Tag Archives: litigation

Are There Options Besides A Trial When My Claim is Denied?

Reducing the risk of having to fight for benefits requires understanding the terms of your policy from the beginning, carefully and thoroughly filling out the application, and ensuring accuracy and consistency in your claim packet and subsequent filings. As the saying goes, the best defense is a good offense, and the best way to avoid litigation is to file the claim correctly the first time.

Although filing a successful claim is not easy, it is the ideal.  Unfortunately, insurance companies have a strong incentive to increase their bottom lines and often they practice aggressive tactics in improper attempts to justify the denial or termination of even a wholly legitimate claim. If your claim has been terminated or denied, it can seem overwhelming or hopeless to try to reverse the decision.  In the event of a denial or termination, many insureds know they can sue their insurer and go to trial.  Yet, even if you are ultimately successful in a lawsuit, litigation can sometimes drag on for years.  While a lawsuit is pending, you’ll not only have legal expenses, but will also not be receiving benefits (and likely not be in a position to work to offset your expenses, due to the nature of your disability or your policy’s language). There are, however, some alternative options that can be attractive to both parties that policyholders may not be aware of, namely mediation and lump sum settlements.

Mediation

All too often we see legitimate claims denied or terminated, with the insurance company refusing to reconsider their position. If your claim is terminated, the company knows that it wields a lot of power over the denied individual, including the power of money, the power of time, the power of institutional knowledge, and the power to tolerate litigation.  In other words, insurers calculate that spending money on even protracted litigation will end up being cheaper than continuing to pay benefits, and they know that many claimants will just give up and go away if they draw out court proceedings long enough.

While this might sound bleak, there can be alternatives to a full-fledged lawsuit that culminates in a trial (and potentially drawn-out appeals).  One such method is mediation.  Mediation is where the parties to a lawsuit meet with a neutral third party in an effort to settle the case.

For the most part, mediators are retired judges, or active or retired attorneys. The mediator reviews the case file and then meets with both parties, seeking  to facilitate discussions between the parties and try to find common ground in order to reach  an acceptable compromise. Because mediation is not binding, the mediator’s recommendation and any subsequent agreement between the parties is not final until the parties memorialize it by putting all the agreed upon terms in writing and signing the document.

Often the insurance company will offer to draft the agreement so they can have control over what the agreement says, and so it is important to stay engaged in the process even after the mediation has ended, in order to ensure that the parties’ agreement is accurately documented.  The settlement agreement itself is a very important document, so you should be sure to take the time to carefully review it before signing, to be sure it encapsulates all the agreed upon terms.

It is also important to keep in mind that mediation typically does not result in a full restoration of benefits nor is not always successful.  The non-binding nature of mediation means that if the insurance company low-balls and refuses to budge in its offer, the claimant may need to just walk away and resume litigation.

Lump Sum Settlement

Another way of avoiding trial is through negotiating a lump sum settlement.  This typically occurs outside of the mediation setting, but sometimes requires the filing of a lawsuit before the insurance company is willing to come to the table.  When this happens, your insurer agrees to buy out your policy and you release your right to collect under your policy and your insurer from any obligation to you.  The buyout amount will be your policy’s “present value” (i.e. the amount of money you could invest upon receipt, based on a determined interest rate, and end up with the same amount of money you would have received in benefits at the end of your policy), discounted by a percentage that is negotiated by the parties.

A buyout can be an attractive offer and can occur at any stage of the litigation process.  A lump sum buyout could even be a preferable alternative to having benefits reinstated, as you would no longer have to deal with your insurer.  Your benefit payments would cease being on hold pending the outcome of a trial and you could invest the lump sum in order to provide for your and your family’s future. In addition, unlike monthly disability benefits, the lump sum settlement you receive would be inheritable and available to be passed on to your heirs, should something happen to you.

There are, however, certain drawbacks to a lump sum buyout, including the fact that you and your insurers cannot accurately predict the future of the market with 100% certainty, so the calculations will only be a best estimate.  If you are healthy and have lifetime benefits, you could also receive more money cumulatively over time if you were to stay on claim.  So, while attractive, especially when faced with litigation, the pros and cons must be carefully weighted when considering lump sum buyouts during the litigation process.

We often see claimants who face the loss of their benefits simply give up and accept a denial, daunted by the thought of protracted litigation.  While litigation may sometimes be the most advisable way to get benefits, and possibly punitive damages, there are other avenues to explore, advisably with the help of an attorney, that can end in your retaining at least some of the benefits you stand to lose completely when an insurance company denies your claim.

 

 

 

 

AzMedicine publishes “Can Your Disability Insurer Dictate the Terms of Your Care?” article by Ed Comitz and Michael Vincent

Disability insurance attorney Edward O. Comitz and Michael Vincent, Summer Associate at Comitz | Beethe, had their article “Can Your Disability Insurer Dictate the Terms of Your Care?” published in the Winter edition of AzMedicine, the publication of the Arizona Medical Association.  The article is excerpted below.

Can Your Disability Insurer Dictate the Terms of Your Care?

By Edward O. Comitz, Esq. and Michael Vincent

           Imagine that you are a surgeon who has submitted a disability insurance claim after failed cataract surgery left you with halos, starbursts, and even temporary blindness under bright lighting. While you are dedicated to your profession, you realize that continuing to operate on patients puts them in danger.  Your disability insurance company, however, will not pay your claim.  It insists that you can keep performing surgeries, alleviating any occupational hazards by wearing sunglasses and using matte-finish instruments in the operating room.  This scenario may sound absurd, but it is an actual example of some of the difficulties faced by many doctors seeking legitimate policy benefits.  Fortunately, the surgeon in question had the common sense to cease performing surgeries rather than follow her insurer’s suggestions.  Her decision did affect her financially, as benefits were denied for almost two years, and only paid after litigation ensued.

Insurance company treatment mandates are commonplace and based on their interpretation of the terms of your policy.  In some cases, the insurance company goes so far as to demand surgery, invading your privacy and leaving you with the choice of either undergoing an operation involuntarily, bearing all of the medical risks and financial costs yourself, or waiving your right to collect disability insurance benefits.  The decision can be difficult, but understanding your rights and obligations beforehand can help alleviate much of the worry.

Whether or not insurers can legally condition payment of your disability insurance benefits upon you following their suggested treatments depends on the specific terms in your policy.  The various policy types fall into three general categories: “regular care” policies, “appropriate care” policies, and “most appropriate care” policies.

The oldest policies typically contain provisions conditioning benefits on being “under the regular care and attendance of a physician.”  These “regular care” policies provide the most protection for insureds, as courts have repeatedly found that these provisions only create a duty for the insured to undergo regular monitoring by a physician to determine if the disability persists.  Even if a proposed surgery is usually successful and very low risk, an insurance company cannot force it upon you.  Under a policy requiring only regular care, courts will not enforce any particular course of treatment, no matter how vehemently an insurance company objects. Continue reading AzMedicine publishes “Can Your Disability Insurer Dictate the Terms of Your Care?” article by Ed Comitz and Michael Vincent