In earlier posts we’ve discussed how agents don’t have the authority to change, delete, or add provisions to a policy. We’ve also discussed how most policy applications now contain language stating that you cannot rely upon representations made by agents regarding the scope of coverage, or eligibility for coverage. Thus, while agents can provide helpful advice and help to point you in the direction of a policy that may fit your needs, it is ultimately up to you, the purchaser, to review your policy, become familiar with the provisions of the policy, and confirm that you are in fact purchasing the coverage that you expected to receive.
If you don’t take the time to do this, and blindly pay premiums without reviewing your policy first, you could end up paying for coverage that provides less protection than you thought you were getting when you applied for the policy. For example, most physicians and dentists know that their disability insurance policies should be “own occupation”, meaning a policyholder is considered totally disabled (and eligible to collect benefits) when he or she can no longer work in his or her profession, versus being unable to work at all, in any profession. In some policies, own occupation is further defined as being unable to practice in a particular medical or dental specialty (i.e. anesthesiologist, periodontist, etc.).
Quite often physicians and dentists decide to buy another policy, either because they let a previous one lapse, or because they want to purchase additional coverage as their income increases and they can afford higher premiums, and they ask their agent for a new policy with the “same coverage”. This can be incredibly difficult or impossible to achieve, because over time policies have evolved to become more restrictive, and each company has variations on what they deem an “own occupation” policy. Consequently, while your agent may present you with a policy that contains the phrase “own occupation”, it may not be a true own occupation policy at all.
For example, some policies are actually conversion policies, which mean they start out as “own occupation” policies, but after a certain time frame (e.g 2 years, or 5 years), they change to an “any occupation” policy, which means that, in order to continue receiving benefits, you would have to show that you can’t work at all. This can be very difficult to prove, particularly if you worked in another capacity for all or some of the prior “own occupation” period.
Even if your agent does locate an own occupation plan with similar premiums and benefit amounts to an older policy, there may also be provisions that cancel each other out in the new and old policies. One scenario we’ve seen is a policy containing the provision that a claimant must not be working (a “no work” provision) in their own occupation or another profession in order to collect benefits, while the second policy states that a claimant must not be working in their own occupation but must be working in another field in order to collect benefits (a “work provision”). Under this scenario, in essence, one of the policies you’ve been paying years of premiums for is worthless, as both requirements cannot be met at once.
These examples highlight why it is important that you do more than just check an “own-occupation” box on your application and/or blindly rely on your agent’s assurance that a new policy is compatible and/or the same as an existing one. If you end up with a policy you essentially cannot use, your recourse is limited, as insurance companies have gone to significant lengths to shield themselves from any liability based on an agent’s representations of a policy. It is therefore far better to take the time to review your policy at the outset, before you pay years of premiums, to ensure that it provides the coverage that you applied for and need.
We are often asked whether a particular claim is the type of claim that an insurance company would be interested in settling for a lump sum buyout. The answer, as explained in more detail below, is always, it depends, because there are a number of factors that come into play, and many of those factors are not even directly related to whether the claim itself is legitimate or whether the insured’s condition is permanent (although those are important factors that impact whether a buyout is a possibility).
What is a Lump Sum Buyout?
You may be familiar with the terms of your disability policy, but you may not know that, in certain instances, insurers are willing to enter a lump sum settlement. Under a lump sum settlement, your insurer agrees to buy out your policy and, in return, you agree to surrender the policy and release the insurer from any further obligations to you going forward.
There are certain pros and cons to this sort of settlement. Some claimants prefer a lump sum settlement, because it allows them to avoid having to rely on month-to-month payments from their insurer (which may or may not arrive, or if they do arrive, may not arrive on time) and/or to avoid the hassle of dealing with claim forms, medical exams, etc. for years to come. A lump sum settlement can also allow you to take advantage of present investment opportunities that can provide for your and your family’s future. But there are also other considerations that you will need to discuss with your attorney as well as your accountant and other financial advisors. For example, if your benefit period lasts to age 65 (and you end up living to the end of the benefit period), you would likely receive more money cumulatively over time if you stayed on claim and received monthly benefits in lieu of a lump sum settlement.
Lump sum settlements can also be attractive to insurance companies. A settlement can allow insurance companies to release money from their reserves and to eliminate administrative expenses associated with the ongoing review of your claim year after year. But just as you might receive more money cumulatively over time if you stayed on the claim, the insurer might benefit financially from not offering you a lump sum settlement. For example, if your policy provided for lifetime benefits, and you met an untimely demise, your insurance company’s obligation to pay benefits would cease, and they may end up ultimately paying out a lower amount in total monthly benefits than they would have if they paid out a lump sum settlement on your claim.
Because this process is completely discretionary on their part, insurance companies are very deliberate about offering lump sum settlements. Before doing so, they must weigh multiple factors including the following:
- Permanency. The insurer is more likely to offer a settlement if its actuaries determine that you will likely be on claim for the maximum benefit period.
- Reserves. Over the course of your claim, your claim’s reserves slowly peak as you are on claim for an extended period of time (and permanency is established) and then at some point, they start to diminish as the claim is paid out, and you get closer and closer to the end of the maximum benefit period. The insurer is more likely to offer a settlement when the reserves are at their peak (typically around 3-5 years into a claim), because that is when the insurance company would improve its bottom line the most by freeing up the reserves.
- Mortality/Morbidity Issues. The insurer is more likely to offer a settlement if its actuaries determine that you will probably live to the end of the maximum benefit period. Or if you have lifetime benefits, the insurer will estimate your lifespan based on your health history to determine whether it is financially beneficial for the company to offer a lump sum settlement.
- Offsets. The insurer is more likely to offer a settlement if it determines that you will probably not receive income in the future that would offset the benefit amount before the end of the maximum benefit period.
- Anticipated Gain. Companies will not offer a buyout unless they stand to save money in the long run, so they have their actuaries calculate how much of a gain (percentage-wise) the company would net if they settle the claim. Insurers often have internal financial objectives that impact the amount they are willing to offer on settlements such as requiring a net gain amount of a certain percentage (e.g. 35%).
- Cash Outflow. The insurer will be more or less willing to offer a settlement depending on their quarterly or even annual cash outflows. Thus, if a company had paid out a lot of buyouts recently, the company may not have enough cash available to offer additional lump sum settlements.
The bottom line is that offering a lump sum settlement is completely voluntary on the part of the insurer and doing so depends on the unique factual circumstances of your claim. Nevertheless, knowing the factors that insurers consider in making this decision can help you understand whether a lump sum settlement is appropriate in your case.
In an ideal world, you’d receive a favorable decision and your first benefit check shortly after your policy’s elimination period is satisfied. Unfortunately, even wholly legitimate claims get scrutinized, questioned, delayed, and in some cases, denied. Below are a few common reasons benefit payments are delayed, particularly at the outset of a claim.
Improperly Completed/Partially Completed Forms
If your initial claim forms are missing information, unreadable, or incomplete, your insurer will likely issue additional forms for completion or use the missing information as an excuse to delay processing the claim. This applies to both the forms that you are required to complete and sign and the forms the insurer gives you to give to your doctor to fill out, so it is important to follow up with your doctor and make sure that all of the necessary forms are completed and returned in a timely fashion. If you do not carefully document your claim, and you do not promptly respond to requests for follow-up information, most insurers will delay making a claim decision until you provide them with the requested information.
Pending Requests for Information
At the outset of your claim, your insurer will require you to sign an authorization that allows them to request a wide range of information from a wide range of sources, including your doctors and employer. Oftentimes, the insurer will request information from these other sources (without telling you) and then will delay making a decision on your claim if any of these requests remain pending.
This means that even if you provide the insurance company with everything they requested from you, there may be other information that the company is waiting that is holding up the claims decision. Consequently, it’s important to ask the insurance company to find out if there are any pending requests, adn then follow up with your doctors, employers, etc. as needed to ensure that the information is provided.
It’s also important to keep tabs on the pending requests, to determine whether the scope of the insurer’s investigation is appropriate. An experienced disability attorney can advise you on whether a particular request for information is warranted under the circumstances of your particular claim.
Failure to Schedule Medical Examinations/Interviews
When you file a disability claim, insurers will almost always require that you participate in a detailed interview and/or undergo an independent medical examination (IME). While the stated point of these requests is to confirm or verify your disability, they can often be an attempt by your insurer to discredit your own doctor or medical records and generate fodder to deny your claim. Depending on the nature of your condition, your insurer might also request other types of interviews or exams—such as a functional capacity evaluation (FCE) or neuropsychological evaluation.
Some claimants (mistakenly) believe that if they keep putting off these exams, then they’ll be able to avoid the exams. However, most disability policies contain a provision that expressly requires the policyholder to submit to exams, and states that failure to do so is grounds for denying a claim or terminating benefits. So if you put off these exams, it’s only going to delay the company’s claim decision, and possibly result in a claim denial. However, keep in mind that going into a medical examination, IME, or interview unprepared can be just as bad for your claim, so it’s very important to prepare beforehand. Once again, an experienced disability attorney can advise you regarding the proper scope of an interview or IME, and can also be present for the interview or IME, if desired.
We’ve talked before about how your insurance company may require you to undergo an independent medical examination (IME) by a physician of their choosing and how they may also ask for a Functional Capacity Evaluation (FCE).
Neuropsychological evaluations are another tool insurers utilize when investigating disability claims. A neuropsychological evaluation is also something that a claimant filing a disability claim may choose to undergo independently, to provide additional proof of his or her disability. In this series of posts, we will be talking about what a neuropsychological evaluation is, what to expect during an examination, and how an exam could affect your claim.
What is a Neuropsychological Evaluation?
Neuropsychology is the study of the relationship between the brain and behavior. A neuropsychological evaluation is a method of testing where a neuropsychologist seeks to obtain data about a subject’s cognitive, behavioral, linguistic, motor, and executive functioning in order to identify changes that are, often, the result of a disease or injury. The evaluation can lead to the diagnosis of a cognitive deficit or the confirmation of a diagnosis, as well as provide differential diagnoses.
Neuropsychological evaluations are most often associated with conditions that exhibit cognitive dysfunctions, such as
- Multiple sclerosis
- Epilepsy or seizures
- Psychological and mental health disorders
- Chronic pain
- Head injuries
- Parkinson’s disease
- Neurodegenerative diseases
- Side effects of medication
Conditions such as those enumerated above often have symptoms that vary person by person, and the amount of cognitive impairment can often not be fully assessed by other diagnostic tools such as an MRI, or a traditional psychological evaluation.
Neuropsychological tests are standardized tests that are given and scored in a similar manner each time they are used. The tests are designed to evaluate the following:
- Intellectual Functioning
- Academic Achievement
- Language Processing
- Visuospatial Processing
- Verbal Learning and Memory
- Executive Functions
- Speed of Processing
- Sensory-Perceptual Functions
- Motor Speed and Strength
There are many different accepted tests for each domain listed above. Accordingly, an examiner will likely not perform every test, but rather select tests from each category that will best evaluate the particular question posed by the referrer.
The goal of these neuropsychological tests is to produce raw data. The results are then evaluated by comparing test scores to healthy individuals of a similar background (age, education, gender, ethnic background, etc.) and to expected levels of cognitive functioning. The data is then interpreted by the neuropsychologist, and perhaps other providers, to determine the strengths and weaknesses of the subject’s brain, provide suggestions for potential treatment options, set a standard for any future testing, evaluate a course of treatment, make recommendations on steps and modifications that can improve daily living, and evaluate whether a subject can return to work with or without modifications.
In our next post we will go look at what you can expect during a neurospychological evaluation.
Atif B. Malike, MD; Chief Editor, et al., Neuropsychological Evaluation, Medscape, http://emedicine.medscape.com/article/317596-overview, updated May 18, 2017.
Neuropsychological Evaluation FAQ, University of North Carolina School of Medicine Department of Neurology, https://www.med.unc.edu/neurology/divisions/movement-disorders/npsycheval
Kathryn Wilder Schaaf, PhD, et al, Frequently Asked Questions About Neuropsychological Evaluation, Virginia Commonwealth University Department of Physical Medicine and Rehabilitation, https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0ahUKEwir3pKk__fUAhUBEmMKHenkDzsQFggoMAA&url=http%3A%2F%2Fwww.tbinrc.com%2FWebsites%2Ftbinrcnew%2Fimages%2FNeuropsych_FAQ.pdf&usg=AFQjCNG0Mv3o17ZrNmXuDN5ITUIh4fWYtA&cad=rja
The answer depends on what your disability policy says. Many people don’t realize that their policy may limit their ability to receive disability benefits if they move out of the country. If you’ve ever wondered why claims forms ask for your updated address, one of the reasons might be that your policy contains a foreign residency limitation, and your disability insurance company is trying to figure out if they can suspend your benefits.
Foreign residency limitations allow disability insurance companies to stop paying benefits under your policy if you move out of the country. These limitations may be especially relevant if you have dual citizenship, you want to visit family living abroad, or you plan to obtain medical care in another country. A foreign residency limitation may also affect you if your policy allows you to work in another occupation and you have a job opportunity in another country that you want to pursue. For instance, if you are a dentist and can receive disability benefits while working in another occupation, your insurance company may suspend your benefits if the opportunity you pursue is in another country.
Foreign residency limitations benefit disability insurance companies in several ways. By requiring you to remain mostly in the country while receiving benefits, these limitations simplify the payment process and reduce the possibility that insurers will need to communicate with doctors in other countries to manage your claim. They also make it easier for insurance companies to schedule field interviews and conduct surveillance of you to find out if you have done something that could be interpreted as inconsistent with your claim.
While these limitations are not included in every disability insurance policy, it is important to check if your policy—or a policy you are considering purchasing—contains a foreign residency limitation, because it could limit your ability to collect benefits later on.
Foreign residency limitations vary by policy. Here is an example of one foreign residency limitation from a Guardian policy:
This limitation highlights several details you should look for if your disability policy contains a foreign residency limitation, including the length of time you can spend in another country before your insurance company will suspend your benefits, whether you can resume receiving benefits if you return to the country, and when you will have to resume paying premiums if your insurance company suspends your benefits. Another important consideration is the effect a foreign residency limitation will have on your policy’s waiver of premium provision. Under the policy above, premiums will continue to be waived for six months after benefits are suspended. However, your policy may have a different requirement regarding payment of premiums, so it’s important to read your policy carefully.
Here is an example of another foreign residency limitation from a different Guardian policy:
This limitation contains much less detail than the first limitation. For instance, it does not clarify how suspension of benefits will affect waiver of premium. If your disability policy contains a foreign residency limitation that does not discuss waiver of premium, you should look to your policy’s waiver of premium provision to find out when premiums will become due after benefits are suspended. The policy above also defines foreign residency differently than the first policy. At first glance, it may seem that you can continue to receive disability benefits any time you leave the country for twelve months or less. What the policy actually says, though, is that the insurance company will only pay benefits for twelve months that you are out of the country at any time you are covered by the policy. So, if you have received benefits for twelve months while living in another country—even if those months were spread out over several years—your insurance company will not pay benefits in the future unless you are in the United States or Canada.
As you can see, foreign residency limitations vary among disability policies. If you are thinking about leaving the country, it is important to read your policy carefully first so that you understand how leaving the country may affect your ability to recover benefits.
Many disability claimants suffering from chronic, intense pain are surprised and disheartened when their reported pain levels are received with skepticism by their insurance company. Since pain is a subjective feeling, treating doctors typically ask patients to self-report their pain on a scale of 0-10, so that they can diagnose and treat the pain. Unfortunately, most insurance companies are unwilling to accept self-reported pain levels and will often try to downplay the severity of the claimant’s pain, citing a lack of objective evidence.
Recently, researchers have developed a technology called functional MRI scans, or fMRIs, for short, which may provide a new way to objectively verify the existence of pain. In this post, we will examine this technology and discuss how it might be used in the context of disability claims.
What is an fMRI?
fMRI scanning is a noninvasive technique used by doctors to map and measure brain activity. More specifically, fMRIs are used to measure and observe increases in MR signal caused by neural activity in the brain. The fMRI data is then analyzed to determine which parts of the brain were active during the scan. The data is then compared to known neurological signatures, or “biomarkers,” to determine if there are any correlations between the neural activity in the brain and the symptoms reported by the patient (such as chronic pain).
The Use of fMRI Scans to Prove Pain
Recently, a number of companies and researchers are focusing on using fMRI scans to produce objective evidence of pain. For instance, Dr. Joy Hirsch, a professor at the Yale School of Medicine, claims to have developed a test that is capable of distinguishing real, chronic pain from imagined pain.
fMRI scans are also now being used to support the cases of claimants in disability cases. For example, a woman in New York recently used an fMRI scan to convince her insurer, after two years of litigation, that her disability claim never should have been denied. An fMRI scan was also recently used in the case of Carl Koch, a truck driver from Arizona who suffered severe burns when the hose of his tanker broke loose and sprayed him with molten tar. Mr. Koch visited Dr. Hirsch, who used functional brain mapping to conclude that Mr. Koch’s pain was real. When the judge ruled that Dr. Hirsch’s testimony would be admissible at trial, the case settled for $800,000 – an amount ten times higher than the company’s original offer.
What the Skeptics Say
The use of fMRI scans to prove pain remains controversial. Some critics argue that the techniques being used in litigation have little support in existing publications. Others, such as Tor Wager, a professor of psychology and neuroscience at UC Boulder, contend that the sample size in available studies is too small. Proponents of fMRI refute both of these claims, arguing that a number of credible studies support the validity of their methods.
The Future of fMRI Scans in Disability Cases
It’s easy to see how fMRI scans could prove useful in a disability claim. For example, many dentists suffer from musculoskeletal disorders, particularly in their spines, that cause chronic, debilitating pain. However, as noted above, these types of claims can be particularly difficult, because many insurance companies refuse to accept a claimant’s self-reported pain levels and limitations. Co-workers, family, and friends can provide statements describing how the dentist’s pain is affecting his performance at work and his quality of life, but once again, insurance companies will typically similarly claim that such statements are “objectively verifiable” evidence of the pain. Sometimes a cervical or lumbar MRI can identify potential causes for the pain, and/or a functional capacity exam (FCE) can help document the limitations the pain is causing—but these types of reports are also commonly challenged by insurance companies intent on denying benefits.
In such a case, an fMRI scan illustrating the doctor’s pain might serve as an additional, objectively verifiable method of establishing the existence of chronic pain. Whether or not insurance companies are willing to accept fMRIs as reliable evidence of pain remains to be seen, and will likely depend, in large part, on how willing courts are to accept fMRIs as admissible evidence of pain. If, in the future, this technology continues to develop and become more precise, and courts and juries demonstrate a willingness to accept fMRIs as proof of pain, fMRIs may eventually be enough to convince insurance companies to accept legitimate disability claims without ever setting foot in a courtroom.
- UC San Diego Sch. of Med., What is fMRI?, available at http://fmri.ucsd.edu/Research/whatisfmri.html.
- Sushrut Jangi, Measuring Pain Using Functional MRI, The New England Journal of Medicine, available at http://blogs.nejm.org/now/index.php/9863/2013/04/10/.
- Steven Levy, Brain Imaging of Pain Brings Success to Disability Claim, EIN Presswire (June 29, 2016), available at http://www.einpresswire.com/article/333249721/brain-imaging-of-pain-brings-success-to-disability-claim.
- Kevin Davis, Personal Injury Lawyers Turn to Neuroscience to Back Claims of Chronic Pain, ABA Journal (Mar. 1, 2016), available at http://www.abajournal.com/magazine/article/personal_injury_lawyers_turn_to_neuroscience_to_back_claims_of_chronic_pain.
In the last post, we discussed the facts of the court case Massachusetts Mutual Life Insurance Company v. Jefferson. 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.
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.
 104 S.W.3d 13, 18 (Tenn. Ct. App. 2002).
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.
In the case of Massachusetts Mutual Life Insurance Company v. Jefferson, 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:
- The factual disability has medical support.
- The onset of the factual disability occurred before the legal disability.
- 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.
 104 S.W.3d 13, 18 (Tenn. Ct. App. 2002).
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:
- 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.
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:
- The location of the pain.
- The level of the pain (if you use a numeric scale, be sure to also describe the scale).
- The duration of the pain.
- Any triggers to the pain.
- Any medications you are taking.
- Whether the medications you are taking are effective or have any adverse side effects.
- 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:
American Cancer Society Form:
Peace Health Medical Group Form:
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:
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.
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.
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.
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.
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.
In our last post, we talked about PDQ and why it matters. In this post we are going to be talking about another important calculation—EIQ.
EIQ stands for “earnable income quotient.” Your EIQ estimates how much income you will earn before you retire.
Why Does EIQ Matter?
Many young doctors and dentists are understandably hesitant to go out and purchase disability insurance right away. Adding another insurance premium to the mix is often not very appealing to a young doctor or dentist facing substantial student loan debt and other expenses.
As time goes on, it is easy to forget about disability insurance. Once income is on the rise, many doctors and dentists raise their standard of living proportionally, without giving much thought to what might happen if that income suddenly disappeared.
Consequently, many doctors and dentists have not set up a safety net (such as disability insurance) to cover their expenses if they become disabled. Calculating your EIQ can give you a sense of how much income you are placing at risk by not having disability coverage. Depending on your salary and years remaining until retirement, the number may surprise you.
Once you know your EIQ, you will have a better sense of the amount of disability coverage you will need to maintain your standard of living and meet your goals for retirement. Remember that should you become disabled, your expenses will not simply go way. If anything, they will likely be higher due to medical bills and other out-of-the-ordinary costs that are necessary to accommodate the disability, so be sure to also factor such expenses into your level of coverage.
How Do I Calculate My EIQ?
The Council for Disability Awareness also has an online EIQ calculator. All you have to do is input some basic information about your annual/hourly/weekly income, expected salary increases, and retirement age and the EIQ calculator will estimate how much you will make before you retire.
PDQ stands for “personal disability quotient.” Your PDQ estimates the likelihood that you will become disabled during your lifetime, based on a number of lifestyle and health factors.
Why Does PDQ Matter?
Many young doctors and dentists think that because they are young and healthy, they do not need disability insurance, but this can be a dangerous way of thinking. In the first place, many disabilities are caused by unforeseen accidents, not poor health. Additionally, the odds of becoming disabled are much higher than you might think. The Social Security Administration estimates that a 20-year old entering the workforce has a 1 in 4 chance of becoming disabled before retirement.
Still, each person is different. Your lifestyle, occupation, or medical history may place you above or below the average risk for disability. This is where your PDQ comes in. While your PDQ obviously will not be able to predict what will happen to you with 100% accuracy, it can help you have a better sense of your personal level of risk for disability.
How Do I Calculate My PDQ?
The Council for Disability Awareness has an online PDQ calculator that you can use to find out your PDQ. All you have to do is input some basic information about your age, height, medical conditions, and the kind of work you do and the PDQ calculator will tell you your chances of being disabled before you retire. The PDQ calculator will also tell you the chances of your disability lasting 3 months or longer, the chances of your disability lasting 5 years or longer, and the average length of a long term disability for someone like you.
Recently, several insurers have decided to raise their Issue and Participation (I&P) limits. In this post we will discuss some of the potential ramifications of increased I&P limits.
What are Issue and Participation Limits?
The Issue Limit is the maximum amount of liability a single insurer will cover for a particular individual. The Participation Limit is the maximum amount of total coverage an insurer is willing to provide after factoring in the coverage that the individual is already receiving from other insurance companies. Usually your maximum monthly benefit is determined by your income, but some insurers allow professionals, such as physicians and dentists, to apply for default rates based on other factors such as occupation, years of experience, etc. Usually, an insurer’s I&P limits permit coverage in an amount that is approximately 40-65% of your actual monthly income.
Essentially, insurers use I&P limits to make it possible to collectively provide higher total benefits to high income earners, while at the same time ensuring that they are not over-insuring an individual.
What are the Ramifications of Higher Issue and Participation Limits?
In previous posts, we have talked about how in the 1980’s and early 1990’s, disability insurers aggressively marketed policies to doctors, dentists, and other high income earners. We’ve also discussed how, due to the emergence of managed care, doctors and dentists saw a significant decrease in income. The end result was that disabled doctors and dentists had policies that promised benefits that were equal to, or greater than, their modified salaries. When the insurance companies had to start paying the benefits they had promised, they lost hundreds of millions of dollars. This in turn led to insurance companies taking an aggressive stance toward claims involving high paying policies. Most insurers also stopped offering policies with high benefit limits.
Now, it appears that at least some insurance companies have come full circle and are once again marketing policies with high benefit limits. What does this mean? Now that insurers are beginning to raise I&P limits, it may be possible for you to obtain benefit amounts that are closer to your actual monthly income. Remember, as with any insurance, generally speaking, a higher benefit also means higher premiums. However, if you can afford it, it is usually better to have as much coverage as possible.
If insurers end up providing higher benefits again, it will be interesting to see if there is another corresponding spike in claim denials. If you do end up purchasing a high benefit policy, be sure to look it over carefully and make sure that there is not anything in it that would allow the insurance company to limit or deny your claim later on down the road. If you are unsure about whether you are being offered a good policy, an experienced disability attorney can review the policy and explain any complex provisions.
Recently, insurers have started to allow consumers to build and personalize their own insurance policies online. For instance, Guardian recently announced the launch of its online insurance quoting tool. According to Guardian, the tool “educates clients on the costs for various options based on age and occupation, demonstrates how adding or removing certain options affects pricing, and shows how to create the plan that best matches their individual needs.”
If this “build your own insurance” concept catches on, consumers may have much more control over the terms of their policies than they have had in the past. Accordingly, in this post we are going to talk about things to look for in a policy, and some things to avoid in a policy.
Things to Look for in a Policy
Generally speaking, here are a few things that you will want to look for when selecting a policy:
- Make sure that the policy is a true “own occupation” policy.
- Make sure that the policy provides for lifetime benefits.
- If possible, add a specialty rider that clearly defines your own occupation as your specialty.
- Try and find a policy with a COLA (cost of living adjustment) provision. This provision will increase your potential benefits by adjusting for inflation as time passes.
- Make sure that you get the highest benefit amount you can afford. Remember, if you’re unable to practice, your monthly disability payments may be your only source of income.
Things to Avoid in a Policy
Generally speaking, here are a few things that you should avoid when selecting a policy:
- “No Work” provisions that only provide benefits if you are unable to perform the material and substantial duties of your own occupation and you are not working in any other occupation.
- Substance abuse exclusions.
- Provisions requiring you to apply for Social Security benefits.
Remember, purchasing disability insurance is no different than any other significant purchase. Be sure to take your time and obtain quotes from multiple insurance companies before making a final decision.
For more information regarding what to look for in a policy, see this podcast interview where Ed Comitz discusses the importance of disability insurance with Dentaltown’s Howard Farran.
 See http://www.businesswire.com/news/home/20151028005074/en/Guardian-Empowers-Consumers-Build-Disability-Insurance-Coverage.