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John Hancock must pay back $23.8M for breaking New York insurance laws.

In addition to making a total of $23.8 million in refunds to clients and the state of New York, John Hancock Life & Health Insurance Company will also pay a $2.5 million fine for breaking the rules set forth by the state governing the management of long-term care insurance plans.

Following a review of John Hancock's compliance with state requirements regarding long-term care insurance, the New York State Department of Financial Services (NYDFS) announced on Thursday that the company will return nearly $21.6 million to clients and/or their beneficiaries and $2.2 million to the New York State Medicaid Program.

According to a joint investigation by the NYDFS and the state's Department of Health, John Hancock "prematurely terminated" 156 long-term care plans for New Yorkers between 2001 and 2009 before the customers had used up all of their legal entitlements to benefits, the NYDFS claimed. Due to the early terminations, benefits were not provided for 27,161 days, forcing customers to pay the costs out of pocket or apply for Medicaid early. On days when the consumer did not utilize all of the policy's benefits, John Hancock allegedly computed lifetime maximum benefits incorrectly.

According to the settlement decree, the NYDFS decided that 21 currently insured consumers and the 130 relatives of deceased policyholders were awarded compensation.

The investigation was started in response to a 2019 customer complaint alleging that John Hancock abruptly cancelled the New York State Partnership for Long Term Care, a long-term care insurance policy. According to the judgment, the NYDFS began "a review of all similarly situated insureds to determine whether any other partnership policies had been prematurely terminated" after John Hancock had addressed the issue.

According to the NYDFS investigation, John Hancock broke four state insurance statutes. The order stated that the partnership policy's clauses "were misleading and confusing" and failed to specify the benefits and restrictions of the program, as well as its alternatives for use of long-term facilities. According to the NYDFS, John Hancock used unfair settlement methods and failed to manage the plan's rules in line with the terms of the policy form that had been approved by the state's superintendent of financial services. The company did not resolve issues in a fast, fair, and equitable manner.

John Hancock initiated a "thorough review" of its long-term care policies and certificates in addition to compensating impacted customers and paying the punishment. Up till the regulator is satisfied, the firm promised to give the NYDFS monthly updates on the status of all corrective efforts implemented.

The company has been "working diligently with the New York State Department of Financial Services and the New York Department of Health to ensure customers with New York Long-Term Care Insurance Partnership policies impacted by this administrative error receive the benefits due to them," according to a spokesperson in an email.


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