Residential Care Home Not Covered Under LTC Insurance Policy

The U.S. Court of Appeals for the Tenth Circuit has ruled that a long-term care policyholder who moved to a residential care home is not entitled to benefits because the home does not meet the policy's definition of "nursing home." Gillogly v. General Electric Capital Assurance Co. (10th Cir., Nos. 04-7026, 04-7032, 04-7042, Dec. 12, 2005).

In 1989 Russell Gillogly purchased a long-term care insurance policy from a company that later became General Electric Capital Assurance Company (GECA). The policy provided a fixed daily benefit for an inpatient stay in a nursing home. The term "nursing home" was defined as a facility "licensed . . . to engage primarily in providing nursing care and related services to inpatients." In 2001 Mr. Gillogly began residing at the Van Buren House (VBH), which is part of a larger regional health center. When Mr. Gillogly tried to collect on his policy to pay for his care, GECA declined, claiming that VBH was licensed by the Oklahoma Department of Health as a "residential care home," not a "nursing facility."

Mr. Gillogly sued GECA, arguing that because the policy covers custodial care, it should cover custodial care in a facility licensed as a residential care home, and that VBH is a properly licensed facility because it is part of a larger health center that provides nursing care. A U.S. district court found that GECA had breached its contract with Mr. Gillogly, and a jury awarded him $4 million in damages. GECA appealed.

The U.S. Court of Appeals for the Tenth Circuit reversed, ruling that VBH does not qualify as a "nursing home" under the GECA policy. "At the time that Gillogly submitted his request for benefits," the court writes, "[Oklahoma's] Residential Care Act defined 'residential care home' as a facility whose residents shall not 'routinely require skilled nursing care or intermediate care.' "

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