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.

Case Study: Factual Disability v. Legal Disability – Part 3

In the last post, we discussed the facts of the court case Massachusetts Mutual Life Insurance Company v. Jefferson[1].  In that case, the court was asked to determine whether a clinical psychologist whose license had been suspended was entitled to disability benefits.  In this post, we will discuss how the court ultimately ruled, and go over some takeaways from this case.

The Court’s Ruling

As explained in the last post, the key question was whether Dr. Jefferson’s legal disability (i.e. the suspension of his license to practice psychology) happened before the onset of Dr. Jefferson’s factual disability (i.e. his depression).  In the end, the court determined that Dr. Jefferson was not entitled to disability benefits for the following reasons:

  • Dr. Jefferson’s claim form stated that he was not disabled until April 29, 1990, which was two days after the licensing board revoked his license.
  • Although Dr. Jefferson later claimed that his depression went as far back as May 1989, the court determined that such claims were inconsistent with:
    • Jefferson’s representations to the licensing board that he was a “highly qualified and competent psychologist”;
    • The fact that Dr. Jefferson had been consistently seeing patients up until the day his license was revoked; and
    • The fact that Dr. Jefferson had scheduled patients during the month following the licensing board’s hearing.

Thus, under the circumstances, the evidence showed that Dr. Jefferson’s was not entitled to benefits because his legal disability preceded his factual disability.

Takeaways

Dr. Jefferson’s case provides a good example of the challenges that can arise in a disability claim if the claimant has lost his or her license.  Here are some of the major takeaways from this case:

Be Precise When Filling Out Claim Forms. The date you list as the starting date of your disability can be very significant.  Take your time when filling out claim forms, and make sure that the date you provide is accurate and consistent with the other information you are submitting with your claim forms.  It is always a good idea to double check everything on the form at least once after you have completed it, to make sure that you did not make a mistake.

Recognize that Your Claim Will Not Be Evaluated in a Vacuum. Other proceedings—such as board hearings—can directly impact your claim.  You should always assume that anything you say in such a proceeding will at some point end up in front of the insurance company.  This is particularly problematic when, as in Dr. Jefferson’s case, the goals of the other proceeding are inconstant with the goals of the disability claim.  In such a situation, you may have to decide which goal is more important to you.  An experienced attorney can help you assess the strengths and weaknesses of each available option so that you can make an informed decision.

Do NOT Engage in Activities that Place Your License in Jeopardy. Losing a license that you worked hard for several years to obtain is not only emotionally devastating, it can severely limit your options going forward.  Even if you have a disability policy, it is very difficult to successfully collect on a disability claim if your license has been revoked or suspended.  Once again, if you find yourself in Dr. Jefferson’s position, you should talk with an experienced attorney who can help you determine what your available options are, if any.

[1] 104 S.W.3d 13, 18 (Tenn. Ct. App. 2002).

Case Study: Factual Disability v. Legal Disability – Part 2

In the last post, we discussed the distinction between “factual” and “legal” disability and why that distinction matters.  In this post, we will begin looking at a court case involving “factual” and “legal” disability.  Specifically, in this post we will begin looking at the facts of the case and the test that the court applied.  In Part 3, we will see how the court ultimately ruled.

The Facts

In the case of Massachusetts Mutual Life Insurance Company v. Jefferson[1], the court assessed whether Dr. Jefferson—a clinical psychologist—was entitled to disability benefits.  Here are the key facts of the case:

  • From October 1987 to February 1989, Dr. Jefferson had an affair with a former patient.
  • When Dr. Jefferson’s wife found out about the affair, she filed a complaint with Dr. Jefferson’s licensing board.
  • During the hearings in front of the licensing board, Dr. Jefferson argued that he was a competent psychologist, and that he should be permitted to continue to see patients.
  • On April 27, 1990, the licensing board permanently revoked Dr. Jefferson’s license to practice psychology, effective as of May 15, 1990. On appeal, a chancery court reduced the permanent revocation to an eight year suspension ending on May 15, 1998.
  • Up until the day his license was revoked, Dr. Jefferson continued to see patients and schedule future patients.
  • On October 1, 1900, Dr. Jefferson filed a claim under his disability policy, claiming that he was disabled due to “major depression.”
  • On his claim form, Dr. Jefferson listed the beginning date of his disability as April 29, 1990. Later on, Dr. Jefferson attempted to submit evidence that he had been depressed as early as May 1989.

The Court’s Test

As a threshold matter, the Court determined that the suspension of Dr. Jefferson’s license was a “legal disability” and assumed for the sake of argument that Dr. Jefferson’s “major depression” was a “factual disability.”  As explained in Part 1 of this post, courts generally hold that disability policies only cover factual disabilities, not legal disabilities.  However, the court’s decision becomes more difficult when a claimant like Dr. Jefferson has both a legal disability and a factual disability.

Although different courts approach this situation in different ways, here is the test that the court came up with in Dr. Jefferson’s case:

  • Step 1: Determine which disability occurred first.
  • Step 2: Apply the following rules:
    • Rule # 1: If the legal disability occurred first, the claimant is not entitled to benefits.
    • Rule # 2: If the factual disability occurred first, the claimant is entitled to benefits, if the claimant can prove the following three things:
      1. The factual disability has medical support.
      2. The onset of the factual disability occurred before the legal disability.
      3. The factual disability actually prevented or hindered the claimant from engaging in his or her profession or occupation.

In the next post, we will discuss how the court decided this case.  In the meantime, now that you have the key facts and the court’s test, see if you can guess how the court ultimately ruled.

[1] 104 S.W.3d 13, 18 (Tenn. Ct. App. 2002).

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.

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:

http://static1.1.sqspcdn.com/static/f/780996/10986694/1298931690137/Partners+Againts+Pain+Daily_Pain_Diary.pdf?token=%2BxUZiQYiQI0BQuASODoUtMrCRaE%3D

American Cancer Society Form:

http://static1.1.sqspcdn.com/static/f/780996/10986775/1298931779760/pain_diary.pdf?token=4N2osqMoTgvDsWtePLtKqJGthag%3D

Peace Health Medical Group Form:

http://static1.1.sqspcdn.com/static/f/780996/10986822/1298931923430/Peace+Health+Pain+Diary.pdf?token=qqil7fKha7RaXW7%2FgJ8tCnXxihY%3D

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).

 

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).

Case Study: Abuse of Discretion Under ERISA

In previous posts, we have discussed how it is oftentimes harder to collect under ERISA policies. One of the primary reasons ERISA claims are more difficult is the fact that in most ERISA cases courts are required to defer to the insurer’s decision unless the insurer “abused its discretion.” Under the abuse of discretion standard, an insurer’s decision is only reversed if the claimant can demonstrate that the insurer’s actions were “arbitrary and capricious.” This is a high standard to meet.

While ERISA claims can be more difficult, particularly under the “abuse of discretion” standard, they are not impossible. Sometimes a court will determine that the insurer did, in fact, abuse its discretion. In this post, we will be looking at the recent court case Jalowiec v. Aetna Life Insurance Company[1] to illustrate some of the things that a court may find to be an abuse of discretion.

In Jalowiec, the claimant suffered from chronic migraine headaches, dizziness, nausea, vertigo, insomnia and fatigue after suffering a blow to the back of his head at a Tae Kwon Do event. After over a year of testing and treatment, the claimant was initially diagnosed with postural orthostatic tachycardia syndrome (“POTS”). Later on, claimant was diagnosed with an “unspecified disorder of autonomic nervous system.”

The insurer, Aetna, initially awarded the claimant short term disability benefits, but subsequently denied claimant’s claim for long term disability benefits. Ultimately, the court determined that Aetna’s denial of long term disability benefits was an abuse of discretion, for the following reasons:

  • Aetna changed the classification of claimant’s occupation multiple times throughout the claims process, from “sedentary” at the short term disability phase, to “light’ at the initial stages of the long term disability claim, and then back to “sedentary” in order to deny the claim.
  • Aetna relied on file reviews conducted by reviewers who were relying on incorrect and incomplete information about the claimant’s job classification (i.e. that the job was “sedentary,” not “light”).
  • Aetna relied on file reviews conducted by reviewers who did not have the proper expertise to review claimant’s diagnosis of “unspecified disorder of autonomic nervous system.”
  • Aetna relied on file reviews that were not based on informed consultation with the claimant’s treating physicians.

These are just a few examples of things that courts have found to be an “abuse of discretion” under ERISA. Remember, the law in each jurisdiction varies, so the courts in your state may not necessarily agree with the court in this case. An experienced disability insurance attorney should be able to give you a sense of whether a court would uphold or reverse your claim denial, under ERISA or otherwise.

[1] No. CV 14-4332 (DWF/LIB), 2015 WL 9294269, at *1 (D. Minn. Dec. 21, 2015).

Case Study: The Importance of Proper Documentation

In previous posts, we have discussed the importance of properly documenting your claim. From the moment you file your claim, most insurers begin collecting as much documentation as possible in the hopes that they can use the documentation to deny your initial claim, or terminate your benefits later on.

Oftentimes, benefits are terminated without warning. For example, an insurance company may conduct covert surveillance over an extended period of time, and then suddenly terminate your benefits once they feel that they have sufficient footage to assert that you are not disabled. If you are not consistently documenting the ongoing nature and extent of your disability, you may find yourself lacking sufficient evidence to contest a denial or termination of benefits.

For example, in the recent case Shaw v. Life Insurance Company of North America[1], the insurer refused to pay claimant her disability benefits. Although claimant saw multiple doctors and psychiatrists for PTSD and depression before filing her claim, the court ultimately found that the medical records she submitted were deficient, for several reasons.

First, even though claimant was asserting mental health claims, the claimant’s primary treatment provider was a family practice physician, not a psychologist or psychiatrist. Additionally, the court observed that the family practice physician’s records were “cursory, and contain[ed] minimal documentation of the frequency or intensity of [claimant’s] symptoms.”  Id. To make matters worse, the claimant only saw the psychiatrists for a period of a few months, and the psychiatrists’ records showed that claimant had refused to follow the recommended treatment plan, which included both psychiatric medication and cognitive treatment.

The claimant attempted to supplement her medical records using a narrative letter she wrote describing her symptoms, along with several letters from family and friends. However, the court ultimately found the narratives unconvincing because there was a “significant potential for bias,” the severity levels described in the narratives conflicted with the psychiatrists reports, and claimant’s friends and family were not medical specialists or care providers and therefore could not diagnose claimant’s medical condition or assess claimant’s functional capacity. Id.

In the end, the court affirmed the denial of benefits, even under de novo review. Id.

What could the claimant have done better to avoid the denial?  For one, she could have used a psychiatrist or psychologist as her primary treatment provider. She also could have followed the treatment plan recommended by her psychiatrists. Finally, she could have asked her physician to provide more thorough documentation.

Remember, courts will generally want to see medical records, not statements from friends and family. While such statements can be a useful way to provide background information, a court will want to see documentation of diagnosis and treatment by a health care provider. An experienced disability insurance attorney can help you review your medical records and determine if they are sufficient in comparison to the documentation that the insurance company will almost assuredly be collecting.

[1] No. CV1407955MMMFFMX, 2015 WL 6755187 (C.D. Cal. Nov. 4, 2015).

Exertion Levels: What They Are, and Why They Matter

The Dictionary of Occupational Titles (DOT) contains definitions of various exertion levels that are used to place different jobs within categories based on the level of strength required to perform each job. You may have noticed these categories listed on claim forms, or referred to in functional capacity evaluation (FCE) reports or independent medical evaluations (IME) reports. In this post, we are going to look at what the various exertion levels are, and why they matter.

What Are the Exertion Levels?

The DOT lists five exertion levels—sedentary, light, medium, heavy, and very heavy. The DOT definitions for each exertion level are summarized below.

Sedentary Work (S)

Occasionally (i.e. up to 1/3 of the time) exerting up to 10 pounds of force and/or frequently (i.e. from 1/3 to 2/3 of the time) exerting a negligible amount of force to lift, carry, push, pull, or otherwise move objects, including the human body. Sedentary work involves sitting most of the time, but may involve occasional walking or standing for brief periods of time.

Light Work (L)

Occasionally exerting up to 20 pounds of force, and/or frequently exerting up to 10 pounds of force, and/or constantly (i.e. 2/3 or more of the time) exerting a negligible amount of force to move objects. Requires walking or standing to a significant degree, requires sitting most of the time but also involves pushing and/or pulling of arm or leg controls, and/or requires working at a production rate pace entailing the constant pushing and/or pulling of materials even though the weight of those materials is negligible.

Medium Work (M)

Occasionally exerting 20 to 50 pounds of force occasionally, and/or frequently exerting 10 to 25 pounds of force, and/or constantly exerting greater than negligible up to 10 pounds of force to move objects.

Heavy Work (H)

Occasionally exerting 50 to 100 pounds of force, and/or frequently exerting 25 to 50 pounds of force, and/or constantly exerting 10 to 20 pounds of force to move objects.

Very Heavy Work (V)

Occasionally exerting in excess of 100 pounds of force, and/or frequently exerting more than 50 pounds of force, and/or constantly exerting more than 20 pounds of force to move objects.

Why Do They Matter?

Insurers usually rely on the DOT exertion levels in ERISA claims or cases involving “any occupation” policies. First, the insurer will seek to establish that the claimant can work at the highest level of capacity possible. Then, the insurer will claim that the claimant can return to work performing any job within that category, and any lower categories.

Conversely, if the case involves an “own occupation” policy, the insurer will seek to establish that the claimant’s occupation required the lowest level of capacity. The insurer will then assert that the claimant’s disability is not severe enough to prevent the claimant from returning to his or her old job.

In either case, if the insurer feels that it can demonstrate that a claimant is capable of returning to work, it will likely deny the claim for benefits, or terminate existing benefits.

References:

http://www.occupationalinfo.org/appendxc_1.html

What Is A Discretionary Clause?

Discretionary clauses grant your insurance company substantial discretionary authority to interpret your policy and determine your eligibility for disability benefits.  If your disability policy contains a discretionary clause and your insurance company denies your claim, courts will generally be reluctant to overturn the denial.

Here is an example of a discretionary clause taken from a Unum policy:

DISCRETIONARY ACTS

The Plan, acting through the Plan Administrator, delegates to Unum and its affiliate Unum Group discretionary authority to make benefit determinations under the Plan. Unum and Unum Group may act directly or through their employees and agents or further delegate their authority through contracts, letters or other documentation or procedures to other affiliates, persons or entities.  Benefit determinations include determining eligibility for benefits and the amount of any benefits, resolving factual disputes, and interpreting and enforcing the provisions of the Plan.  All benefit determinations must be reasonable and based on the terms of the Plan and the facts and circumstances of each claim.

It is easy to see why discretionary clauses are “highly prized” by disability insurance companies.[1]  Such clauses not only grant your insurance company the authority to interpret the provisions of your policy, but also the authority to resolve factual disputes. The practical consequences of this are obvious:  any close calls regarding ambiguous policy language or the seriousness of your disability will be resolved in the insurance company’s favor.

Discretionary clauses also make overturning a denial of benefits much more difficult.  If your policy has a discretionary clause, the court can generally only overturn your denial if you prove that the denial was an “abuse of discretion” because it was “illogical, implausible, or without support in . . . the record.”[2]   In contrast, if your policy does not contain a discretionary clause, the court generally conducts a “de novo,” or independent, review of your claim.[3]   In some cases involving discretionary clauses, courts that would normally be willing to overturn a denial under de novo review have been compelled to uphold the denial under the more exacting abuse of discretion standard.[4]

Not surprisingly, because the “abuse of discretion” is a high legal standard, the inclusion of discretionary clauses in disability policies dramatically reduces policyholders’ chances of successfully challenging a denial of benefits.  A 2004 study found that only 28% of lawsuits to overturn denials of benefits were successful if the policy included a discretionary clause.[5]   In contrast, policyholders won 68% of similar cases involving policies that did not have discretionary clauses.[6]

Insurance companies’ abuse of discretionary clauses has led several states to outlaw them.[7] You should avoid policies which include discretionary clauses.  If you already have a policy which includes one, talk to your insurance agent about finding a new policy.

 


[1] See Rush Prudential HMO, Inc. v. Moran, 536 U.S. 355, 384 (2002).

[2] Saloma v. Honda Long Term Disability Plan, 642 F.3d 666, 667 (9th Cir. 2011).

[3] Id. at 673.

[4] See, e.g., Curtis v. Kansas City Life Ins. Co., 2011 WL 901992 (W.D. Ky. 2011).

[5] Brent Brehm and Corinne Chandler, California’s Ban on Discretionary Clauses in Disability and Life Insurance Policies, Advocate: Journal of Consumer Attorneys Associations for Southern California, June 2013.

[6] Id.

[7]The states that have outlawed discretionary clauses are:  California, Colorado, Hawaii, Illinois, Indiana, Kentucky, Maryland, Maine, Michigan, Montana, New Hampshire, New Jersey, New York, Oregon, South Dakota, Texas, Utah, Vermont, and Wyoming.  See American Health Insurance Plan’s (AHIP) “Limitations on the Use of Discretionary Clauses:  Summary of State Laws,” available at www.ahip.org.

Legal Requirements for Denial Letters: What Your Insurance Company Has to Tell You When It Denies or Terminates Your Claim

If your claim for disability insurance benefits is denied or terminated (i.e., if the insurance company discontinues benefits they were once paying), the insurance company will send you a letter notifying you of that denial or termination.  Depending on the state you live in and the type of policy you have, the insurance company’s denial or termination letter has to include certain information.  Most doctors have individual (a.k.a. private) disability insurance policies governed by state law.  Below are some examples of denial letter requirements in several states.

Arizona: Under Arizona law, the denial letter should reference any specific policy provision, condition, or exclusion upon which the denial or termination was based.[1]  The letter should also provide a reasonable explanation why, given the facts of your claim and/or the applicable law, the insurer believes you do not qualify for benefits under the terms of your particular policy.[2]

California: In California, insurers must advise claimants of the acceptance or denial of a claim within 40 calendar days of receipt of proof of claim, unless they provide written notice of a need for additional time within that 40 days.[3]  All denials must be in writing (as opposed to simply given over the telephone), and the denial or termination letter must state reasons for the decision, including reference to specific policy provisions.[4]  Like in Arizona, denial or termination letters from California disability insurance companies should provide a reasonable explanation of the basis the insurer relied on in the insurance policy, in relation to the facts or applicable law, for the denial.[5]

Nevada: Nevada disability insurers have 30 working days after receiving properly executed proofs of loss to advise claimants of the acceptance or denial of the claim, unless the insurer advises otherwise within the 30-day period.[6]  Nevada law requires that denials be in writing, and it must include whatever specific policy provision, condition or exclusion upon which the insurer based its decision.[7]  Just like Arizona and California, Nevada law indicates that disability insurance denial letters should provide a reasonable explanation of the basis the insurer relied on in the insurance policy, in relation to the facts or applicable law, for the denial of the claim.[8]

Utah:  Utah follows the same 30-day rule as Nevada with respect to the time the insurer has to provide a claims determination.  In Utah, the insurance company must not only put the basis for the denial or termination of the claim in a letter to the claimant, it must also record that basis in its claim file.[9]  Consistent with the other states mentioned, insurers are prohibited from denying a claim on the grounds of a specific provision, condition, or exclusion in the policy unless they reference that provision, condition or exclusion in the denial letter.[10]

We always recommend contacting a disability insurance attorney if your claim is denied or terminated.  If your denial or termination letter does not include the required information, be sure to let the attorney know, as you may have additional legal rights that you need to enforce.

 


[1] R20-6-801(G)(1)(a).

[2] A.R.S. § 20-461(15).

[3] Cal. Code Regs. tit. 10, § 2695.7(b).

[4] Cal. Code. Regs. tit. 10 § 2695.7(b)(1).

[5] Cal. Ins. Code § 790.03(h)(13).

[6] Nev. Admin. Code ch. 686A.675(1), (3).

[7] Nev. Admin. Code ch. 686A.675(1).

[8] N.R.S. § 686A.310(1)(n).

[9] Utah Admin. Code. R590-190-10(2).

[10] Id.

What to Do When Your Disability Insurance Claim Is Denied

A large part of our practice consists of helping physicians and dentists whose disability insurance claims have been denied or terminated.  When our clients come to us, we carefully analyze their medical records, the claim file, and the law to craft a specific strategy for getting the insurer to reverse its adverse determination.  Unfortunately, we sometimes find that in between receiving notice that their claim has been denied or terminated and getting in touch with our firm, doctors will inadvertently take actions that prejudice their claims.  With that in mind, it’s important to review what to do and what not to do in the first few days after your claim is denied or terminated.

  1. In all likelihood, you will first find out that your insurer is denying or ending your disability benefits via a telephone call from the claims consultant who analyzed your claim.  As we’ve explained before, the consultant will be taking detailed notes about anything you say during that call.  Therefore, even if you are justifiably upset or angry, be very mindful of what you say.  Anything you tell the consultant will certainly be written down and saved in your file.
  2. During the call with your consultant, make your own notes.  You don’t have to ask a lot of questions at this stage, but you do want to make sure to record whatever information the consultant gives you.
  3. Following the phone call, you should receive a letter from the insurance company stating that it has denied your claim or discontinued your benefit payments.  According to most state and federal law, the letter should have a detailed explanation of the evidence the company reviewed and why the insurer thinks that evidence shows you aren’t entitled to benefits.  When you receive the letter, read through it carefully.  Make notes on a separate document about any inaccuracies you identify.
  4. Make sure you keep a copy of the denial or termination letter as well as the envelope it came in.  You should also make a note of the date on which you received the letter.  The date the letter was actually mailed and received could be important to your legal rights in the future.  Then, the best thing to do is to scan the documents electronically or make a photocopy for your file, just in case the original denial letter gets lost or damaged.
  5. Once you find out that your claim has been denied or terminated, you should contact a disability insurance attorney.  Some doctors and dentists attempt to handle an appeal of their claim on their own, but we strongly suggest at least consulting with a law firm.  Every insurance  company has its own team of highly-trained claims analysts, in-house doctors, and specialized insurance lawyers to help it support the denial of your claim.  Having your own counsel can level the playing field by making sure you know your rights under your policy and what leverage the applicable law provides you, and help you avoid the common traps that insurance companies lay for claimants on appeal.
  6. The lawyer you consult can be in your area, or it can be a firm with a national practice that’s physically located in another state.  You may want to review these questions to ask potential attorneys before you decide who you would like to represent you.
  7. Whatever attorney you choose to contact, make sure you do so as soon as possible.  In many circumstances, you will only have a limited amount of time to appeal the insurance company’s decision.  Particularly in claims governed by the federal law ERISA, the clock starts ticking as soon as you find out your claim has been denied or terminated.
  8. It’s usually best to contact an attorney before you respond to the denial letter, to avoid saying anything that could prejudice your appeal.  For instance, if you have a policy that is governed by ERISA, and you submit some additional information, the insurance company may not allow you to submit any additional information after your initial response.
  9. Before you meet with potential disability insurance lawyers, gather whatever documents you can to help them evaluate what’s going on with your claim.  Our firm will always want to review the insurance policy or policies.  (Here’s information on how to get a copy of your policy). We typically also like to see your relevant medical records and any correspondence between you and your insurance company.  If you aren’t able to locate this information, it could cause delays in starting the appeal process.
  10. If you are a physician or dentist that is totally disabled, you should not try to go back to work just because your insurance company thinks you don’t qualify for benefits.  Trying to practice when you aren’t in a physical or mental condition to do so could cause you to re-injure yourself or accidentally harm your patients.  Of course, trying to work on patients after you’ve claimed that you are totally disabled can expose you to professional liability as well.  Further, trying to return to work could impair your ability to collect your benefits upon appeal.

Timing Is Everything: When to Discuss Your Potential Claim with a Physician

When it comes to disability insurance, your treating physician’s support can be critical to getting your legitimate claim approved. If your doctor can’t provide adequate documentation of your condition or is reluctant to get involved, there is a much higher chance that your claim will be denied. However, fully discussing your condition with a professional, compassionate treating physician will help ensure supportive medical records. When you are involved in a disability insurance claim, it is important to understand how to approach your treating doctor so that he or she can help you.

When to discuss your potential claim with a physician is an important timing issue. Instead of trying to enlist your doctor’s help at the very first visit, you should wait to talk to your treating physician until after he or she knows you and your condition well enough to opine accurately as to your ability to work. It is vital that you develop a relationship of trust and confidence with your doctor before inviting him or her to assist you in your claim. hysicians are often reluctant to support claims for benefits if they question the motivations behind the claims. A physician who has treated, without success, the policyholder making a legitimate disability claim will be more willing to cooperate with the extensive process.