Assisted Living Resident May Proceed with Breach-of-Contract Claim Against Long-Term Care Insurer

A U.S. district court in California denies summary judgment to a long-term care insurance company that refused to provide nursing home benefits to a claimant who was residing in an assisted living facility that had a nurse on call 24 hours a day. Gutowitz v. Transamerica Life Insurance Co. (U.S. Dist. Ct., C.D. Cal., No. CV-14-06656 MMM (JPRx), Aug. 14, 2015).

Erwin Gutowitz purchased a long-term care insurance policy in 1991. The policy included a daily nursing home benefit that defined a nursing home in part as a facility with a nurse on call at all times. In 2013, Mr. Gutowitz moved into a facility that was licensed as a residential care facility, not as a nursing home. While the facility did not provide skilled nursing care, there was a nurse on call 24 hours a day. The insurance company refused to cover Mr. Gutowitz's care because he was not in a nursing home.

Mr. Gutowitz sued the insurance company for breach of contract, breach of good faith, and bad faith denial of insurance benefits. The nursing home filed a motion for summary judgment, arguing that the facility was not a nursing home because it was not licensed to provide nursing services on an ongoing basis.

The U.S. District Court, Central District of California, denies the insurance company summary judgment, holding that the terms of the contract were ambiguous. According to the court "a reasonable insured would have interpreted the policy as covering a facility that employed an on duty or on call nurse to provide nursing services in the facility on an ongoing basis to persons residing there." The court concludes that there are issues of fact remaining as to whether the insurance company breached its contract, so the case may proceed to trial.

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