On account of Failure to Properly File Notice of Effective Date.”

Genworth appealed to the Appeals Courtroom and sought direct appellate evaluate by the Supreme Judicial Courtroom. Nevertheless, that courtroom denied Genworth’s request for an instantaneous attraction.

Appeals Courtroom confirms Genworth did not comply with the right notice process

Earlier than the Appeals Courtroom, Genworth argued that beneath the applicable statute its requested fee improve was “deemed authorised” on December 16, 2016, because its October 21, 2016 letters had offered the requisite 30-day discover. Genworth furthered argued that because the commissioner didn’t explicitly disapprove the increase within thirty days as required.

Genworth claimed its failure to file the request via SERFF was insignificant as a result of the Commissioner had actual discover of the requested improve. Genworth additionally argued that the Division’s guidelines for filing by way of SERFF exceeded the Commissioner’s authority.

The Commissioner place before the Appeals Courtroom was once more that because Genworth’s statutory notices to the commissioner weren’t legitimate as a result of Genworth didn’t file them by means of SERFF, as required. Thus, the statute didn’t management; the brand new rates were not deemed authorised; and have been, the truth is, validly disapproved in the Commissioner’s February 2017 letter to Genworth after it had filed go well with.

The Commissioner pointed the courtroom to the directions to the 2008-08 bulletin state explicitly, beneath the section titled “Deemer Provision,” that “

The courtroom famous the parties didn’t dispute that when on October 21, 2016, Genworth amended its pending fee request by letters to choose into the speed statute’s 30-day deemer provision, Genworth despatched its notices to the Commissioner by way of Federal Categorical and e-mail, and not via SERFF, because the 2008-08 bulletin required.

The courtroom affirmed the Superior Courtroom determination that Genworth’s letters didn’t trigger the statute’s 30-day deemer provision. Subsequently, the requested fee improve didn’t grow to be efficient, and the Commissioner’s specific disapproval in February 2017, of Genworth’s fee increases, managed.

The courtroom’s remaining ruling was;

We are glad that the [Superior Court] decide’s view was right here and that the sub-regulatory steerage offered by the 2008-08 bulletin was an applicable exercise of the Commissioner’s authority. Consequently, Genworth has not carried its “formidable burden” of demonstrating that the Commissioner’s interpretation, and administration, of [the statutes involved] have been incorrect.”

Twenty days to apply for further appellate evaluate to the Supreme Judicial Courtroom

The Massachusetts Appeals Courtroom is an intermediate appellate courtroom. The last word judicial authority resides with the Supreme Judicial Courtroom. Events dissatisfied with an Attraction Courtroom’s determination might apply for further appellate evaluation. Nevertheless, the allowance of any further attraction is discretionary with the Supreme Judicial Courtroom.

Genworth had initially requested the Supreme Judicial Courtroom permit a direct attraction bypassing the Appeals Courtroom. The Supreme Judicial Courtroom denied that software on March 29, 2018.  Beneath the circumstance of this case, there’s little doubt Genworth will make a second software for appellate evaluation by the Supreme Judicial Courtroom.

Beneath the Massachusetts Guidelines of Appellate Process, Genworth may have until June 24, 2019, to apply for further appellate evaluation.

Agency Checklists will hold its readers posted on any additional appellate proceedings in this case.