How Far Will Insurers Go To Offset Your Benefits?

We have previously discussed benefit offsets, which are provisions in policies that permit the insurer to reduce the amount of your monthly benefits if you are receiving income from certain sources (listed in the policy). While you may be aware that these provisions exist, you may be shocked by how far some insurers are willing to go to reduce benefits.

In the case of Rustad-Link v. Unum[1], Dawn Rustad-Link suffered a below-the-knee amputation after receiving negligent medical care. In addition, she had been diagnosed with multiple sclerosis (MS) several years earlier. Accordingly, she filed for disability benefits under her Unum policy.

At the outset of Rustad-Link’s claim, Unum determined that her MS was the primary disabling condition, and asserted that she had to wait 12 months to receive benefits, because the MS was a pre-existing condition.

Later on in the claim, Rustad-Link received a medical malpractice settlement (in connection with the below-the-knee amputation). When Unum learned about the settlement, it changed it’s prior assessment, determined that the amputation (not the MS) was the primary disabling condition, and asserted that, because of this, they were entitled to offset any income she received as a result of the amputation (i.e. the medical malpractice settlement). Significantly, when asked to assess the situation, Unum’s own in-house attorneys concluded that the settlement proceeds did not qualify as an offset; however, Unum’s “Financial Recovery Unit” ignored this, and continued its efforts to apply and enforce the offset. Unum then claimed that it had overpaid roughly $47,000 in benefits, and informed Rustad-Link that, moving forward, it would be reducing her benefits each month by roughly $2,000 until this amount was repaid to Unum (resulting in a remaining monthly benefit of only $115). Rustad-Link then filed suit to contest Unum’s determination.

Fortunately, the Court saw through Unum’s efforts to improperly apply the offset and concluded that Unum’s interpretation of the policy was “impermissibly self-serving.” In reviewing the record, the Court noted that Unum did not change its assessment until after it learned of the medical malpractice settlement, and concluded that the only purpose behind this change was “to take advantage of the settlement by treating the entirety of her misfortune as income.”

Although, in the end, Rustad-Link was able to avoid an offset, this case highlights the fact that insurance companies are financially motivated to deny and/or reduce your disability benefits, and illustrates how far insurance companies are willing to go to apply an offset. This case also shows that, while many juries have awarded damages and regulators have imposed fines in an effort to deter to bad faith conduct, Unum (and other insurance companies) continue to take aggressive and unreasonable positions in order to benefit their bottom-lines.

[1] Rustad-Link v. Providence Health & Serv., No. CV 16-136-M-DWM, 2018 WL 651833 (D. Mont. Jan. 31, 2018).

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Can Your Disability Insurance Company Dictate The Medical Treatment You Must Receive To Collect Benefits? Part 2

“Regular Care”

If you are a doctor or dentist and you bought your individual disability insurance policy in the 1980s or 1990s, the medical care provision in your policy likely contains some variation of the following language:

Physician’s Care means you are under the regular care and attendance of a physician.”

This type of care provision is probably the least stringent of all the care provisions.  If your policy contains a “regular care” provision, courts have determined that you are under no obligation to minimize or mitigate your disability by undergoing medical treatment.[1]  In other words, you cannot be penalized for refusing to undergo surgery or other procedures—even if the procedure in question is minimally invasive and usually successful.[2]

Let’s look at an actual case involving a “regular care” provision.  In Heller v. Equitable Life Assurance Society, Dr. Stanley Heller was an invasive cardiologist suffering from carpal tunnel syndrome who declined to undergo corrective surgery on his left hand.  Equitable Life refused to pay his disability benefits, insisting that the surgery was routine, low risk, and required by the “regular care” provision of Dr. Heller’s policy.  The U.S. Court of Appeals disagreed, and determined that the “regular care” provision did not grant Equitable Life the right to scrutinize or direct Dr. Heller’s treatment.  To the contrary, the Court held that “regular care” simply meant that Dr. Heller’s health must be monitored by a treatment provider on a regular basis.[3]

Unfortunately, the Heller case didn’t stop insurance companies from looking for other ways to control policyholders’ care and threaten denial of benefits.  For instance, some disability insurance providers argued that provisions requiring policyholders to “cooperate” with their insurer grants them the right to request that a policyholder undergo surgery.  Remarkably, when insurers employ these tactics, they are interpreting the policy language in the broadest manner possible–even though they know that the laws in virtually every state require that insurance policies be construed narrowly against the insurer.

Why would insurance companies make these sorts of claims when it is likely that they would ultimately lose in court?  Because insurance companies also know that even if their position is wrong, most insureds who are disabled and/or prohibited from working under their disability policy cannot handle the strain and burden of protracted litigation.  They know that if they threaten to deny or terminate benefits, many insureds will seriously consider having surgery—if only to avoid the stress and expense of a lawsuit.  Unfortunately, this can lead to insureds submitting to unwanted medical procedures, despite having no legal obligation to do so.

As time went on, and more and more courts began to hold that “regular care” simply meant that the insured must regularly visit his or her doctor, Unum, Great West, Guardian, and other insurers stopped issuing policies containing that language.  Instead, insurers started to insert “appropriate care” standards into policies.  In the next post, we will discuss this heightened standard and how insurers predictably used it as a vehicle to challenge the judgment of policyholders’ doctors, in a renewed effort to dictate their policyholders’ medical care.

[1] Casson v. Nationwide Ins. Co., 455 A.2d 361, 366-77 (Del. Super. 1982)

[2] North American Acc. Ins. Co. v. Henderson, 170 So. 528, 529-30 (Miss. 1937)

[3] Heller v. Equitable Life Assurance Society, 833 F.2d 1253 (7th Cir. 1987)

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Unum Outsourcing Jobs to India?

In past posts, we have discussed Unum’s track record of wrongfully denying disability claims and Unum’s bad faith efforts to avoid paying legitimate claims.  Unum was again in the news last year when it made significant changes within the upper echelons of company management.   Unum is now making headlines again, due to speculation that it is in the process of outsourcing hundreds of jobs overseas.

Unum is apparently currently in talks with several information technology (IT) firms to outsource up to 350 jobs to India.  A Unum employee, who spoke to the Portland Press Herald on the condition of anonymity, told the newspaper that as many as 200 jobs could be cut at Unum’s Portland, Maine offices, and estimated that the cuts could affect up to 350 jobs company-wide.  The employee reported that Unum was meeting with several vendors to discuss different levels of sourcing.  Florida attorney Sara Blackwell, who operates the website ProtectUSWorkers.com, claims that Unum has met with Cognizant and HCL – two multinational IT consulting firms – to discuss the potential move.  In an interview with the Times Free Press, Ms. Blackwell expressed concerns that policyholders’ personal medical information may be compromised by outsourcing to countries that don’t have strict provisions such as HIPAA to protect the medical records of policyholders.

It will be interesting to see if Unum’s outsourcing efforts end with its IT department, or whether this is the first step towards Unum outsourcing positions that play key roles in the disability claims process, such as claims managers and in-house medical consultants.

References:

http://www.pressherald.com/2016/06/16/sources-unum-in-talks-to-outsource-hundreds-of-jobs/

http://protectusworkers.org/2016/06/stop-unum-now-is-the-time-you-can-make-a-difference/

http://www.timesfreepress.com/news/business/diary/story/2016/jun/16/chattanooga-based-unum-criticized-outsourcing/371288/

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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 assess 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.

Conclusion

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.

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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.

Conclusion

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.

References:

ACLU Website: https://theyarewatching.org/technology/drones.

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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.

References:

ACLU Website: https://theyarewatching.org/technology/stingray.

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Unum Denies Its Own Employee Disability Benefits

In previous posts, we have discussed how Unum is notorious for wrongfully denying disability claims.  Recently, Unum refused to pay its own employee disability benefits.[1]

Apparently, the Unum employee suffered from carpal tunnel—due to all the typing that her job required—and also suffered a back injury in her home office.  Naturally, the Unum employee saw a hand specialist for the carpal tunnel, and a back specialist for the back injury.  After the Unum employee had surgery on her hand to treat the carpal tunnel, the Unum employee’s primary care physician placed her on work restrictions.  However, the primary care physician did not send the work restrictions to Unum because she thought that the other doctors had already documented the restrictions.

Unfortunately for the Unum employee, the other doctors had not forwarded the restrictions to Unum.  Instead of reaching out to the Unum employee’s doctors to see if the disability claim was legitimate, Unum simply denied the long term disability claim due to a lack of documentation.  At that point, the primary care physician came forward and expressly told Unum that she supported the restrictions, but Unum still refused to pay any benefits.

[1] See http://www.lawyersandsettlements.com/articles/first_unum/interview-unum-lawsuit-insurance-29-20883.html#.VfhBwxFVikp.

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

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 articles like “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.

ABC News Investigates
CIGNA’s Disability Claims Handling Practices

UPDATE: Since this story was originally posted in 2008, the insurance regulators of Maine and Massachusetts initiated targeted market conduct examinations of CIGNA’s disability claims handling practices. The concerns raised by Maine and Massachusetts prompted the insurance commissioners of Connecticut and Pennsylvania to also open market conduct examinations and for the California Insurance Commissioner to reopen his previous examination of CIGNA. In 2013, the examinations resulted in fines against the CIGNA companies, corrective actions being required in its handling of disability claims, and for CIGNA to reevaluate certain claims that were denied or terminated. Information on the CIGNA Multi-State Regulatory Settlement Agreement can be found here.


ABC News/Good Morning America‘s investigation by Chris Cuomo into CIGNA disability claim denials has uncovered some disturbing stories. In the video above, claimants describe some of the hardships they have been forced to endure due to denials of their claims or unreasonable delays in having their claims paid.

One breast cancer survivor, who eventually was paid on her claim with the assistance of a disability insurance attorney, describes her two-year ordeal with CIGNA as a “daily, eight-hour job just to fulfill the information that CIGNA was requesting.” The tactic of wearing down a disabled claimant with repeated requests for documentation that has already been provided multiple times — thereby deliberately delaying payment of the claim — is called “slow walking” by some in the industry. While CIGNA denies engaging in this practice, many claimants who are already emotionally and physically vulnerable due to their disability will eventually quit pursuing benefits to which they are entitled in this battle of attrition that is widespread in the disability insurance industry. In this situation, it is often necessary for a claimant to retain the services of an attorney, not only to take on legal issues with the insurance company but also to shoulder the burden of the excessive and repetitive requests for documentation.

Other claimants in Chris Cuomo’s GMA piece describe (a) three years of fighting CIGNA for their benefits, all the while sinking deeply into debt and losing everything; (b) being caught between a rock and a hard place when told by an employer that he could not return to work due to his disability, but simultaneously having CIGNA deny disability benefits; (c) purchasing insurance to protect herself and her family, only to have her business destroyed, savings depleted and fighting to keep her family home when benefits were denied or delayed.

Another of the claimants profiled, Ursula Guidry, a young wife and mother with advanced breast cancer, initially had her benefits paid by CIGNA, but after awhile, they terminated her benefits and told her she could return to work full-time. Eventually CIGNA settled the claim with her. She passed away three months later. As her husband says, it is tragic that her last year on earth was spent being in a panic over financial issues and fighting an unethical insurance company instead of enjoying as much time as possible with her husband and children.

CIGNA did not respond to GMA re any of the specific claimants profiled, but their Chief Medical Officer stated they pay 90% of disability claims filed and that the majority of their customers are satisfied.

Does Your Unum Claims Handler Have a Personal Financial Incentive to Deny or Terminate Your Disability Claim?

The transcript of Unum Group’s May 23, 2013 Annual Shareholder Meeting provides some disturbing insight into what may motivate claims personnel at Unum to deny or terminate a legitimate disability claim.

Unum’s Chief Executive Officer, President and Director, Thomas R. Watjen reported to the shareholders that they had “overwhelmingly approved” an employee cash incentive system based on performance:

The fourth item of business is the approval of our annual incentive plan, which provides employees the opportunity to earn cash incentive awards based primarily on the company’s performance each year. Our company performs well, employees get treated well from a financial standpoint. Our company doesn’t perform well, employees don’t get treated as well. . . . So our shareholders see, as we as directors and managers see, how to run the company successfully by creating an incentive system based on performance. So that has been overwhelmingly approved.

Later in the meeting, Unum’s Chief Financial Officer, Richard P. McKenney, spoke about the performance of Unum’s “closed block of business,” which includes its individual disability policies issued prior to the mid-1990s–the type of policies that Unum no longer sells.

We do have our Closed Block business. These are policies which are written some time ago. We serve those customers equally as well. But the returns in these businesses are lower.

Taken together, the two statements paint a picture of claims personnel handling the closed block of business under pressure to improve the returns, or else they “won’t get treated as well” or receive as sweet an incentive bonus.

We often hear from claimants who are incredulous that their claims have been denied or terminated despite a mountain of evidence of their disability.  This may be one explanation, and having an attorney to advocate for you as a claimant can be essential when you have a financially-motivated adjuster reviewing your claim.

The full transcript of the Unum Annual Shareholder Meeting is available at Seeking Alpha.

Pima County Medical Society Publishes Ed Comitz and Karla Thompson’s Article Re Surveillance in Disability Insurance Claims

The January 2013 edition of Sombrero, the publication of the Pima County Medical Society, features an article by Comitz | Beethe’s disability insurance attorneys, Edward O. Comitz and Karla Baker Thompson.  The article, “Surveillance Misuse in Claims Investigations,” reviews some of the ways in which evolving technology has led to overly intrusive surveillance of claimants by insurance companies.

Among the surveillance techniques being utilized are stakeout operations, tailing (sometimes using a “decoy” investigator), pretexting (obtaining your personal information under false pretenses), and GPS and cell phone tracking.  For example, some private investigators use a stingray, which is a cell phone tracking device that operates as a miniature cellular tower from inside of the PI’s vehicle.  The device enables an investigator to connect to a claimant’s cell phone, even when it’s not in use, and, after taking measurements of the phone’s signal strength, triangulate its location.  Since most people tend to carry their cell phones at all times, the device then allows the investigator to track the insured’s movements remotely.

The law surrounding some of these intrusive surveillance techniques, which have been made possible by modern technology, is not yet settled, and it is important that anyone on claim with their disability insurance carrier remain vigilant to the possibility of surveillance at all times, regardless of whether a human being is conducting the surveillance.  Long gone are the days when surveillance was only conducted by someone with a camera sitting in a car outside an insured’s home.

When Are Internal Insurer Memos Discoverable?

The recent 9th Circuit case Stephan v. Unum Life Insurance provides new guidance on when an insurance company’s internal documents may be discoverable.

Mark Stephan, a resident of California, suffered a bicycle accident that injured his spinal cord, rendering him quadriplegic. He filed for total disability benefits under his employer-sponsored Unum disability insurance policy, which was part of a plan governed by ERISA.

Mr. Stephan’s policy required Unum to pay him a benefit equal to a percentage of his pre-disability earnings. When Unum calculated how much Mr. Stephan was earning, it included his monthly salary, but not his annual bonus. This allowed Unum to calculate a much lower earnings rate—and thus a much lower amount that Unum had to pay in disability benefits.

Mr. Stephan sued Unum, seeking to overturn its benefit determination. After the trial court found in Unum’s favor, Mr. Stephan appealed, and the 9th Circuit Court of Appeals examined his case. Continue reading “When Are Internal Insurer Memos Discoverable?”

Private Investigators Track Disability Claimants with Stingrays

Disability insurance companies often hire private investigators to conduct surveillance on disabled insureds after they file for disability benefits.  In a previous blog post, we discussed some methods private investigators use to monitor disability claimants.  In this post, we will take a closer look at one of the latest tools private investigators now use to assist them with tracking disability claimants—stingrays.

A stingray is a new tracking device that operates as a miniature cellphone tower from inside a private investigator’s vehicle.  A private investigator can use this mobile tower to connect to a disability claimant’s cellphone—even when the disability claimant is not using the phone to make a call—and measure the cellphone’s signal strength.  Once he measures the signal strength from a particular location, the private investigator drives the stingray to another position for another measurement.  After the private investigator does this a few times, the stingray device then uses the collected data to triangulate and locate the disability claimant’s cellphone.  Since most people tend to always carry their cellphones, the device has proven to be an effective locator.

Stingrays are a relatively new technology and therefore the law surrounding the device is still largely unsettled.  The technology is becoming more and more popular, though, in part because of the limitations the Supreme Court put on GPS tracking devices in United States v. Jones.  In Jones the Court held that law enforcement officials needed a search warrant before physically attaching a GPS tracking device to someone’s vehicle because the physical attachment of a GPS tracking device to another’s property constituted trespass.

Because the stingray does not require physical attachment, some police departments have opted to invest in this newer technology, believing that the law permits them to use the equipment without first obtaining a search warrant.  In Arizona, for example, the Gilbert police department has already spent $244,000 on stingray equipment.  Many private investigators also advertise this technology and use it when conducting surveillance on disability claimants.

The legal assumptions that police officers rely upon to justify use of stingray equipment without first obtaining a search warrant are questionable and in dispute.  Civil liberty organizations, like the ACLU, argue that warrantless cellphone tracking is a serious invasion of privacy that is prohibited by the Fourth Amendment.  The Department of Justice, on the other hand, believes that requiring a search warrant is not only unnecessary, but would also severely limit law enforcement’s ability to operate effectively.  Until these issues are resolved by the courts, or until legislatures pass laws addressing stingrays, private investigators will likely continue taking advantage of the law’s gray area by using stingray equipment to assist disability insurance companies with denying claimants’ disability benefits.

Insurance Bad Faith: Private Investigators and Their Surveillance Practices

Insurance companies often will hire a private investigator to aid in terminating disability insurance claims.  Ostensibly, the purpose of a private investigator is to expose dishonest individuals of fraudulent disability insurance claims.  A private investigator may even advertise as a “Disability Insurance Fraud Specialist.”  All too often, however, insurance companies and their investigators are not seeking to expose fraud, but to manufacture it.  They produce “evidence” only to aid in denying disability insurance claims—even wholly legitimate ones.  They do so because there is a strong financial incentive to deny disability insurance claims.

At Comitz | Beethe, we have dealt with these insurance companies and their private investigators time and again.  We know how they operate and how to prepare our clients.  We have developed a short list of basic information about private investigators so you can know what to expect:

  • When are they watching?  In a previous post, we noted the five most popular times for disability surveillance: (1) holidays, (2) birthdays, (3) weekends, (4) activities claimant listed in insurance company’s activity log; and (5) near the end of fiscal quarters.
  • Who are they?  Typically, private investigators are just as the name indicates – private people from private companies.  Disability insurance companies contract with these private companies to conduct surveillance on disability claimants.
  • What are their surveillance methods?  Particular tactics will vary depending upon the private investigator, the disability insurance company and the disability claimant.  However, many methods are common across the board.  Basically, the private investigator will inconspicuously follow a disabled claimant with a video-capturing device as the disabled claimant undergoes day-to-day activities.  If the private investigator has difficulty locating the disabled claimant, the investigator may use different tactics, such as pretexting, stake-outs or tracking devices, to locate and track the claimant.  Our last blog post describes these other tactics in detail.

The private investigation industry has a reputation for its shady practices.  At Comitz | Beethe, we uncover and expose private investigators’ objectionable “tracking” methods to protect our clients.  We hold insurance companies and their private investigators accountable under the law.

 

Private Investigator Surveillance Methods and Terms

Private investigators use a variety of tactics to produce evidence that may be used to deny your disability insurance claim.  Below is a list of different private investigator surveillance methods and terms.  

Disability Surveillance – refers to the monitoring, recording and documenting of activities or behavior of another.  In the disability context, this surveillance is called sub rosa surveillance.  Sub rosa, a Latin phrase which translated means “under the rose,” denotes the secretive and clandestine nature of private investigator actions.

Disability Stake outs – according to Shannon Detective Service, Inc.—a private investigation company whose client list includes Arizona Counties Insurance Pool, CNA Commercial Insurance, Danielson Insurance, Farmers Insurance, Federated Mutual Insurance Company, Hartford Insurance, Insurance Company of the West, Liberty Mutual Insurance, Nationwide Insurance, Progressive Insurance, Seabright Insurance Company, Sedgwick Claims Service, Travelers Insurance and Westfield Insurance—this is a stationary surveillance method by which a private investigator documents and records a claimant’s activities.  The hallmark feature of a stake out is that the private investigator does not move or follow the disabled claimant.  In a typical stake out operation the private investigator may station in front of your home or office and record you as you come and go.  The goal of the stake out is to produce evidence that will enable the insurance company to deny your disability insurance claim.  An ABC News story shows how an insurance company successfully denied a doctor’s disability claim with evidence produced during a stake out.

Disability Pretexting – the Federal Trade Commission (FTC) defines pretexting as “the practice of getting your personal information under false pretenses.”  Private investigators are engaging in illegal conduct when they use pretexting to obtain your personal information from a financial institution.  See 15 U.S.C. § 6801, et seq.

Here’s an example of how this works: someone pretends to be you and calls your bank.  The person claims to have forgotten your checkbook, account number, social security number or other sensitive information.  He then tries to get this information from the bank.  Such conduct constitutes pretexting and violates federal law.  Id.

Although private investigators claim to use only “appropriate” pretexting methods, methods which are not illegal per se, these are the same techniques which are used to facilitate identity theft and consumer fraud.  Check out the FTC website for more information about pretexting and how you can protect yourself.

Disability Tracking Devices and GPS – this area of the law is still evolving.  In a recent Supreme Court case, United States v. Jones, the Court held that attaching a GPS device to a vehicle constitutes a “search” under the Fourth Amendment; therefore, law enforcement officials need a warrant before installing the device.  132 S. Ct. 945, 949 (2012).  Although the Court did not address the attachment of GPS devices in the private investigation context, its decision largely turned on the physical trespass involved in attaching a GPS device to another person’s vehicle.  Id.  The Court stated:

It is important to be clear about what occurred in this case: The Government physically occupied private property for the purpose of obtaining information. We have no doubt that such a physical intrusion would have been considered a “search” within the meaning of the Fourth Amendment when it was adopted.

Id.  Therefore, this ruling may be used to argue against private investigator installations of GPS devices since such installation would also constitute a physical trespass.  Private investigation companies, such as Shannon Detective Services, Inc. (SDS), are now looking how to bypass the physical trespass issue altogether through implementation of other technologies that do not require physical attachment.  Here are two examples of other technologies cited from the SDS website:

  • Disability stingrays (a device that can triangulate a cell phone signal to locate a user) will become popular in the future as a way to skirt around the new GPS laws for law enforcement.
  • Disability ping of cell phones (by accessing a user’s cell phone GPS chip) will also fill the gap created by GPS legislation since the FCC has mandated GPS chips to  be installed in all new cell phones by 2018.