Case Study: Factual Disability v. Legal Disability – Part 1

In the next few posts we will be looking at the distinction between “factual” and “legal” disability.  In Part 1, we will discuss the difference between a factual and a legal disability, and why that distinction matters.  In Parts 2 and 3, we will look at an actual court case involving “factual” and “legal” disability.

What is “Factual Disability”?

Factual disability refers to incapacity caused by illness or injury that prevents a person from being physically or mentally able to engage in his or her occupation.  This is the type of disability that most people think of in connection with a disability claim.

What is “Legal Disability”?

Legal disability is a broad term used to encompass all circumstances in which the law does not permit a person to engage in his or her profession, even though he or she may be physically and mentally able to do so.  Here are some examples:

  • Incarceration;
  • Revocation or suspension of a professional license;
  • Surrendering a professional license as part of a plea agreement or to avoid disciplinary action; and
  • Practice restrictions imposed by a licensing board.

Why the Distinction Matters

In sum, someone with a “factual disability” is mentally or physically unable to engage in their profession.  In contrast, someone with a “legal disability” is not allowed to engage in their profession.  Courts have repeatedly held that disability insurance policies provide coverage for factual disabilities, but not for legal disabilities.

If a claimant has both a factual and legal disability, things become more complicated.  In the next few posts, we will look at an example of how one court determined whether someone with both a factual and legal disability was entitled to benefits.


Online Underwriting – Tips to Avoid Potential Pitfalls

Recently, several disability insurers have started to introduce new online applications in an effort to make purchasing disability insurance more convenient.  Some of them even offer automated underwriting and instant approval of your application.  In connection with the online applications, insurers are also providing more flexible options regarding benefit amounts and benefit periods.

While online applications will likely make purchasing disability insurance more convenient, here are some tips to keep in mind and some pitfalls to avoid.

  1. Don’t neglect to shop around. While it will certainly take less time to just apply to the first website you come across, you should always look at what multiple companies are offering before you apply for disability benefits.  While it may not seem like it at the time, the decision to purchase disability insurance may be one of the most important decisions in your life if you end up becoming disabled.  So make sure to take the time to research what your options are, so that you can be sure to get the best policy you are able to.
  1. Do the research. If you are merely interacting with a computer screen, you will not be able to ask questions about particular policy provisions.  Consequently, you should take the time to do outside research so that you know exactly what to look for and what to avoid in a policy.
  1. Don’t sacrifice important provisions for convenience or affordability. There are certain provisions that every doctor and dentist should have in their policy, such as an own occupation provision.  If the online policy does not offer the provisions you need, don’t settle for the sake of convenience or affordability.  Remember, if you end up becoming disabled, you will not just want any policy—you will want the best policy.
  1. Take your time when you are filling out your application. Most insurance policies contain language that allows the insurer to void the policy if you make material misstatements in your application.  Many people tend to rush through online applications, particularly if their priority is convenience.  Make sure that you double check your answers before you submit the application, to ensure that everything you are submitting is accurate.
  1. Periodically reevaluate your coverage. If your initial goal is affordability, make sure that you periodically reevaluate your coverage to ensure that it is still sufficient for your needs. Many people initially apply for low benefit policies and neglect to increase their benefits amounts later on when they can afford to pay higher premiums.  Consequently, if they become disabled, their benefit amount ends up covering only be a small fraction of their prior income.

These tips are particularly important for physicians and dentists to remember when applying for disability insurance, because insurance companies are particularly aggressive towards claims by doctors and dentists.  Additionally, many doctors and dentists are accustomed to a high level of income.  Physicians and dentists who do not purchase enough coverage and later become disabled can find themselves unable to meet their obligations and care for their family, even if their disability claim is approved.  Additionally, as we have discussed in previous posts, in some cases, a single word in a policy can determine whether you receive benefits.

So remember, purchasing disability insurance is not something that should be taken lightly.  Take your time, and get the best policy you can.


What is a Pain Journal and Why Are They Important?

In previous posts, we have discussed the importance of properly documenting your disability.  In this post we are going to discuss one way you can document your disability—pain journals.

A pain journal is exactly what is sounds like—a journal in which you document your pain levels and symptoms each day.  Creating this sort of record will not only provide you with documentation when filing your claim, but will also allow you to effectively communicate with your treatment providers regarding your symptoms, so that they can provide you with appropriate care.  Oftentimes, depending on your disability, you will go several days or weeks without speaking to your treatment providers.  A pain journal can help you easily recall and communicate to your treatment provider everything that has happened since you last met with them.

Tips for Creating a Pain Journal

When creating a pain journal, you want to be as specific as possible so that your record is complete.  You also want to make sure that you describe your plain clearly, so that you will be able to understand what you meant when you refer back to your journal.

Here are a few things you might consider documenting in your journal:

  1. The location of the pain.
  1. The level of the pain (if you use a numeric scale, be sure to also describe the scale).
  1. The duration of the pain.
  1. Any triggers to the pain.
  1. Any medications you are taking.
  1. Whether the medications you are taking are effective or have any adverse side effects.
  1. Any other symptoms in addition to the pain.

When filling out your pain journal, you may have a hard time coming up with a description that fits the type of pain you are experiencing, since all pain is not the same.  However, you should avoid the temptation to document your pain in a generic way.  The type of pain you are experiencing is just as important as your pain levels, and it is something that your insurer will likely ask you to describe.

To that end, here is a list of adjectives that are commonly used to describe pain:

Cutting; Burning; Cramps; Knots; Deep; Pulsing; Sharp; Shooting; Tender; Tight; Surface; Throbbing; Acute; Agonizing; Chronic; Dull; Gnawing; Inflamed; Raw; Severe; Stabbing; Stiff; Stinging

Sample Pain Journals:

American Pain Foundation Form:

American Cancer Society Form:

Peace Health Medical Group Form:


The Four Functions of Insurance

In this post, we are going to discuss the four functions of an insurance company.

Introduction – The Promise

Insurance is not like any other business.  Rather than selling a tangible product that you receive immediately upon paying for it, insurance companies are selling an important promise—a promise of protection, security and peace of mind if something goes wrong.

When you buy a car, you give someone money and you take a car home.  When you buy groceries, you pay money and get your groceries.  Insurance is different.  With insurance, you give them money and trust, and hope and pray that you never have to collect.

The Four Functions of Insurance

The activities of an insurance company can be divided into four major functions:

1.  Actuarial

The actuarial department is concerned with what kind of promise the company is going to sell and how much the promise should cost.  Essentially, the actuaries’ role is to analyze the financial consequences of risk and price the company’s product in a way that will allow the company to make a profit.  For example, an actuary working for a car insurance company might calculate the risk that potential customers will be in a car accident, and then adjust premium amounts to account for that risk so that the insurer can pay accident claims and still make money.

2.  Marketing

The marketing department is concerned with how to get people to buy the promise being sold.  They design ads and employ sales people.  Basically, this department’s goal is to get people interested in buying the promise.

3.  Underwriting

The underwriting department determines who the company should sell the promise to.  Underwriters review applications and assesses whether the company should allow applicants to purchase the promise.  For example, the underwriting department of a life insurance company might review health questionnaires submitted by applicants to assess whether the level of risk is low enough to provide life insurance to the applicant.

4.  Claims

The claims department’s role is to process and pay legitimate claims. While the first three departments are very much concerned about profitability, the claims department is not supposed to consider company profitability when adjusting a claim.  If the actuaries made a mistake and sold a product that is costing the company too much money, the product was not marketed correctly, or if underwriting was too lax, the company is supposed to pay legitimate claims and bear the loss.


As we have discussed in previous posts, an insurance company has a legal obligation to treat its customers fairly and deal with its customers in good faith.  Ideally, the disability insurance claim process should be simple.  You should inform the company that you meet the standards of the contract, provide certification from a doctor of that fact, and collect your benefits.  It is not supposed to be an adversarial process.

Unfortunately, in instances where one or all of the first three departments mess up, some insurance companies improperly shift the burden of making a profit onto the claims department.  This, in turn, transforms the claims process into an adversarial process.

If you have an experienced disability attorney involved from the outset of your disability claim, your attorney can monitor the insurance company to make sure that they are complying with their legal obligations.  If you have already filed a claim, but believe that your insurer is not properly processing your claim, an experienced attorney can review the insurer’s conduct and determine whether the insurer is acting in bad faith.


New Methods of Surveillance: Part 2 – Drones

In Part 1 of this post, we discussed “stingrays”—a relatively new technology that is becoming more and more common. In Part 2, we will be discussing another new technology that is becoming increasingly prevalent as a surveillance tool—drones.

What is a “Drone”?

The term “drone” is a broad term that refers to aircrafts that are not manned by a human pilot.  Some drones are controlled by an operator on the ground using remote control.  Other drones are controlled by on-board computers and do not require a human operator.  Drones were initially developed primarily for military use.  Recently, drones have also been utilized for a wide range of non-military uses, such as aerial surveying, filmmaking, law enforcement, search and rescue, commercial surveillance, scientific research, surveying, disaster relief, archaeology, and hobby and recreational use.

How Does Drone Surveillance Work?

Typically, drones are connected to some type of control system using a data link and a wireless connection.  Drones can be outfitted with a wide variety of surveillance tools, including live video, infrared, and heat-sensing cameras.  Drones can also contain Wi-Fi sensors or cell tower simulators (aka “stingrays”) that can be used to track locations of cell phones.  Drones can even contain wireless devices capable of delivering spyware to a phone or computers.


Over the past few years, several new methods of surveillance have been developed.  These new technologies create a high risk of abuse, and as they become more and more commonplace and affordable, that risk will only increase.  Unfortunately, in the area of surveillance, the law has not always been able to keep up with the pace of technology.  In many respects, the rules regarding the use of new surveillance technologies remain unclear.  Consequently, the most effective way to guard against intrusions of privacy is to be aware of the expanding abilities of existing technology, because you never know when someone could be conducting surveillance.


ACLU Website:


New Methods of Surveillance: Part 1 – “Stingrays”

In previous posts, we have discussed how insurance companies will hire private investigators to conduct surveillance on disability claimants.  In the next two posts, we will be discussing some modern surveillance technologies that most people are not very familiar with – “stingrays” and drones.

What is a “Stingray”?

A “stingray” is a cell site simulator that can be used to track the location of wireless phones, tablets, and computers—basically anything that uses a cell phone network.

How Does Stingray Surveillance Work?

A “stingray” imitates cell towers and picks up on unique signals sent out by individuals attempting to use the cell phone network.  The unique signal sent out is sometimes referred to as an International Mobile Subscriber Identity (IMSI) and it consists of a 12 to 15 digit number.

Once the “stingray” connects to a device’s signal, it can collect information stored on the device. Usually the information collected is locational data, which is then used to track the movement of individual carrying the device.

Additionally, some “stingray” devices can intercept and extract usage information, such as call records, text messages, and Internet search history, from devices it connects to.  Some “stingrays” are even able to intercept phone call conversations and deliver malicious software to personal devices.

Stay tuned for Part 2, where we will discuss drone surveillance.


ACLU Website:


Deciphering Mental Disorders and Substance Abuse Policy Exclusions – Part 2

In Part 1, we looked at how insurance companies broadly define mental disorders and substance abuse.  In this post, we will be looking at a sample mental disorder and substance abuse limitation provision.

What Does a Mental Disorder and Substance Abuse Limitation Look Like?

Here is a sample limitation provision from an actual disability policy (this provision is taken from the same policy containing the definition of “mental disorders and/or substance abuse disorders” discussed in Part 1):

maximum indemnity period means the maximum length of time for which benefits are to be paid during any period of total disability (see the Policy Schedule on Page 1). Benefits will not be paid beyond the policy anniversary that falls on or most nearly after your sixty-seventh birthday, or for 24 months, if longer, except as provided by this policy.  In addition to any limitations described above, the maximum indemnity period for a disability due to a mental disorder and/or substance abuse disorder is also subject to the following limitations:  (a) The lifetime maximum indemnity period is 24 months; (b) the 24-month limitation also applies to all supplementary benefits payable by virtue of your disability due to a mental disorder and/or substance abuse disorder; (c) any month in which benefits are paid for a mental disorder and/or substance abuse disorder (regardless of whether paid under the base policy any supplementary benefits or both) shall count toward the 24-month limitation; (d) this limitation applies to this policy and all supplementary benefits under this policy.

Note that this provision is not entitled “mental disorder limitation” or “substance abuse limitation.”  Instead, it is entitled “maximum indemnity period.”  In fact, this provision is actually part of the policy’s definition section, and not the main part of the policy—highlighting the importance of carefully reviewing the definitions in your policy.

Note also that this particular provision provides that any month in which benefits are paid counts against the 24 month limit.  So, for example, if you received benefits for a period of 12 months in connection with a substance abuse related disability, and subsequently returned to work, the next time you needed to file a claim related to a mental disorder or substance abuse, you could only receive a maximum of 12 months of benefits.


When purchasing a policy, watch out for mental disorder and substance abuse exclusions and limitations.  Always be sure to ready your policy carefully so that you understand the scope of the protection you are purchasing.  If you already have a policy, an experienced disability insurance attorney can review your policy and determine whether it contains any mental disorder or substance abuse limitations that might limit your ability to collect under your policy.


Deciphering Mental Disorders and Substance Abuse Exclusions – Part 1

In previous posts, we have discussed how many disability policies contain mental disorder and/or substance abuse exclusions that either prevent claimants from collecting under their policies, or severely limit claimants’ right to collect—usually to 24 months or less.

Sometimes, it can be hard to tell if your policy contains such an exclusion.  Policy language can be difficult to decipher, and it becomes even more difficult in cases where the terms of the exclusion are contained within multiple provisions of the policy.

In the next few posts, we are going to discuss mental disorder and substance abuse exclusions.  In Part 1, we will look at an example of how insurance companies define mental disorders and substance abuse.  In Part 2, we will look at an example of a mental disorder and substance abuse limitation provision.

How Do Insurance Company’s Define Mental Disorders and Substance Abuse?

Each policy’s definition varies, depending on the insurance company.  Here is a sample definition taken from an actual insurance policy:

mental disorders and/or substance abuse disorders mean any of the disorders classified in the most current edition of the Diagnostic and Statistical Manual of Mental Disorders published by the American Psychiatric Association (APA). Such disorders include, but are not limited to, psychotic, emotional, or behavioral disorders, or disorders relatable to stress or to substance abuse or dependency. If the Manual is discontinued, we will use the replacement chosen by the APA, or by an organization which succeeds it.

As you can see, this definition is quite broad and could potentially encompass quite a few disabling conditions.  Since the policy provision does not actually list out specific disorders, at best you would need to consult the APA manual, in addition to your policy, to find out what this provision actually means.  And if your particular disorder does not fit neatly within the APA’s framework, you will likely have to go to court to determine whether your disorder falls within the policy’s definition of mental disorders and/or substance abuse disorders.

Also, because the definition is based upon the “most current edition” of the Diagnostic and Statistical Manual of Mental Disorders published by the APA, the types of disorders covered by the limitation will change each time the APA publishes a new manual.

These are just a few of the reasons why claims involving mental disorders and substance abuse disorders can be particularly tricky.  In the next post, we will look at an example of what a mental disorder/substance abuse disorder limitation provision looks like.


MetLife to Exit Individual Disability Insurance Market

MetLife, Inc. the fourth largest provider of long-term disability insurance by market share[1], is suspending sales of its individual disability insurance policies.  In an internal memorandum to producers, MetLife Client Solutions Senior Vice President Kieran Mullins announced that the company would be suspending the individual disability insurance block of business effective September 1, 2016.  In the memo, Mr. Mullins cites the goal of creating a new U.S. Retail organization for its insurance products and the “difficult, but strategic” decisions that led to the shutdown of their individual disability insurance product:

This was not an easy decision to make, given the growth and strength of our IDI business. However, we believe it is the best course of action for the immediate future. While there is tremendous opportunity in this market, the suspension provides us with the time and resources needed to properly separate the U.S. Retail business from MetLife. There is a significant amount of work to be done to retool existing systems – and implement new systems – that will ultimately provide the most value to our customers and sales partners in the years to come.

Insurance news websites are already speculating that the shutdown could put pressure on the remaining thirty-one companies selling individual disability insurance to raise premiums.  Because MetLife controls such a substantial share of the individual disability insurance market, their departure effectively reduces the size of the pool in which the risk can be spread.  Cyril Tuohy, writing for, points to the move as an opportunity for the remaining companies in the market to innovate and attract the business MetLife will be leaving behind.  The company’s departure will favor the insurers whose individual disability policies cater to physicians, dentists, and other high-income professionals, such as Guardian, Principal, The Standard, Ameritas and Northwestern Mutual.[2]

In an accompanying FAQ, MetLife assured producers that existing policies would not be affected by the change, and that they would continue to support policy increases by the terms of the Guaranteed Insurability Option, Automatic Increase Benefit, and Life Event riders.  The memo also noted that MetLife would continue sales of its group, voluntary, and worksite disability products.

It is important to remember that even though MetLife must continue to service its existing policies, shutting down sales of new policies can still affect current policyholders.  Absent the need to sell new policies, an insurer may have less incentive to provide customer service or avoid a complaint from the state insurance board.  Additionally, once a block of business closes, the easiest way to maintain profitability of that product is through claims management.  In real terms that is typically accomplished through claims denial and benefits termination.  We discussed these very tactics in a 2012 blog post about Unum’s management of its closed block of individual disability insurance products.

If you have a MetLife individual disability insurance policy, pay close attention as the business focus shifts away from selling new policies and toward the management of existing policies.  If you have a question or concern regarding your MetLife policy, contact our office.


[2]“Will MetLife’s Suspension Send DI Prices Soaring?” Cyril Tuohy,


Study Shows Increase in Long Term Disability Claim Denials

The most recent study conducted by the Council for Disability Awareness shows that long term disability claim approvals have declined in recent years:

CDA Graph - Claim Approvals

In addition, 50% of the companies surveyed reported increased claim termination rates.

The companies surveyed included:

  • Aetna
  • AIG Benefit Solutions
  • American Fidelity
  • Ameritas
  • Assurant Employee Benefits
  • Disability RMS
  • Guardian
  • The Hartford
  • Illinois Mutual
  • Lincoln Financial Group
  • MassMutual Financial Group
  • MetLife
  • Ohio National
  • Principal Financial
  • Prudential
  • The Standard
  • Sun Life Financial
  • UnitedHealthcare
  • Unum