Regardless of the kind of insurance claim at issue, the wording of the insurance policy is indispensable to the coverage analysis, and many insurance companies will strive to avoid coverage by parsing policy words. To illustrate this point and contemporaneously caution those interested in procuring long-term care insurance, I now discuss the dogmatic interpretation and application of long-term care insurance policy language regarding the location of care.

In affirming the United States District Court for the Middle District of Florida’s decision to dismiss the policyholder’s suit against her long-term care insurance company for failing to cover her assisted living facility expenses, the United States Court of Appeal for the Eleventh Judicial Circuit1 summarized the facts as follows:

The relevant facts are these. In applying for the Policy, Sherman had the option of choosing from one of three types of policies: (1) ‘Integrated Facility Home Care Insurance’; (2) ‘Facility Only Insurance’; and (3) ‘Home Care Only Insurance.’ The ‘integrated’ policy provides coverage whether the insured is receiving care in a nursing home, assisted living facility (‘ALF’), or at home. The ‘facility only’ policy provides coverage in either a nursing home or ALF, and the ‘home-care only’ policy provides coverage only in the insured’s own home. Sherman chose to purchase the home-care only policy.2

Under these facts, the Sherman Court shot down the policyholder’s contra proferentem,3 statutory, and public policy arguments. For example, under many policies and in many jurisdictions, it often does not matter if you are receiving the same kind of care at home as you would at an assisted living facility or nursing home. Similarly, it often does not matter if the home care for which you seek coverage is actually cheaper than the assisted living facility or nursing home care afforded under the policy. If the plain language of the insurance contract affords coverage for only assisted living facility or nursing home care and you receive care at home that is identical to and/or cheaper than assisted living facility or nursing home care, you are bound for denial. In sum, lest you end up like Sherman, please be extra careful about the kind of long-term care insurance you purchase and where you receive your long-term care.

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1 Since 1981, the Eleventh Circuit Court of Appeals has had jurisdiction over federal cases originating in Florida, Georgia, and Alabama.
2 Sherman v. Transamerica Life Ins. Co., 475 Fed. Appx. 733, 734 (11th Cir. 2012).
3 The doctrine that, in interpreting documents, ambiguities are to be construed unfavorably to the drafter. Black’s Law Dictionary (9th ed. 2009).