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

References:

http://www.disabilitycanhappen.org/research/CDA_LTD_Claims_Survey_2014.asp


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Long Term Disability by Gender, Age and Occupation

In previous posts, we have reviewed data collected by the Council for Disability Awareness related to long term disability claims.[1]  In the next few posts, we are going to look at the most recent study conducted by the Council for Disability Awareness.

To begin, here are a few of the notable trends that the study revealed regarding the gender, age and occupation of long term disability claimants:

  • The average age of long term disability claimants has increased in recent years, with the vast majority of claimants filing between the ages of 50 and 59.

CDA Graph - Age - 1

CDA Graph - Age - 2

  • The number of in-force individual disability policies for business management and administration, physicians and dental professional occupation categories increased, while the number of in-force policies for sales and marketing professionals decreased.

References:

http://www.disabilitycanhappen.org/research/CDA_LTD_Claims_Survey_2014.asp

[1] The Council for Disability Awareness is “a nonprofit organization dedicated to educating the American public about the risk and consequences of experiencing an income-interrupting illness or injury.”

See http://www.disabilitycanhappen.org/research/CDA_LTD_Claims_Survey_2014.asp


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Case Study: Interpreting Policy Language – Part 2

In Part 1 of this post, we started to look at the recent case Leonor v. Provident Life and Accident Company[1].  The key issue in this case was whether the policy language “the important duties” meant “all the important duties.”  In Part 2 of this post, we will look at how the court addressed the parties’ arguments and see how the court ultimately resolved the dispute.

The Law

Under Michigan law, ambiguous words in a disability policy are construed in favor of the insured.  A word or phrase is ambiguous if the word or phrase may “reasonably be understood in different ways.”  Because of these rules, in order to win his case, the claimant, Leonor, did not have to come up with an interpretation that was superior to the interpretation offered by the insurer, Provident Life.  Instead, Leonor merely had to establish that the policy language was ambiguous and then come up with a reasonable interpretation of the policy language that supported his claim for benefits.

The Analysis

The court began its analysis by recognizing that context is important when interpreting a contract.  The court acknowledged that the definition of “residual disability” was obviously intended to be a less severe category of disability, and even acknowledged that the terms “total disability” and “residual disability” had to be mutually exclusive for the rest of the policy to make sense.  Nonetheless, the court determined that the phrase “the important duties” was ambiguous.

By way of illustration, consider the following continuum, beginning with no limitations and ending at the inability to perform all of the important duties of an occupation.

    |———————————–|———————————–|———————————–|

No Limitations            Unable to Perform            Unable to Perform                  Unable to Perform                                             Some Duties                      Most Duties                         All Duties

Essentially, the court determined that the “residual disability” definition was broad enough to encompass individuals who could not perform “some” of the duties of their occupation, but was not broad enough to encompass individuals who could not perform “most” or “all” of the duties of their occupation.  Thus, the policy language remained ambiguous because the “total disability” definition could still mean either the inability to perform “most” duties or the inability to perform “all” duties.

Next, the court determined that Leonor’s interpretation of the policy language was reasonable.  The court explained that, under the rules of grammar, the definite plural does not necessarily apply to each thing in the group referred to.  To support its position, the court noted that Provident Life’s own counsel argued at oral argument that its position was supported by “the rules of grammar” even though Provident Life’s counsel obviously did not mean to suggest that its position was supported by “all the rules of grammar.”

Finally, the court held that a claimant’s income is “far from dispositive” in disability cases.  Specifically, the court determined that Leonor should not be penalized for earning more income after his injury than he did before the injury.  The court noted that because investing in businesses is inherently risky, it was entirely appropriate for Leonor to insure himself against the loss of the guaranteed, steady income provided by the dental procedures.

The Decision

In the end, the court determined that Leonor was “totally disabled” under the policies because the phrase “the important duties” was ambiguous and Leonor had offered a reasonable application of the phrase that supported an award of benefits.  The court ordered Provident Life to pay Leonor his benefits under the policy, plus 12% interest as a penalty for failing to pay the claim in a timely fashion.

Conclusion

This case demonstrates how the presence or absence of a single word in a policy can dramatically affect your ability to recover benefits.  Even language that is not necessarily unfavorable, but merely ambiguous, can delay your recovery of benefits if you have to go to court to resolve a dispute with the insurer.  For example, in the Leonor case, Leonor made his initial disability claim in July 2009, but the court did not conclusively establish he was entitled to benefits until June 2015—nearly six years later.

If possible, you should avoid ambiguous and unfavorable language when purchasing a policy.  If you already have a policy, an experienced disability insurance attorney can review your policy and identify words or phrases that could impact your ability to recover benefits in a timely fashion.

[1] 790 F.3d 682 (6th Cir. 2015).


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Case Study: Interpreting Policy Language – Part 1

Can the presence or absence of a single word in your disability policy determine whether you receive your disability benefits?

In the recent case Leonor v. Provident Life and Accident Company[1], the key issue was whether the policy language “the important duties” meant “all the important duties.”  In Part 1 of this post, we will look at each party’s position in the case and examine why this policy language was so important.  In Part 2 of this post, we will look at how the court addressed the parties’ arguments and see how the court ultimately resolved the dispute.

The Facts

In the Leonor case, the claimant, Leonor, was a dentist who could no longer perform dental procedures due to an injury and subsequent cervical spine surgery.  Prior to the injury, Leonor spent approximately two-thirds of his time performing dental procedures, and spent the rest of his time managing his dental practice and other businesses he owned.  After the injury, he no longer performed dental procedures; instead, he sought out other investment opportunities and devoted his time to managing his investments.  Interestingly, Leonor’s income actually increased after he stopped performing dental procedures because his investments turned out to be very successful.

The Policy

Leonor’s disability policy provided for benefits if he became “totally disabled,” and defined “totally disabled” as follows:

“Total Disability” means that because of Injury or Sickness:

You are unable to perform the important duties of Your Occupation; and

You are under the regular and personal care of a physician.

Leonor’s policy also provided for benefits if he became “residually disabled,” and defined “residually disabled” as follows:

“Residual Disability,” prior to the Commencement Date, means that due to Injury or Sickness:

(1) You are unable to perform one or more of the important duties of Your Occupation; or

(2) You are unable to perform the important duties of Your Occupation for more than 80% of the time normally required to perform them; and

Your loss of Earning is equal to at least 20% of your prior earnings while You are engaged in Your Occupation or another occupation; and

You are under the regular and personal care of a Physician.

The Arguments

The insurer, Provident Life, argued that Leonor’s managerial duties were “important duties” of his occupation prior to his injury, and therefore Leonor was not “totally disabled” because he could still perform managerial duties in spite of his injury.

Leonor responded that the policy language only required him to be unable to perform “the important duties” of his occupation.  He pointed out that Provident Life could have required him to be unable to perform “all the important duties” of his occupation.  Since Provident Life did not include the word “all,” Leonor argued that it did not matter whether he could still perform managerial duties because he could no longer perform other “important duties” of his occupation—namely, performing dental procedures.

In response, Provident Life argued that, when read in context, “total disability” plainly meant the inability to perform “all the important duties” because the policy separately defined “residual disability” as being unable to perform “one or more of the important duties.”  Thus, according to Provident Life there was already a category under the policy that covered individuals like Leonor who could not perform “some” of the important duties of their occupation.  Provident Life also argued that Leonor should not receive total disability benefits because Leonor’s income after the injury was higher than it was prior to the injury.

Stay tuned for Part 2, to find out how the court addressed Principal Life’s arguments and resolved the dispute.

[1] 790 F.3d 682 (6th Cir. 2015).


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Myelopathy: Part 2

In Part 1 of this post, we listed some of the symptoms and potential causes of myelopathy.  In Part 2, we will discuss some of the methods used to treat myelopathy.

Methods of Treating Myelopathy

  • Avoidance of activities that cause pain;
  • Acupuncture;
  • Using a brace to immobilize the neck;
  • Physical therapy (primarily exercises to improve neck strength and flexibility);
  • Various medication (including nonsteroidal anti-inflammatory drugs (NSAID), oral corticosteroids, muscle relaxants, anti-seizure medications, antidepressants, and prescription pain relievers);
  • Epidural steroid injections (ESI);
  • Narcotics, if pain is very severe;
  • Surgical removal of bone spurs/herniated discs putting pressure on spinal cord;
  • Surgical removal of portions of vertebrae in spine (to give the spinal cord more room); and
  • Spinal fusion surgery.

Conclusion

Myelopathy can be severely debilitating, particularly for doctors and dentists. Obviously, any physician or dentist who is experiencing a loss of motor skills, numbness in hands and arms and/or high levels of chronic pain will not be able to effectively treat patients.

If you are experiencing any of these symptoms, you may want to ask your doctor to conduct tests to see if your spinal cord is being compressed. If you have myelopathy and the pain and numbness has progressed to the point where you can no longer treat patients effectively or safely, you should stop treating patients and consider filing a disability claim.


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Myelopathy: Part 1

In previous posts, we have discussed a number of disabling conditions, such as Parkinson’s disease, essential tremors, carpal tunnel syndrome, and fibromyalgia. In this post, we are going to talk about another serious condition that can severely limit a physician or dentist’s ability to practice—myelopathy. In Part 1, we will discuss some of the causes and symptoms of myelopathy. In Part 2, we will discuss some of the methods used to treat myelopathy.

What is Myelopathy?

Myelopathy is an overarching term used to describe any neurologic deficit caused by compression of the spinal cord.

The onset of myelopathy can be rapid or it can develop slowly over a period of months. In most cases, myelopathy is progressive; however, the timing and progression of symptoms varies significantly from person to person.

What Causes Myelopathy?

There are several potential causes of myelopathy, including:

  • Bone fractures or dislocations due to trauma/injury;
  • Inflammatory diseases/autoimmune disorders (e.g. rheumatoid arthritis);
  • Structural abnormalities (e.g. bone spurs, disc bulges, herniated discs, thickened ligaments);
  • Vascular problems;
  • Tumors;
  • Infections; and
  • Degenerative changes due to aging.

Symptoms of Myelopathy

The symptoms of myelopathy will vary from case to case, because the nature and severity of the symptoms will depend on which level of the spine is being compressed—i.e. cervical (neck), thoracic (middle), or lumbar (lower)—and the extent of the compression.

Some of the symptoms of myelopathy include:

  • Neck stiffness;
  • Deep aching pain in one or both sides of neck, and possibly arms and shoulders;
  • Grating or crackling sensation when moving neck;
  • Stabbing pain in arm, elbow, wrist or arms;
  • Dull ache/tingling/numbness/weakness in arms, hands, legs or feet;
  • Position sense loss (i.e. the inability to know where your arms are without looking at them);
  • Deterioration of fine motor skills (such as handwriting and the ability to button shirts);
  • Lack of coordination, imbalance, heavy feeling in the legs, and difficulty walking;
  • Clumsiness of hands and trouble grasping;
  • Intermittent shooting pains in arms and legs (especially when bending head forward);
  • Incontinence; and
  • Paralysis (in extreme cases).

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Case Study: Mental Health Disability Claims – Part 2

In Part 1 of this post, we started looking at a case involving a mental disability claim where the court reversed Unum’s claim denial under ERISA de novo review. In Part 2, we are going to look at how the same court determined the extent of claimant’s benefits.

Turning back to the Doe case we examined in Part 1, after the court reversed the denial, the parties could not agree on the amount of benefits claimants was entitled to. In previous posts, we have discussed how many policies have a mental health exclusion that limits recovery to a particular period—usually 2-3 years. Unfortunately for our claimant, he had such a provision in his policy, which provided that his “lifetime cumulative maximum benefit period for all disabilities due to mental illness” was “24 months.”[1]

Not surprisingly, Unum invoked this provision and asserted that it only had to pay benefits for a 24 month period. The court agreed, for several reasons:

  • To begin, the policy defined “mental illness” as “a psychiatric or psychological condition classified in the [DSM], published by the American Psychiatric Association, most current at the start of disability.” All of claimant’s conditions (major depression, OCD, ADHD, OCPD, and Asperger’s) were classified in the DSM-IV.
  • Claimant attempted to assert that his disability was not a “mental illness” because it was “biologically based.” Id. While this type of argument had been accepted by some other courts, the court in Doe determined that it was not convincing in this particular instance because the claimant’s policy expressly defined “mental illness” as a condition classified in the DSM-IV. The court also noted that DSM-IV itself notes that “there is much ‘physical’ in ‘mental’ disorders and much ‘mental’ in ‘physical’ disorders” Id.
  • Accordingly, the court concluded that because the policy was “concerned only with whether a condition is classified in the DSM,” whether claimant’s conditions had “biological bases” was “immaterial.”

Thus, even though the Doe claimant was successful in obtaining a reversal of the claim denial, in the end, he only received 24 months of benefits due to the mental health exclusion.

If you are purchasing a new policy, you will want to avoid such exclusions where possible. If you have a mental disability and are concerned about your chances of recovering benefits, an experienced disability insurance attorney can look over your policy and give you a sense of the likelihood that your claim will be approved, and the extent of the benefits you would be entitled to.

[1] See Doe v. Unum Life Ins. Co. of Am., No. 12 CIV. 9327 LAK, 2015 WL 5826696 (S.D.N.Y. Oct. 5, 2015).

 


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Case Study: Mental Health Disability Claims – Part 1

In a previous post, we have discussed how ERISA claims are different from other disability claims. We have also looked at an ERISA case involving “abuse of discretion” review. However, there is another type of review under ERISA—“de novo” review. Unlike abuse of discretion review, under de novo review, the court assesses the merits of the disability claim without affording any deference to the insurer’s decision. Whether your claim is governed by abuse of discretion review or de novo review will depend on the terms of your plan. An experienced disability attorney can look at your policy and let you know which standard will apply.

In this post, we will be looking at two things. First, we will be looking at a case where the court reversed the denial of benefits under de novo review. Second, we will be looking at some of the issues that commonly arise in mental health disability claims. In Part 1, we will be looking at the initial determination made by the court regarding whether the claimant was entitled to benefits. In Part 2, we will be looking at how the court determined the amount of benefits the claimant was entitled to.

In Doe v. Unum Life Insurance Company of America[1], the claimant was a trial attorney with a specialty in bankruptcy law. After several stressful events, including his wife being diagnosed with cancer, claimant started experiencing debilitating psychological symptoms. The claimant was ultimately diagnosed with anxiety, major depression, obsessive compulsive disorder (OCD), attention deficit hyperactive disorder (ADHD), obsessive compulsive personality disorder (OCPD), and Asperberger’s syndrome. He filed for long term disability benefits, but the insurer, Unum, denied his claim. The court reversed Unum’s claim denial under de novo review, for the following reasons:

  • First, the court found the opinions and medical records of the claimant’s treatment providers to be “reliable and probative.” Id. More specifically, the court determined that claimant’s conditions fell within the expertise of the treating psychiatrist and that the psychiatrist’s conclusions were corroborated by neuropsychological testing.
  • Second, the court determined that the opinions provided by Unum’s file reviewers were not credible or reliable. The court noted that while Unum’s in-house consultants claimed that the neuropsychological testing did not provide sufficient evidence of disability, the single outside independent reviewer hired by Unum concluded the opposite and determined that there was no evidence of malingering and that the tests were valid.
  • Finally, the court rejected Unum’s argument that claimant’s psychiatrist should have provided more than a treatment summary. The court determined that this was “a problem of Unum’s own making,” because the evidence showed that Unum expressly stated in written correspondence that it was willing to accept a summary of care letter in lieu of the claimant’s original medical records.

Stay tuned for Part 2, where we will look at how much benefits the claimant actually ended up receiving.

[1] No. 12-CV-9327 LAK, 2015 WL 4139694, at *1 (S.D.N.Y. July 9, 2015).


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Mind Your EIQ

In our last post, we talked about PDQ and why it matters. In this post we are going to be talking about another important calculation—EIQ.

What’s EIQ?

EIQ stands for “earnable income quotient.” Your EIQ estimates how much income you will earn before you retire.

Why Does EIQ Matter?

Many young doctors and dentists are understandably hesitant to go out and purchase disability insurance right away. Adding another insurance premium to the mix is often not very appealing to a young doctor or dentist facing substantial student loan debt and other expenses.

As time goes on, it is easy to forget about disability insurance. Once income is on the rise, many doctors and dentists raise their standard of living proportionally, without giving much thought to what might happen if that income suddenly disappeared.

Consequently, many doctors and dentists have not set up a safety net (such as disability insurance) to cover their expenses if they become disabled. Calculating your EIQ can give you a sense of how much income you are placing at risk by not having disability coverage. Depending on your salary and years remaining until retirement, the number may surprise you.

Once you know your EIQ, you will have a better sense of the amount of disability coverage you will need to maintain your standard of living and meet your goals for retirement. Remember that should you become disabled, your expenses will not simply go way. If anything, they will likely be higher due to medical bills and other out-of-the-ordinary costs that are necessary to accommodate the disability, so be sure to also factor such expenses into your level of coverage.

How Do I Calculate My EIQ?

The Council for Disability Awareness also has an online EIQ calculator. All you have to do is input some basic information about your annual/hourly/weekly income, expected salary increases, and retirement age and the EIQ calculator will estimate how much you will make before you retire.


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Mind Your PDQ

What’s PDQ?

PDQ stands for “personal disability quotient.” Your PDQ estimates the likelihood that you will become disabled during your lifetime, based on a number of lifestyle and health factors.

Why Does PDQ Matter?

Many young doctors and dentists think that because they are young and healthy, they do not need disability insurance, but this can be a dangerous way of thinking. In the first place, many disabilities are caused by unforeseen accidents, not poor health.  Additionally, the odds of becoming disabled are much higher than you might think. The Social Security Administration estimates that a 20-year old entering the workforce has a 1 in 4 chance of becoming disabled before retirement.

Still, each person is different. Your lifestyle, occupation, or medical history may place you above or below the average risk for disability. This is where your PDQ comes in. While your PDQ obviously will not be able to predict what will happen to you with 100% accuracy, it can help you have a better sense of your personal level of risk for disability.

How Do I Calculate My PDQ?

The Council for Disability Awareness has an online PDQ calculator that you can use to find out your PDQ. All you have to do is input some basic information about your age, height, medical conditions, and the kind of work you do and the PDQ calculator will tell you your chances of being disabled before you retire. The PDQ calculator will also tell you the chances of your disability lasting 3 months or longer, the chances of your disability lasting 5 years or longer, and the average length of a long term disability for someone like you.


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