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Estate of Gardner v. Continental Casualty Co.

United States District Court, D. Connecticut

March 1, 2016



Janet Bond Arterton, U.S.D.J.

March 1, 2016 Plaintiffs the Estate of Marie L. Gardner, the Estate of Francis R. Coughlin, M.D., the Estate of Barbara B. Coughlin, Janice B. Foster, and Marie Miller bring this case against Defendant Continental Casualty Company ("CNA"), alleging violations of the Connecticut Unfair Trade Practices Act ("CUTPA"), Conn. Gen. Stat. § 42-110a (Count One), unjust enrichment (Count Two), breach of contract (Count Three), and bad faith (Count Four), arising from Defendant's denial of insurance claims for Plaintiffs' stays in assisted living facilities in Connecticut. Plaintiffs now move [Doc. ## 108, 109] for class certification. Oral argument was held on February 24, 2016. For the following reasons, Plaintiffs' motion is granted.

Plaintiffs propose a Rule 23(b)(2) class and a Rule 23(b)(3) subclass. As revised at oral argument, Plaintiffs' proposed Rule 23(b)(2) class consists of all current CNA long-term care insurance policyholders of the following policy forms - 'LTC 1' (Forms 15203/16356/17931) and 'Con Care B' (Form 59433) who reside in Connecticut and whose policy was issued in Connecticut. The proposed Rule 23(b)(3) subclass consists of:

All Class members who were medically eligible for benefits but were not afforded coverage for a stay at an assisted-living facility[1] in the State of Connecticut - on the grounds that the facility (1) was not licensed by the state and/or (2) could not legally provide 24-hour-a-day, or continuous, nursing services/care and who suffered ascertainable damages as a result.

(Mot. for Class Cert, at 2.)

In order to understand these class definitions, some background on the insurance policies at issue and the Connecticut laws and regulations governing assisted living facilities is necessary.

I. Background

A. Connecticut Laws & Regulations

Plaintiffs' claims arise out of Defendant's refusal to cover their stays in managed residential communities ("MRCs") in Connecticut or to cover the services provided to Plaintiffs through assisted living services agencies ("ALSAs").

Under Connecticut law, an MRC is a "for-profit or not-for-profit facility consisting of private residential units that provides a managed group living environment consisting of housing and services for persons who are primarily fifty-five years of age or older." Conn. Gen. Stat. § 19a-693. MRCs must "[a]fford residents the ability to access services provided by an [ALSA]." Conn. Gen. Stat. § 19a-694. ALSAs are regulated by the Connecticut Department of Public Health.

Under the Department's regulations, an MRC "may not provide health services... unless it has been licensed as an assisted living services agency." Conn. Agencies Regs. § 19-3-D105(c)(6). An MRC may, however, "contract with one or more" ALSAs "to make available health services for tenants provided by such licensed persons or entities." Id. "Assisted living services may not be provided in a managed residential community unless . . . the assisted living services agency has been issued a license to operate by the department." Id. § 19-3-D105(c)(1).

ALSAs are required to employ a supervisor of assisted living services who must be "a registered nurse licensed to practice in this state, " id. § 19-3-D105(g)(1), as well as at least one additional registered nurse, id. § 19-3-D105(j)(2). Supervisors must be on site at least twenty hours per week (forty if the ALSA employs more than ten full time or full time equivalent licensed nurses or assisted living aides). Id. § 19-3-D105(j)(3). Additionally, ALSAs are required to be staffed with other "licensed nurses at least ten . . . hours per week for each additional ten ... or less full time or full time equivalent assisted living aides." Id. § 19-3-D105(j)(4). Finally, ALSAs must "designate a registered nurse to be on call twenty-four ... hours a day." Id. § 19-3-D105(j)(8).

ALSAs are mandated to "maintain a complete service record for each client. All parts of the record pertinent to the daily care and treatment of the client shall be located in an accessible area on the campus of the managed residential community." Id. § 19-3-D105(k)(l). The record must contain "complete medical diagnoses, " "all initial and subsequent orders by the physician or health care practitioner, " "assessment of the client including pertinent past and current health history, physical, mental and social status, and evaluation of client's needs, " "nurses['] notes including changes in client conditions, " "a record of medications administered, " and "documentation of all care and services rendered." Id. § 19-3-D105(k)(2).

B. The LTC 1 and Con Care B Policies

Plaintiffs had one of two insurance policies: an LTC 1 policy or a Con Care B policy. In order to qualify for long term care benefits under either policy, claimants are required to demonstrate: (1) they are medically eligible and (2) the facility at which they will reside meets the definition of a Long-Term Care Facility ("LTCF"). (Second Revised Am. Compl. ¶ 15.)

1. Medically Eligible

Under the LTC 1 policy, a claimant is "medically eligible" if the care required and provided in the LTCF is "necessary care"[2]; "due to the inability to perform two or more activities of daily living"[3]; or "due to cognitive impairment." (LTC 1 Policy, Ex. A to Second Revised Am. Compl. at 6.) Under the Con Care B policy, a claimant is "medically eligible" if the Long Term Care[4] required is "necessary care."[5] (Con Care B Policy, Ex. B to Second Revised Am. Compl. at 6.)

2. Long-Term Care Facility

The LTC 1 policy defines an LTCF as:

A place primarily providing Long-Term Care and related services on an inpatient basis, which:

1. Is licensed by the state where it is located; and
2. Provides skilled, intermediate, or custodial nursing care under the supervision of a physician; and
3. Has 24-hour-a-day nursing services provided by or under the supervision of a registered nurse (R.N.), licensed vocational nurse (L.V.N.), or licensed practical nurse (L.P.N.), and
4. Keeps a daily medical record of each patient; and
5. May be either a freestanding facility or a distinct part of a facility such as a ward, wing, unit, or swing-bed of a hospital or other institution.
A Long-Term Care Facility does not mean a hospital or clinic, boarding home, home for the aged or mentally ill, rest home, community living center, place that provides domiciliary, residential, or retirement care .... However, care of services provided in these facilities may be covered subject to the conditions of the Alternate Plan of Care Benefit provision.

(LTC 1 Policy at 8.)

The Con Care B policy, by contrast, defines an LTCF as "a skilled nursing facility or a custodial or an intermediate care facility." (Con Care B Policy at 4.) A "skilled nursing facility" is, in turn, defined as a place which:

1. is licensed by the State;
2. provides skilled nursing care under the supervision of a physician;
3. has 24-hour-a-day nursing services by or under the supervision of a registered nurse (RN); and
4. keeps a daily medical record of each patient.

(Id.) A "custodial or intermediate care facility" is a place which:

1. is licensed by the State;
2. operates primarily to provide nursing care for three or more persons at those persons['] expense; and
3. provides continuous nursing care under the direction of a licensed registered nurse (RN), a licensed practical or vocational nurse (LPN or LVN) or a physician.
It is not a hospital or clinic; a home for the aged or mentally ill; a rest home; a community living center; or a place that provides domiciliary, residency, or retirement care ....


C. The Named Plaintiffs

1. Marie L. Gardner

Ms. Gardner purchased an LTC 1 policy from CNA on October 25, 1993. (Second Revised Am. Compl. ¶ 22.) In 2008, after she broke her hip, Ms. Gardner began to need assistance with activities of daily living. (Id. ¶ 23.) In order to obtain that assistance, she moved to the assisted living facility "The Village" in South Windsor, Connecticut, and filed a long term care claim with CNA to cover the cost of her stay there. (Id.) Her claim was approved on October 20, 2008, with an effective date of June 10, 2008. (Id. ¶ 24.) On February 11, 2011, CNA terminated Ms. Gardner's claim because her medical condition had improved.[6] (Id. ¶ 25.) However, Ms. Gardner decided to stay at The Village and began paying for her own stay there. (Id. ¶ 26.)

On April 28, 2012, Ms. Gardner fell down a flight of stairs and fractured her sacrum. (Id. ¶ 27.) Thereafter, on May 8, 2012, she filed a claim for benefits with CNA to once again cover her stay at The Village. (Id.) However, on July 10, 2012, CNA denied her claim on the grounds that the facility was not licensed. (Id. ¶ 28; see Gardner Explanation of Benefits, Ex. D to Second Revised Am. Compl.)

When Ms. Gardner's counsel wrote to CNA in October 2012 seeking an explanation for the denial of Ms. Gardner's claim, CNA's counsel responded:

The primary basis for the denial of benefits for Ms. Gardner was (and remains) the fact that The Village is not a licensed facility .... The State of Connecticut licenses facilities providing skilled or intermediate nursing care. . . . The Village is not a licensed facility. Rather, it is a managed residential community (MRC) which is not licensed by the state of Connecticut. . . . [Residents of an MRC may receive assisted living services through an assisted living services agency (ALSA). The ALSA must be licensed through the state, and it is our understanding that The Village is a licensed ALSA. The facility itself, however, is not licensed.
You should be aware that in light of policy requirements that long-term care facilities be licensed, [CNA] has worked with the State of Connecticut Insurance Department to address MRCs at which ALSA services are provided. [CNA] has agreed with the Insurance Department that there are circumstances under which a long-term care policyholder might receive benefits related to services provided by an ALSA while the insured is a resident of an MRC. For example, benefits might be available where a policy provides coverage for home health care services or where the policy affords "Alternate Care Facility" (ACF) coverage....
Regardless of the "nursing services" requirement within the definition of Long Term Care Facility . . . and regardless of whether the requisite services are available at The Village, it cannot be disputed that The Village is not a facility licensed by the State of Connecticut. As such, it cannot qualify as a Long-Term Care Facility for purposes of the [CNA] ...

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