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Understanding Residual Disability Benefits: Are They Worth The Cost? Part 3 – Current Monthly Income

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In our previous posts, we identified the basic formula disability insurers use to calculate residual (partial) disability benefits and discussed variations in how disability insurers calculate Prior Monthly Income.  Now, we will examine the other principal component in calculating a residual disability benefit: Current Monthly Income.

Current Monthly Income is the calculation of how much a doctor is earning now, versus how much he was earning prior to his disability.  Although this sounds like a simple concept, calculating Current Monthly Income can be challenging in the healthcare industry.  Many physicians and dentists own their own practices or are a partner in a practice group.  Their income is not only based on their productivity, but also includes a passive component from the other business activities of the practice.  For example, a dentist may employ one or more hygienists or associate dentists who generate additional revenue.  When a doctor becomes disabled, the practice revenue may remain relatively constant as associates increase their production to account for the doctor’s reduced schedule.

Some insurers take advantage of this by calculating Current Monthly Income not on the doctor’s production, but rather on the practice’s revenue.  This fails to take into account the true financial impact of a disability because, while revenue may remain high, expenses increase as associate doctors and hygienists work more (and earn more) to fill in for the disabled doctor.

Additionally, many doctors pay themselves based on a percentage of their own production, in addition to the income they earn as practice owners.  When a doctor becomes partially disabled, his income from working in the practice will drop, even if the practice’s overall profitability does not.  Depending on the language in a particular policy, the policy may not take into account the drop in production, and the doctor may not be able to recover the full loss caused by his disability.

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Electronic Medical Records: What You Don’t Tell Your Doctor Might Hurt Your Disability Claim

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Over the last ten years, there has been an increasing movement away from paper records and toward Electronic Medical Records (EMR).  This move has been accelerated by the federal government’s mandate that doctors who treat Medicare and Medicaid patients must have adopted and implemented EMR systems as of January 1, 2014.

There are many benefits to using EMR.  They can facilitate patient care between referring doctors, improve data tracking over time, increase efficiency and reduce errors.  However, EMR systems have drawbacks when they are used for purposes never intended, such as to document a disability claim.

Many EMR systems allow the doctor to input his findings for every major system in the human body, such as the cardiovascular, musculoskeletal, gastrointestinal, neurological and psychiatric systems.  However, if the doctor does not put in something regarding one of the symptoms, the default setting on the EMR will report the system as being “within normal limits” or that the patient has “no complaints.”  The concern with this from a disability perspective occurs when a patient sees his doctor for a condition unrelated to his disability.

For example, a patient with a history of degenerative disc disease could visit his doctor for an unrelated infection or illness.  Since the doctor is conducting only a limited examination for purposes of treating the presenting illness, he may not input any information related to the patient’s disabling condition.  The EMR will then generate an inaccurate record stating that the patient’s musculoskeletal system and neurological system are within normal limits.

Disability insurance carriers can then use these default settings to their own advantage to raise questions about the severity of the claimed disability, justify an independent medical examination or functional capacity evaluation, or support a claim termination.  For patients who are receiving disability benefits, it is therefore important to know what their medical records look like and to effectively communicate with their physicians to ensure that their conditions and symptoms are accurately recorded on each visit.


Beware the “Offset”

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Insureds may think that if their claim is approved and the insurer begins paying benefits, they have won the battle. In reality, however, even the insurer’s complete admission that the insured is disabled within the terms of the policy does not mean that the insurer will pay the full monthly benefit listed in the policy. Most of us think of disability insurance as providing a stream of income to replace lost salary, but few understand that these policies often contain language effectively cutting off other benefits to which the insured would otherwise be entitled.

Disability insurance policies, especially long-term disability policies, frequently contain “offset” provisions, which offset other benefits against the insurer’s monthly payments. Common offsets include benefits which the insured receives from Social Security disability or retirement, unemployment compensation, worker’s compensation, no-fault auto insurance, sick leave, severance pay, and others. The net effect of these offsets is that should the insured receive a benefit from another source, the disability insurance company will reduce its monthly payment by the same amount.

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How Can I Keep My Disability Insurance Company From Contacting My Doctors Without My Consent?

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In our recent post, “Should Disability Insurance Companies Be Deciding What Kind of Care You Receive?” we explained that insurance companies will often contact your treatment providers directly without your consent, ambushing them with medical studies and demanding answers to a plethora of questions about your medical treatment in an effort to undermine your disability claim.  In many instances, insurance companies will refuse to produce the medical reports their in-house doctors wrote about you, but still expect full access to your treatment providers and their reports.

If this happens to you, you may (justifiably) feel like the insurance company is going behind your back and unfairly manipulating the claims process.  Your treatment providers may become upset because the insurance company is harassing them to respond to detailed questions without adequate time to understand the questions and/or provide thorough answers.  You may even notice your doctors acting differently towards you after speaking with the insurance company.  For example, your doctor might begin to avoid you when you ask him or her to provide you with documentation to support your claim.

How can you protect your treatment providers from being ambushed by insurance companies and protect your claim from being manipulated?

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How Functional Capacity Evaluations Impact Your Disability Insurance Claim

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Our last post discussed what to expect during a functional capacity evaluation (“FCE”), as well as the intended purpose of an FCE.  Though FCEs can be a useful tool for measuring your abilities, FCEs do not always provide results that are truly indicative of your ability to do your job on a regular, consistent basis.  Many courts have recognized the weaknesses and limitations of FCEs in the disability insurance claim context.

Weaknesses and Limitations of FCEs

There are approximately 10 different types of FCEs, each with its own program, measurement methods, and possible evaluative outcomes.  Because FCEs can be influenced by many factors, such as physical ability, beliefs, and perceptions, FCEs need to “be interpreted within the subject’s broad personal and environmental context.”[1] Thus, the FCE “process and its administration are only as good as the examiner.”[2]

Disability insurers often stop paying benefits based on FCE results, even when you can’t actually meet the demands of your former job duties on a consistent basis.  This is due to an inherent limitation of FCE testing: the FCE can only measure your capacity to do a certain task for a limited amount of time on a certain day.  For instance, you may be able to push and pull ten pounds for a few minutes during the FCE, but that doesn’t mean you can do the same task all day, every day.

Another important limitation of FCE testing is how effort is measured.  The FCE examiner normally monitors the subject’s heart rate to determine if he or she is putting forth full effort.  If your heart rate isn’t high enough, the examiner will say you didn’t try your hardest, so you can probably do more than you demonstrated during the testing.  However, there are factors that affect your effort level that can’t be measured by your heart rate alone. For example, heart rate monitoring doesn’t measure the impact of migraine headaches, kidney failure, or other non-exertional limitations (such as interference with attention and concentration due to pain and fatigue).

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What Is a Functional Capacity Evaluation?

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After filing a disability insurance claim, your insurance company may ask you to undergo a Functional Capacity Evaluation, or FCE.  The insurer tells you where and when to show up, but you likely have little idea what to expect when you arrive.  What is an FCE, what is its purpose, and how will it affect your claim?

What Is an FCE?

FCEs are formal examinations performed by occupational therapists (OTs) or physical therapists (PTs), not physicians.  The purpose of the FCE, according to your insurer, is to evaluate your ability to perform the substantial and material duties of your occupation.

What Can You Expect at the FCE?

FCEs usually last between four to six hours, but depending on the tests your insurer has requested, they could be longer, taking place over two consecutive days.

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Comitz | Beethe at Arizona Society of Anesthesiologists Scientific Meeting

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This Friday and Saturday, May 16-17, Comitz | Beethe will have a booth in the exhibitor hall of the Arizona Society of Anesthesiologists 40th Annual Scientific Meeting at the Scottsdale Resort and Conference Center.  Attendees are invited to stop by our booth for information about our law firm, what doctors can expect when filing a disability insurance claim, and how our firm may be able to assist you.


How Does an Incontestability Clause Protect My Disability Insurance Claim?

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When reading your disability insurance policy you may come across a clause entitled “Incontestable.” An example of an incontestable clause from Berkshire (a subsidiary of Guardian Life Insurance Company) is as follows:

 Berkshire - Incontestable

This clause is required by statute, and it protects you in a couple of ways.

First, it protects you against being denied coverage because of a preexisting condition.  This clause precludes insurance carriers from inquiring into the representations you made on the policy application if the two-year incontestable period has lapsed.  In essence, the clause gives insurers a two-year time limit to review policy applications.  If the insurance company makes no inquiry in those two years, they lose the ability to rescind the policy based on the accuracy of your representations in the policy application’s paperwork.

For example in the case of Robison v. Brotherhood of R. R. Trainmen Ins. Dept.,[1] the plaintiff had been treated for tuberculosis prior to the effective date of the policy.  Three years after obtaining the policy he became disabled from tuberculosis.  When the insurance company tried to deny the insured’s claim, the Arizona Supreme Court ruled that the incontestable clause of the contract precluded the insurance company from inquiring about the insured’s health prior to the effective date of the policy.[2]

Second, this clause protects you against an insurance company’s attempt to deny a claim based on a representation you made that is not material.  For instance, when filling out the application for the insurance policy, you might write down the wrong year that you had some minor knee surgery.  An insurance company cannot use such a miniscule and immaterial mistake to deny you coverage when your claim is for debilitating arthritis in your hands which doesn’t allow you to practice properly in your field of medicine.

Third, this clause protects an insured that is completely truthful when filling out the policy paperwork.  In Paul Revere Life Ins. Co. v. Haas the court upheld a policy which limited “coverage to sicknesses that ‘first manifest’ themselves after the policy has been issued.”[3]  This means that if you have a condition before the insurer issued the policy, but you don’t become aware of it until after the policy has become effective, the condition should be covered.

It is important to remember that and incontestable clause usually includes a caveat: it does not protect an insured that knowingly or fraudulently misrepresents information during the application process. The Haas court stated that the language of the incontestable clause “does not protect insureds who make fraudulent misrepresentations in their applications. Rather, the language is intended to protect those insureds who are unaware of their diseases.”[4]  The insurance company in Haas (Paul Revere, a subsidiary of Unum) was allowed to deny coverage of the insured’s eye condition when the insured knew about and had been treated for the disease well before the start of the policy. The court believed that the legislature did not intend for the mandatory incontestable clause to be “an invitation for fraudulent applications for disability insurance.”[5]  The preexisting eye condition was deemed to be a fraudulent misrepresentation, and the insurance company denied its coverage.  We also discussed this topic in a previous post entitled “Medical History Misstatements On A Disability Insurance Application Can Void The Policy In The Future.”

The outcomes of the cases based on incontestable clauses show how important it is to be truthful throughout the insurance claim process.  The more accurate you are about your health condition, the fewer coverage problems you may have down the road.


[1] Robison v. Brotherhood of R. R. Trainmen Ins. Dept., 73 Ariz. 352, 241 P.2d 791 (1952), opinion modified on reh’g on other grounds, 74 Ariz. 44, 243 P.2d 472 (1952).

[2] Id.

[3] Paul Revere Life Ins. Co. v. Haas, 137 N.J. 190, 210, 644 A.2d 1098, 1108 (1994).

[4] Id.

[5] Id. at 190, 208, 644 A.2d 1098, 1107.


Should Disability Insurance Companies Be Deciding What Kind of Care You Receive?

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What role should your insurance company play in determining your treatment options?  In our article, “Can Your Disability Insurer Dictate the Terms of Your Care?” by Ed Comitz and Michael Vincent, we discussed how, depending on the terms of your insurance policy, insurers can dictate what care you should receive, and whether you can be forced to undergo surgery in order to continue to receive policy benefits.

When prescribing you a specific treatment or medication, your doctor usually has very specific goals in mind.  First, they want to medically treat you in the best way possible.  They want to provide you with the best means for curing or coping with your situation after considering the totality of your circumstances and your recovery goals.  Second, they want to make you feel better and help you recover from your ailments if possible.

For example, if surgery isn’t an option for your consistently high levels of pain, your doctor may prescribe strong medication to give you the relief you need.  They may effectively manage the pain you struggle, but the side effects may impede you from returning to work.

Unlike doctors, insurance companies have one goal in mind: to get you off of their claims list and not pay monthly claim benefits.  They want you treated in a way that returns you to work in the short run and may not be as concerned about the long term side effects or repercussions of alternative treatment options.

One way they accomplish this is by having their doctor contact your doctor to discuss treatment alternatives.  Such alternative methods include using less effective medications that would allow you to return to work.  A strategy they employ is to point your doctor to studies like those outlined in the recent articles “Disability experts question long-term opioid use,” or “Reed Group Releases New Opioid Treatment Guidance in Disability Guidelines.”

What many people don’t realize is that the Reed Group, the company who released the “updated expert guidelines,” is a subsidiary of Guardian Life Insurance Company, parent company of Berkshire Life.  This company has a substantial incentive to downplay the safety and effectiveness of drugs, like opioids, that are able to manage acute pain, but render patients unable to return to work because of medication side effects.   These companies want to point your doctors to these guidelines to influence their bottom line by getting you back to work quickly.

The problem with this tactic is that these blanket guidelines do not take into account your pain, your needs, or your situation.  Yes, the alternative options may get you back to work, but in the long run you may experience repercussions.  Letting claims consultants, who aren’t medical professionals, or the insurance company’s doctors determine your care and treatment is a conflict of interest for insurance companies and is not always in your best interests.


Ed Comitz Presenting Course “Disability Insurance: Will It Be There When You Need It?” at Western Regional Dental Convention on Friday April 4 and Saturday April 5, 2014

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WRDC 2014 resized

Attorney Ed Comitz, the head of Comitz | Beethe’s healthcare and disability insurance practice, will be giving a presentation called “Disability Insurance:  Will It Be There When You Need It? Choosing Policies, Pursuing Benefits and Litigating Claims” on April 4th (Course Code F08) and April 5th (Course Code S06) at 8:30 a.m. at the Western Regional Dental Convention in Phoenix, Arizona.  The course is worth three CE credits for dentists who attend.  Registration information is available on the Western Regional Dental Convention’s website.

Comitz | Beethe is also an exhibitor at the dental convention.  Please feel free to stop by our Booth 537 (directly across from the Internet Cafe) if you have questions about your disability insurance policy or claim.


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