Uh Oh, Someone Has Sued Suze Orman For Fraud
But not for her advice* or her fashion sense, as you might expect. In addition to doling out advice on TV and in books, Orman is a licensed insurance broker in California, and in 1999 her firm the Suze Orman Financial Group sold some long-term care insurance to Ann Garat, who developed ovarian cancer two years later. When Garat filed a claim, CNA Financial—the issuer of the insurance—rejected it, saying their fine print stipulated it wouldn't cover care from family members.
Garat died in 2007, but her daughters (who filed the suit) have pointed out that the promotional brochure for the insurance simply said the caregivers "cannot be a member of your immediate family living with you," not "any family member" as CNA Financial claimed. They also point out that Orman herself says your financial planner should protect you from this sort of thing:
It also cites Orman's declaration that a person's financial adviser has the obligation "to make sure you understand all the ramifications of the policy." The court file contains a 1999 disclosure statement from Orman herself saying she was an "investment adviser" to Garat with a "conflict of interest," presumably due to a commission she received for the policy sale.
Orman has said that there's no evidence Garat ever read any of her books, in which case the accusation of fraud shouldn't stick since Garat presumably wouldn't have known Orman said any such thing about understanding any ramifications.
The fact that Suze Orman is involved makes this story sound all newsworthy, but the reality is you should never trust 100% what your advisor is saying, unless you feel comfortable putting your future entirely in another person's hands. Read the fine print, even if it means taking an extra few days to go home and pore over it.
*Which is not to say her advice is bad—it's very common-sensical and worth following if you don't already. Her clothing choices are another matter.
"Suze Orman Sued For Fraud" [Forbes]
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Comments:
It seems like Suze Orman doesn't have anything to do with this issue. This seems more like an issue of the definition of immediate family and also "living with you", and probably best decided by a court.
The reason behind the "immediate family member" clause is to prevent people from having their kids take care of them and then getting reimbursed for their time, as it is commonly held that your kids would take care of you for free. In short, its to prevent abuse of the system. What I don't understand here is this- after the first claim was denied, why didn't she just hire a nurse who wasn't her daughter? This would have provided her with the care she needed and would have been reimbursable. Plus, her daughter could still care for her.
I can see the gray area though, as I would imagine that once the mother is debilitated by the chemo, the daughter probably started staying over more and more often, at which point she would become an immediate family member living with her.
I always think of Suze Orman's financial advice as analogous to Rachael Ray's recipes - good, but very basic.
@Joe Reilly: CNA Financial says their fine print stipulates that NO family member qualifies, whether living with you or not. They rejected the claim based on that. As far as I can tell from the Forbes article, her daughters never moved in with her, at least not officially. But simply by being her daughters, they were ineligible, which they claim is not what Garat was led to believe.
"Which is not to say her advice is bad-it's very common-sensical and worth following if you don't already."
Thank you for adding this Chris. I'm sure there will be a lot of Suze hatred to come, but this 23 yo is in a lot better financial shape than her peers (both younger and older) as a direct result of advice from Suze and this site. Granted having a super cheap mother with a MBA helped, but who listens to their parents in their 20s??
As has already been said, this doesn't seem to have all that much to do with Suze. I think they were trying to attach a famous name to get more attention for their case.
@Chris Walters: They must be looking for a quick settlement. Since it will be impossible to prove what a dead person knew and didn't know. And it's pretty reckless for them to cite a brochure and to have never looked at the actual details. It sounds like they didn't realize they had to hire someone unrelated and despite their own failure to follow the rules, they now want the same amount of money they could have gotten had they hired a nurse. This clause is specifically in there to protect the company from this very thing. I don't see how they can win.
@Corporate_guy: Agreed, it doesn't look good. Assuming no one involved deliberately acted maliciously, I imagine the agent who sold Garat the policy also overlooked the fine print. I don't know who printed the brochure, but I don't see how that can be treated as equivalent to the fine print of the actual agreement.
@Blueskylaw: All insurance companies know that if it was the wind which damaged the home, then the home owner should have purchased separate tornado coverage...
@TinkishDelight: More like "Who listens to their parents in their early teens?" By the time you're in your 20s, you should probably be mature enough to listen to your parents...
Also, I'm not sure that Suze's advice is all that good - most of her "good" advice is common sense, like "Don't go out and buy extravagant things you don't need" and "save money for emergencies." It sure is sad that we're at the point where we need someone to tell us these things.
@econobiker: Unless that tornado came from the ocean, in which case it's a hurricane. But wait, maybe it's only a hurricane if it STAYS in the ocean and is then re-classified as a tornado once it reaches land?
I think I'm beginning to see the light!
/scathing sarcasm
@nataku83:
"It sure is sad that we're at the point where we need someone to tell us these things. "
I'm afraid common sense is not all that common in matters way more broad than just finance. We probably wouldn't be in the economic situation that we're in if people were more receptive to "common sense" advice. Do you remember the post here not too long ago with the person that had creditor issues because they "didn't know" they had to pay back their credit card? It happens. On many different levels.
Also you're right about the teen vs 20s bit, but I think it's more gradual than a sudden switch on your 20th birthday.
@backbroken: Yes! I never would have put so much effort into my 401k and 8 month emergency fund if it weren't for her show. I also have a working knowledge of investing for my age group thanks to her. I mean it's one thing for your overly cautious parents to tell you x, y and z, it's quite another to hear first hand callers' tales of woe because they didn't do x, y and z. Plus not every parent is a financial expert. I would never take advice from my dad on money. God love him, but my mom is clearly the financial decision-maker in their relationship.
Where was Suze when I was a teenager? Why didn't she come to MY rescue?!
That is exactly correct.
I deal with these types of contracts on a daily basis. The usual language (for the major carriers, Genworth, John Hancock and Metlife) is "Care cannot be provided by a family member unless they are A. A Licensed Care Provider, and B.They are paid through an agency that provides care"
Christ, what's with the swipe at her clothes? Why is it so rare to see any mention of a female in the media without some sort of critique on her appearance. Cheap shots like that make for emptier tip jars.
To the article: an adviser is just that, a person you've chosen to give you advise. Just like an auditor only has to certify their opinion, and a public defender only has to be reasonably competent, a financial adviser is only only there to provide guidance. They never assume the ultimate responsibility for an outcome.
@HannerHearse: Speaking as a big Suze Orman fan -- I promise you, the day a male in the media starts wearing bedazzled leather jackets and gold spangle tops, we'll make fun of him, too.
I agree that Suze O. had little to do with this, however, I stopped listening to her ages ago anyway. While I found her advice smart & sensible, her continual 'bragging' about how many homes she has & how much money she has is unseemly, at best. Most who write or call don't have that kind of money, but that hasn't stopped her from pointing out that she does!
Sheesh! One might think, in her spot, that since she got that money from the sales of her books, etc.,it might be smart to not rub people's noses in it.
Remember: people first... then money... then things... then jackets!
Orman has generally good advice for people who have a hard time understanding finances, but this is a prime example of one of her many conflicts of interest - she has become too involved with financial products while giving out finance advice. She once even had a special "Suze Orman FICO Score Kit" product while pumping up that people needed to check their FICO.
Whenever you buy insurance, you are buying grief. You pay in premiums for months, years, decades. Then, when you need them they find all kind of loopholes to hold up payment, pay less or not pay at all. Insurance people are scum and they know it. Even as they smile as you sign the papers, in their mind they are figuring up their commission and thinking of ways to fulfill their commitments. If it is some type of property or health insurance and they actually pay you on a claim, they skyrocket your premiums so they can get back the money they paid you. Their payments to you are really a type of loan. Life insurance is the worst. My partner died in 2004 after 25 years of premium payments. It took 3 years to get them (MetLife) to pay and then only after fighting them and spending lots of time and money in doing so. They are leeches and I hate the whole lot.
I meant to say above "thinking of ways NOT to fulfill their commitments."
I hate to say it, but I'd have to side with the insurance company on this one. I am sympathetic to the plantiff's assertion that the brochure said that the caregivers "cannot be a member of your immediate family living with you." However, logically speaking, it does not necessarily follow that caregivers can be members of your immediate family NOT living with you even though it could see this way.
The real reason I would have to side with the insurance company, though, would be because California insurance laws provide for a 10 day "free look" period for the insured to back out of any contract for any reason within 10 days. The insured should have read through the contract thoroughly. After that 10 day period, the policy is in force in accordance with its terms. She also had the option to call the insurance company to verify whether or not her kids could be reimbursed if they filed a claim.
That said, if Suze Orman, as the insurance salesperson, used misleading promotional materials, or violated the "know your client" fiduciary standard, she could very well be held accountable as a licensed insurance salesperson. It would be an uphill battle and probably unwinnable for the plaintiffs because their only proof of what was discussed is their deceased mother.
Lessons:
1. READ THE CONTRACT
2. Especially for Long-Term Care or Life Insurance, it's not a bad idea to have the individuals in the room who will be making the claim in the event of your demise.
3. Ask questions about the policy during that first 10 days until you are blue in the face. Make notes. If you are uncomfortable, back out. It's your right.
4. Take insurance salespersons' words worth a grain of salt. These policies are complex, and even in good faith, they may not know all of the ins and outs. It ain't that hard to obtain an insurance license...
@FooSchnickens: whoa whoa whoa! lets not get out of hand here and start spreading mis-information again!!
a tornado over water is called a water-spout, not a hurricane...
that is all, please continue
"Fine print" is such a scary word, but I would like to know how accurate it is. In PA all insurance contracts have to have a minimun size font (of 10 pt I believe).
I don't know what the rules are in her state and I dont know what the contract she signed stated, but please people NEVER assume anything based on a promotional brochure or flyer!!
@mrgenius: I wholeheartedly agree. The only thing we dont know is was the agent told her. if they lied, then it sounds like an E & O claim to me!
@savdavid: blanket statements like these annoy me. and its always from the person that had a claim. "why should they raise my rate?"
its either all people pay X dollars, or:
Safe drivers pay x-1
reckless ones pay x+1
now if there was only some way to determine who are the safe and who are the reckless drivers. something that shows their past driving experience. hmmm... Maybe their Motor Vehicle report? Nah....
Suze dispenses common sense packaged as financial advice, but somebody out there is watching her so she is doing something right.
@Blueskylaw: I don't know of a single insurance company that doesn't do that, since the NFIP is just about the only place to go for flood insurance.
If they can "prove" (that is, "say") that water caused more damage than wind, they will refuse to pay.
"unless you feel comfortable putting your future entirely in another person's hands"
Social Security/Medicare much?
@Joe Reilly: One of the reasons you get insurance is that your family doesn't have to provide you with free medical care. If a nurse was medically justified, what is the abuse?
If I needed a nurse and my daughter was a nurse, I'd prefer to have her care for me. And if I paid for medical insurance that covers nursing, I don't see why my daughter should be donating her time.
If there is abuse, that's one thing. But there can always be abuse with medical insurance and there's nothing specific about this situation that makes it appear to be abuse.
@Limecrete: It's true, that whole tradition of wearing boring suits has protected most men on TV from my scathing fashion takedowns. Although I did make fun of Ryan Seacrest's fashion sense a lot at one point in the recent past.
I should probably point out, by way of credentials, that I'm currently wearing a wrinkled t-shirt covered in cat hair, which for once *wasn't* one I found on the bedroom floor this morning.
Well Suze, if you get sued and lose everything, I know how you can make $14 the hard way.
@CholeFantazmo: How many homes she has? She still owns the very first one she ever bought in California. She owns the home her mother lives in, and one near the studio where she works. This is too many? Take your envy and invest it properly next time.
@mrgenius: So its ok for her greedy kids to want to be paid for taking care of their own mother while she died? I hope they dont get a dime.
If their mother knew they would pull this while she was alive I bet she would've dis-inherited the lot of them. I would have.
@SteveZim1017: It's not so much fine print, as dense print. Sheets and sheets of paper written in legalese... it's not so much that it's difficult to see as that it's difficult to take in.
@DeeKey: I assume (hope) you are being sarcastic.
In any event, whether or not you feel like it's "fair" for her children to receive money from the mean ole Insurance Company, the fact remains that an insurance policy is a contract. If I was expecting to reimbursed by the insurance company for taking care of my mother, I probably would have looked at the terms of the policy first before paying for these very expensive costs out of pocket. Her children decided not to do so. When I get dental work or medical procedures done, I always find out how much I will be reimbursed before paying out of pocket.
What probably happened here is that the mother represented something to her children which was not accurate and they believed her. That sucks for them, but it still isn't a valid claim.
@nataku83: Suze gives more advice than avoiding extravagant purchases and saving money for emergencies. There is a lot of gobbledegook involved in certain loans, investments, etc. that laypeople enjoy having explained in everyday language.
Is this the same insurance company that won't cover hurricane damage because it was water and not wind that destroyed your house?