In previous posts entitled “Why Is It So Hard To Collect On My Disability Insurance Policy?” and “Does Your Unum Claims Handler Have a Personal Financial Incentive to Deny or Terminate Your Disability Claim?”, we reviewed a leading reason behind insurance companies denying disability insurance claims: claims managers often receive incentives, including bonuses, depending on the amount of money they save the company. For the claims department, saving the company money is frequently achieved by denying the claims of existing customers who are receiving disability insurance benefits. This conflict of interest is a probable basis for denial or termination of many legitimate disability claims.
A recent discovery decision by the United States District Court, N.D. California in Welle v. Provident Life & Accident Ins. Co., 2013 WL 5663221 (N.D. Cal., Oct. 17, 2013) comes as a major win for those with legitimate disability claims. There, Doctor Dana Welle injured her left arm in a bike accident. After multiple surgeries, she was diagnosed with ulnar neuropathy and left medial epicondylitis. This condition gave her pain and weakness in her left arm that impacted her ability to safely care for her patients. After Provident Life Insurance (a Unum company) had paid almost three years of disability insurance benefits to Ms. Welle, the company denied her benefits.
In her suit against Provident, which claimed bad faith denial of her benefits, Dr. Welle alleged that Provident’s “incentive structure was based on performance, and performance may be measured, in terms of resolution of claims, including her own.” Dr. Welle requested Provident to produce “any and all documents that reflect, refer or relate to bonus awards, including but not limited to the performance rating and percent of bonus awarded” to claims managers and claim handlers.
Provident objected to the request because, as they argued, it was overly broad and sought to obtain information that was private, proprietary and confidential. The Court overruled Provident’s objections and allowed the discovery. The Court reasoned that the information she sought in her requests “speaks to whether her claim was improperly denied and whether Provident encourages bad faith practices.”
The Court further reasoned that Dr. Welle had shown compelling need for the documents that related to the bonuses of those involved in adjusting her disability insurance claim, and that the information was “highly relevant to her bad faith claim.” The Court disagreed with Provident’s concern with the request being overly broad because it only requested bonus and performance related information of specific individuals. The Court also disagreed with Provident’s defense that discovering the information would breach the employees’ privacy rights, or that the information was proprietary and confidential, because Dr. Welle had already stipulated to a confidentiality agreement and protective order that covered the entire proceeding.
Thus, the Court allowed discovery of the employees’ bonus and performance related compensation documents. Though this is not the end of Dr. Welle’s fight to receive her legitimate disability insurance benefits, it is a major step in helping her get the ammunition she needs to assure her of future benefits under the policy.
 Welle v. Provident Life & Accident Ins. Co., 2013 WL 5663221 (N.D. Cal., Oct. 17, 2013).