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Complaint in Nursing Home Liability Insurance Fight

Last week we touched on a new Illinois nursing home lawsuit related to one large assisted-living company’s suit against their insurer. The full complaint initiating the suit in the case can be found here. The legal matter, S.I.R. Managment, Inc. v. Chelsea Rhone, LLC is a somewhat convoluted case, wherein the plaintiff (SIR) claims that nearly $800,000 was taken in fees and other payments by Chelsea unnecessarily and against their agreement. The suit is a reminder of the high-money stakes invovled in these nursing home insurance interests. It is easy to see how proper compensation for those hurt by negligene might get lost in the shuffle when these sorts of disputes arise between these care facilities and the companies charged without working through their insurance details.

The Case
As outlined in the complaint, Chelsea is an agent of Universal Reinsurance Company–an insurer that provides liability insurance to many long-term care facilities in Illinois and throughout the country. At first, Chelsea administered SIR’s “SelfCap” insurance agreement–essentially a form of self-insurance by the long-term care company. This insurance meant that SIR would deposit money into a Custodial Account. Chelsea’s fees for administering the account would then be deducted directly from that account–Chelsea controlled that account anyway.

In 2007 Chelsea brokered a change in SIR’s insurance arrangement. The change was a shift from a self-insurance program to a traditional liability policy. SIR kept open its Custodial Account, but it stopped making payments into it. Instead, the company made annual premium payments directly to Chelsea amounting to roughly $1.37 million annually.

This is where the disagreement arises.

SIR claims that in 2011 it came to their attention that Chelsea had been wrongfully deducting money from the old Custodial Account. SIR brought their complaints to Chelsea, but the disagreement could not be ironed out. The deductions were alleged made for fees and “unearned premiums.” Various fees and commissions are outlined in the complaint which explain exactly where SIR believes it was overcharged by the insurance company. This includes alleged overcharges for the transition to the traditional insurance, unecessary administration fees, and brokerage commission on estimated premium rates.

For their part, representatives from Chelsea have denied the allegations made in the complaint. The company noted previously that they believe the disagreement stems from new management at SIR that is attempting to get out of agreements made by the former managers. The company stands by the fees and commissions it took from the Custodial Account.

Nursing Home Insurance
This contract matter will undoubtedly take awhile to shake out in the court system, and the companies may reach an agreement on it without the need for the situation to proceed.

The dispute is an instructive lesson for all community members, however, on the big business nature of these insurance disputes. The sums of money involved for the insurance company and nursing home chain are quite high. This is why these entities often have significant resources at their disposal when fighting charges of negligence and mistreatment of residents.

Similarly, it is also why the companies are often engaged in legislative efforts to limit the rights of those hurt from holding them legally accountable. If legal rights of residents are curtailed, then these companies stand to gain significant financial savings. Unfortunately, this skewing of priorities means that the well-being of seniors or the proper compensation following injury is rejected in favor of doing whatever it takes to help the company’s bottom line.

When these disputes arise, the lawyers at our firm are happy to stand on the side of the residents and their loved ones. If you or someone you know might have been harmed by llinios nursing home neglgience, please give our office a call and protect your legal rights.

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