What can be done if a long term care provider refuses to pay a claim?

Question Details: My mother bought a LTC policy 15 years ago. She now has Alzheimer's and I am her daughter and POA. The insurance company will not pay claims for my mother's caregiver because she also happens to be her niece. The policy does not state that a family member cannot be a caregiver, it explains what a family member is but does not mention that a niece is a family member. This policy actually has a family indemnity rider which provides payment for family members at 50% of the maximum benefit for 1 year, however it does not mention a niece. The company is stating that their reasoning is a clause in the exclusions that reads says they will not pay for "services for which no charge is normally made in the absense of insurance". We hired this caregiver because she has experience working with Alzheimer's patients, she has earned her living this way for the past 6 years. She has a waiting list of patients but happened to be between clients when we needed her. She just happens to also be my mother's niece. We were not aware that a niece could not be an independent contractor under the Home and Community Care Services Rider because it does not state that anywhere in the entire policy. This lady has cared for my mother for 8 weeks now, we have paid her out of pocket expecting to be reimbursed by the insurance company and now they say she can only be paid 50% of the maximum daily benefit due to she is a niece. My mother has bonded it with her, she is doing an excellent job for her, and changing caregivers at this point will be detrimental for my mother. She needs routine, familiarity, and no changes in her caregiver. I'm told that all LTC policies now state that family members cannot be paid, however this one was sold before that and does not state that. I feel that because it does not state that family members cannot be caregivers and we had no idea prior to hiring her and that my mother's condition is dependent on her environment remaining the same, that the claims should be paid.

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