Unum Study Shows an Increase in Musculoskeletal Disability Claims Over the Past Decade

As we have discussed in previous posts, musculoskeletal disorders are very common among dentists due to the repetitive movements and awkward static positions required to perform dental procedures. Unum, one of the largest private disability insurers in the United States, recently released statistics showing an increase in the filing of musculoskeletal disability claims over the past 10 years.

According to Unum’s internal statistics, long term disability claims related to musculoskeletal issues have risen approximately 33% over the past ten years, and long term disability claims related to joint disorders have risen approximately 22%.  In that same period of time, short term disability claims for musculoskeletal issues have increased by 14%, and short term disability claims for joint disorders have risen 26%.

This trend may lead to Unum directing a greater degree of attention towards musculoskeletal claims as the volume of these claims continues to increase.  Musculoskeletal claims are often targeted by insurance companies for denial or termination because they are easy to undercut—primarily due to the limitations of medical testing in this area.  For instance, it can be difficult to definitively link a patient’s particular subjective symptoms to specific results on an MRI, and other tests, such as EMGs, are not always reliable indicators of the symptoms that a patient is actually experiencing.  Insurers also typically conduct surveillance on individuals with neck and back problems in an effort to collect footage they can use to deny or terminate the claim.  While such footage is usually taken out of context, it can be very difficult to convince the insurance company (or a jury) to reverse a claim denial once the insurer has obtained photos or videos of activities that appear inconsistent with the insured’s disability.

As we have noted in a previous post, Unum no longer sells individual disability insurance policies, so its disability insurance related income is now limited to the premiums being collected on existing policies.  Because benefit denials and termination are the primary ways insurers like Unum can continue to profit from a closed block of business, and musculoskeletal claims are on the rise, Unum may begin subjecting this type of claim to even higher scrutiny.

References:

http://www.businesswire.com/news/home/20160505006009/en/Aging-obesity-tip-scales-10-year-review-Unum

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Thinking About a Policy Buyout?
How Lump Sum Settlements Work: Part 2

In this two-part series we are addressing the two most common scenarios in which insurance companies pursue lump sum buyouts.  In Part 1, we talked about buyouts for individuals who are totally and permanently disabled and have been on claim for several years.  In Part 2, we will address the other scenario in which buyouts occur: after a lawsuit has been filed.

In the context of an individual disability insurance policy, a lawsuit is generally filed in one of two common scenarios: (1) a person on claim with a legitimate disability has their benefits terminated; or, (2) a person with a legitimate disability has their claim denied.  A lawsuit is typically considered to be the last line of defense in the disability claims process.  By the time a lawsuit has been filed, the claimant’s attorney has likely exhausted every available means to resolve the claim without legal action.  Litigation is costly, time-consuming, and can drag on for years.

If an insurance company offers a lump sum buyout during litigation, it will typically be at one of three stages in the case: (1) after the Complaint and Answer are filed; (2) after all stages of pretrial litigation and discovery are complete; or (3) after the claimant/plaintiff wins at trial.

The first stage of any lawsuit is the filing of the Complaint.  This is a document the plaintiff files with the court outlining all of the claims and allegations against the defendant.  After receiving a copy of the Complaint, the defendant then has a specified period of time in which to file an Answer responding to the plaintiff’s allegations.

Prior to the filing of a lawsuit, a contested claim has likely been reviewed only by the insurance company’s in-house attorneys.  However, once litigation begins, the insurance company will retain a law firm experienced in insurance litigation to handle the case.  After the filing of the Complaint, the insurance company’s outside counsel will have the opportunity to evaluate the strength of the case and the claim.  Viewing the case through the prism of their experience, the insurer’s litigation team may recommend offering a buyout to avoid the risk, costs, and time associated with the lawsuit.

The second point of a lawsuit at which a buyout may occur is after all stages of pretrial litigation are complete.  Once the parties have had the opportunity to conduct discovery and litigate any pretrial motions, they will have a full picture of the case and their prospects at trial.  Through discovery both sides will be able to obtain all documents and interview all witnesses the other side intends to use at trial.  Through the filing of pretrial motions the parties can attempt to prevent or limit the use of certain evidence or witnesses at trial.

At this juncture, the insurance company may seek to avoid the risks of trial and settle the claim before the first juror is ever impaneled.  The disability insurance company’s incentive to resolve the case at this point – even after both sides have invested substantial resources in the litigation – is the financial exposure and bad publicity it faces with a loss at trial.  Additionally, a bad result at trial for the insurance company could create undesirable legal precedent for future cases.

If a jury (or a judge, depending on the case) determines that the insurance company has unlawfully denied or terminated a legitimate disability claim, the insurer will not only be required to pay the disability benefits the claimant/plaintiff is entitled to, but may also be liable for damages and other costs.  The disability insurer may be required to pay back benefits, plaintiff’s attorneys’ fees and costs, consequential damages, and punitive damages.

In the context of a disability insurance lawsuit, consequential damages come in the form of any financial harm to the claimant/plaintiff resulting from the insurer’s denial or termination of benefits.  For example, if the insurer’s termination of benefits led to the claimant/plaintiff losing their house in foreclosure, the insurer could be liable for consequential damages.  Punitive damages are designed to deter the insurer from denying legitimate disability claims in the future, and can be multiplied several times over if the insurer is found to have acted in bad faith.  Additionally, some states allow acceleration of benefits – in which the courts can order the insurer to immediately pay future benefits that would owed to the claimant/plaintiff over the full life of the policy.

The final stage at which a lump sum buyout may be offered is after a victory at trial by the claimant/plaintiff.  You may be wondering why anybody would entertain a settlement offer right after a being awarded back benefits, damages, and costs at trial – why accept anything less?  The answer is simple: appeals.  The insurance company can tie up a trial court victory in the court of appeals for years, which they can use as leverage to offer a settlement smaller than the trial award.

Though these three stages of litigation are the most common points at which a buyout may occur, buyouts themselves are uncommon during litigation.  Depending on the situation, the specter of a long, drawn out legal battle can either provide the insurance company with the incentive to settle the lawsuit early with a buyout or harden its resolve to fight the claim to the bitter end.  You cannot count on simply filing a lawsuit and expecting the insurance company to be eager to settle.  Some insurance companies want to settle early and avoid the financial risks and bad publicity of a defeat at trial, while others take a hard line and use their nearly limitless resources to fight a war of attrition.  Ultimately, whether or not a disability insurer offers a lump sum buyout in the midst of litigation depends largely on the individual facts of the case, the risks at trial, and the parties and attorneys involved.

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Thinking About A Policy Buyout?
How Lump Sum Settlements Work: Part 1

Lump sum buyouts are a frequent source of questions from our clients and potential clients. With that in mind, the next few posts will address different aspects of the buyout process.

Buyouts typically occur in one of two situations: 1) after you’ve been on claim for several years, or 2) after a lawsuit has been filed.  This blog post will focus on the first scenario.

Lump sum buyouts that occur outside of litigation normally won’t occur unless and until the insurance company decides that you are totally and permanently disabled under the policy definition.  Typically, the disability insurer won’t consider whether this is the case until you’ve been on claim for at least two years.  If the insurer determines that you’re totally and permanently disabled, it will then determine whether it makes sense financially for the company to offer you a percentage of your total future benefits rather than keep paying your monthly benefits for the entire duration of your claim.

To understand how the insurance company calculates whether a buyout is in its financial interest, you should understand how insurance company reserves work.  The purpose of reserves is to ensure that the insurance company has the resources to fulfill its obligations to policyholders even if the company has financial difficulties.  Thus, disability insurers are required by state regulators to keep a certain amount of money set aside, or “reserved,” to pay future claims.  Any money required to be kept in a reserve is money that the insurer can’t spend on other things or pay out in dividends.  The amounts required to be kept in the reserve are determined by the state, depending on factors like how much the monthly benefit is and how long the claim is expected to last.

For a disability insurance claim, a graph of the required reserve amount over time looks like a Bell curve: low at the beginning, highest in the middle, and low again towards the end of the benefit period.  The ideal time for a settlement, from an insurance company’s perspective, is at or just before the high middle point–typically about five to seven years into the claim, depending on the claimant’s age and the duration of the benefit period.  At this point, the company is having to set aside the highest amount of money in the reserve.

If the insurance company can pay you a percentage of your total future benefits, it can not only save money in the long run, but it can release the money in the reserve.  The disability insurer can then use those funds for other purposes, including providing dividends for its investors.  In addition, the insurance company will save all of the administrative expenses it was putting towards monitoring your disability claim.

In the next post, we’ll address how and why buyouts occur after a lawsuit has been filed.

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MetLife to Exit Individual Disability Insurance Market

MetLife, Inc. the fourth largest provider of long-term disability insurance by market share[1], is suspending sales of its individual disability insurance policies.  In an internal memorandum to producers, MetLife Client Solutions Senior Vice President Kieran Mullins announced that the company would be suspending the individual disability insurance block of business effective September 1, 2016.  In the memo, Mr. Mullins cites the goal of creating a new U.S. Retail organization for its insurance products and the “difficult, but strategic” decisions that led to the shutdown of their individual disability insurance product:

This was not an easy decision to make, given the growth and strength of our IDI business. However, we believe it is the best course of action for the immediate future. While there is tremendous opportunity in this market, the suspension provides us with the time and resources needed to properly separate the U.S. Retail business from MetLife. There is a significant amount of work to be done to retool existing systems – and implement new systems – that will ultimately provide the most value to our customers and sales partners in the years to come.

Insurance news websites are already speculating that the shutdown could put pressure on the remaining thirty-one companies selling individual disability insurance to raise premiums.  Because MetLife controls such a substantial share of the individual disability insurance market, their departure effectively reduces the size of the pool in which the risk can be spread.  Cyril Tuohy, writing for Insurancenewsnet.com, points to the move as an opportunity for the remaining companies in the market to innovate and attract the business MetLife will be leaving behind.  The company’s departure will favor the insurers whose individual disability policies cater to physicians, dentists, and other high-income professionals, such as Guardian, Principal, The Standard, Ameritas and Northwestern Mutual.[2]

In an accompanying FAQ, MetLife assured producers that existing policies would not be affected by the change, and that they would continue to support policy increases by the terms of the Guaranteed Insurability Option, Automatic Increase Benefit, and Life Event riders.  The memo also noted that MetLife would continue sales of its group, voluntary, and worksite disability products.

It is important to remember that even though MetLife must continue to service its existing policies, shutting down sales of new policies can still affect current policyholders.  Absent the need to sell new policies, an insurer may have less incentive to provide customer service or avoid a complaint from the state insurance board.  Additionally, once a block of business closes, the easiest way to maintain profitability of that product is through claims management.  In real terms that is typically accomplished through claims denial and benefits termination.  We discussed these very tactics in a 2012 blog post about Unum’s management of its closed block of individual disability insurance products.

If you have a MetLife individual disability insurance policy, pay close attention as the business focus shifts away from selling new policies and toward the management of existing policies.  If you have a question or concern regarding your MetLife policy, contact our office.

[1]http://www.statista.com/statistics/216499/leading-long-term-disability-insurance-carriers-in-the-us/

[2]“Will MetLife’s Suspension Send DI Prices Soaring?” Cyril Tuohy, insurancenewsnet.com. http://insurancenewsnet.com/innarticle/agents-split-di-pricing-wake-metlife-suspension

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Karla Thompson Discusses Common Claim Mistakes
in U.S. News & World Report

Attorney Karla Thompson recently spoke with Geoff Williams, a journalist for U.S. News & World Report Money, about common mistakes consumers make when they file insurance claims.

In the article, Ms. Thompson discusses one of the chief errors that can lead to a claim being denied: talking to claims analysts on the phone.  Mr. Williams writes:

If you’re a conversationalist and enjoy talking, be careful. Karla Baker Thompson is a Scottsdale, Arizona-based insurance attorney who specializes in representing professionals with disability insurance claims.

“Most people don’t realize how claims handlers are trained to ask loaded questions whenever they talk to policyholders, and to memorialize everything the claimant says in a written memo after the call,” Thompson says. “The questions might seem routine or mundane to the policyholder, but the answers they elicit can have serious consequences, including denial of the claim.”

Thompson offers the example of a claims handler asking what you’ve been doing that day.

“If you say you went out to pick up a prescription, you’re not just making small talk. You’ve just led that claims adjuster to believe – whether accurately or not – that you’re capable of leaving the house, getting in your car, driving, filling out paperwork, and possibly lifting and carrying bags,” Thompson says.

Maybe, Thompson adds, someone drove you to get that prescription, or maybe you did go out yourself but you came back and felt miserable afterward.

“If you’re just speaking off the cuff, you may not be giving the proper context to your answers,” she says. “Worse, you could say something inaccurate by mistake.”

Other examples in the article include assuming your insurance company is right and not getting the proper documentation to support your claim.

Check out the article in its entirety to learn more: Don’t Make These Mistakes When Filing an Insurance Claim.

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Disability Insurance Profiles: Principal Life

We are expanding our list of insurance company profiles that specifically market to dentists and doctors to include Principal Life.

See our other profiles of Great-West, MassMutual, MetLife, Northwestern Mutual, Guardian, Hartford, and Standard.

Principal Life (also known as “Principal Financial Group”) was founded in 1879.  Initially, Principal Life operated primarily as an insurance company. Principal Life is now a member of the Fortune 500, and offers several additional services, such as retirement and asset management. Principal has most recently realized a growth in net income from $1.112 billion in June of 2014 to $1.290 billion in June of 2015.

Company: Principal Financial Group or The Principal.

Location: Des Moines, Iowa.

Associated Entities: Principal Financial Services, Inc.; Principal Life Insurance Company; Principal Real Estate Investors, LLC; Spectrum Asset Management, Inc.; Post Advisory Group, LLC; Columbus Circle Investors; Edge Management, Inc.; Morley Financial Services Inc.; Finisterre Capital, LLP.

Assets: $530.3 billion.

Notable Policy Features:

Principal Life sells polices that define “disability” as “own occupation”, which means that you are considered totally disabled if you are unable to perform the duties of your occupation. While this may seem like the right policy for a medical professional, you should be aware of a couple caveats.  Coverage under a Principal Life policy is, in part, based upon a key definition that is usually referred to as your “occupation period.”  Essentially, your “occupation period” is the time frame during which the “own occupation” definition of totally disabled applied.  Once the “occupation period” has expired, Principal Life will only pay you benefits if you are unable to work in any occupation that you are reasonably suited to work in, based on your education, training, and experience.

The length of your “occupation period” can range from a base of 2 years after your disability to a period of 5 years, until age 65, until age 67, or until age 70, depending on your “occupation class.”  Oftentimes, the policy provisions regarding “occupation periods” can be convoluted and difficult to decipher.  If you unsure about the length of your “occupation period” under the terms of the policy, an experienced disability insurance attorney can help you understand the applicable policy language.

Claims Management Approach:

In comparison with other insurance companies, Principal Life generally conducts more in-person field interviews with claimants.  Principal Life will not only conduct a field interview when you initially file your claim, but will also likely conduct several additional follow up interviews throughout the claims process.

Most insurance companies require you to fill out generic questionnaires that ask for information about the nature of your disability, among other things.  Because Principal Life handles a lot of disability claims by physicians, it has created a particular “Medical Professional Occupation and Financial Questionnaire” that is more comprehensive than a generic questionnaire, and is specifically tailored towards collecting information from medical professionals.  The questionnaire is quite extensive, and asks about a wide variety of information, from your ownership interest in your practice, to whether your practice participates in a health care network, to the credentials of the medical professional owners and associate professionals you work with, to whether you receive any reimbursements from prescriptions.  If you are unsure about the content or scope of any questionnaire you receive, an experienced disability insurance attorney can help answer any questions you may have.

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Unum Denies Its Own Employee Disability Benefits

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

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

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

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

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Unum is Making Some Changes, But Are They Good For Your Plan?

In previous posts, we have discussed how courts and juries have reprimanded Unum and its various subsidiaries for wrongfully denying disability claims.  Now, Unum is once again making the headlines—this time for making significant changes to its leadership at the highest levels of the company.

What’s changing?

Essentially, Unum is undertaking a widespread overhaul of its upper management.  Marco Forato is now the senior vice president for global growth strategy, Steve Mitchell is the new chief financial officer, and Steve Zabel is the new president of the U.S. closed block operations.  Additionally, Vicki Gordan has been promoted to senior vice president and chief internal auditor, and Matt Royal is now the chief risk officer for Unum.

While any change of leadership can have substantial ramifications, those insured by Unum should take particular note that Unum has appointed a new “president of the U.S. closed block operations.”  “Closed block” refers to Unum’s discontinued product lines, which, according to Unum’s 2014 Annual Report, include long-term care and older individual disability policies.  If you are a physician or dentist with a Unum policy, your policy is probably part of Unum’s “closed block” operations.

Unum’s new president of “closed block” operations will likely face a challenging task because any losses suffered from paying out Unum’s old disability policies cannot be offset by new business.  Additionally, such “closed block” operations are a relatively new phenomenon in the insurance industry, so there is a very small reserve of historical data for Unum to draw upon.

What does this mean?

Generally speaking, a company does not make such extensive changes without expecting results.  Consequently, it is likely that several, if not all, of Unum’s newly appointed leaders will be under substantial pressure to perform.  Because fresh leaders often want to leave their own mark on their industry, insureds should pay close attention to any new changes in policy announced by Unum during this transitional period.

More specifically, insureds with older individual disability policies with Unum should be aware that Unum will likely be looking for new, creative ways to deny their claims.  If you have such a policy and you feel that Unum has arbitrarily changed your policy’s terms and/or wrongfully denied your disability claim, you should consult with an experienced disability insurance attorney to ensure that Unum’s leadership is not improperly exceeding the scope of their newly acquired authority.

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All About Disability Insurance with Dentaltown’s Howard Farran DDS, MBA

Edward Comitz is talking about disability insurance with Howard Farran, the founder and publisher of Dentaltown Magazine. Ed will be discussing why and when to buy disability insurance and what to avoid or look for when you do.

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Protecting the Protectors:
Depression, Medical Professionals, and the Conflicts Involved with Under-reporting

Today we’re taking a closer look at how depression can affect doctors and dentists, their practices, and the way they file for disability insurance. We examine how the medical community’s approach toward mental health is perhaps preventing some doctors from reporting illness, and how this changes a doctor’s ability to obtain adequate treatment and secure disability insurance benefits.

Depression and anxiety are undeniably prevalent among physicians and dentists.  For instance, a study in Australia showed that the rates of depression in doctors is four times higher than the general population and in a British study, 60% of dentists surveyed reported being anxious, tense, or depressed.

Simply looking at the daily life of doctors, and comparing that to the risk factors for depression shows some striking connections between the two. Some of the risk factors associated with depression (as outlined by the Mayo Clinic) include being overly self-critical, having serious or chronic illness and dealing with traumatic or stressful events. Interestingly, these are many things that doctors and dentists struggle with; indeed, probably more often than the average person. Doctors and dentists have to be self-critical because if they aren’t, lives could be at stake. In addition, doctors and dentists often suffer from chronic illness and pain due to the physically and emotionally taxing nature of their work. Worrying about patients, running a practice, and working long hours are all part of the job description for the average doctor.

While physicians and dentists commonly have symptoms of depression, they often don’t report their issues due to the stigma of mental health issues within the medical community. Lay people look to doctors and dentists as the paragon of health, and physicians take the same approach: while their patients are characterized by their illness, physicians are supposed to be the ones who cure them. While the general populace’s approach to mental illness has improved greatly over time (we no longer lock people in tiny jail cells simply because they are mentally ill), the negative stigma attached to depression and anxiety in the medical and dental community is still present. In the Australian study noted above, half of the respondents reported thinking that they were less likely to be appointed to a new position if they had a history of mental illness, and 40% admitted thinking less of doctors that have a history of depression or anxiety.

Nevertheless, it is important for doctors to recognize whether they exhibit signs of mental illness. Aside from needing to be mindful of their own health and well-being, doctors are responsible for the health and well-being of their patients, too.  Physicians and dentists both are in the unique position that a mistake that they make at work could endanger a life. Attempting to work through depression and anxiety symptoms that impair the doctor’s ability to provide responsible patient care could lead to a malpractice suit. Perhaps the solution to this issue is a re-evaluation of the medical community’s approach to mental illness. While that seems like a large task to take on, it starts with each individual doctor either seeking treatment for mental health, or supporting those that do.

For physicians, states have programs in place called Physician Health Programs (PHPs) that are supposed to support the health, including mental health, of medical licensees. A PHP is advertised as a way to get the help one needs, while avoiding disciplinary action such as a loss of license. Physicians should be aware, however, that PHPs are often connected to the licensing boards, and non-compliance with the PHP can lead to disciplinary action. For example, in Arizona, while the PHP is operated by an independent agency, it does have a formal contractual relationship with the state licensing board.

Continue reading “Protecting the Protectors: Depression, Medical Professionals, and the Conflicts Involved with Under-reporting”



Wearable Fitness Trackers and Disability Insurance Litigation: How Your Fitbit Could Help or Hurt Your Claim

Recently, courts have been exploring the use of data from wearable fitness trackers in litigation.  Devices like the FitBit, Jawbone UP, and Nike Fuelband have the capability to track all kinds of fitness-related data, such as steps taken, heart rate, temperature, calories burned, and sleep patterns.  In cases where someone’s physical abilities are at issue, as is often the case with disability insurance claims, this data can be valuable.  But who is this data most valuable to–the claimant or the insurance company?  And is that value outweighed by a claimant’s right to privacy?  These are questions yet to be fully addressed.

Benefits and Drawbacks.  For claimants, data from a wearable fitness tracker could be a great way to show how a disability has caused a cessation or downward trend in activity. Providing the data to an insurance company may give a better picture, over a longer period of time, than any single doctor’s visit or Independent Medical Examination.

On the other hand, providing wearable fitness tracker data to an insurance company could hurt a claim in several ways.  First, if your disability isn’t the type that would prevent you from walking (such as a hand injury, vision problems, orthopedic injuries where movement is part of physical therapy, etc.), step counts could be irrelevant. Nevertheless, data showing a high step count can give an insurance claims adjuster or a jury the erroneous impression that you are very physically active and thus not “disabled.”

Second, for claimants that haven’t accurately described their limitations to the insurance company, the tracker’s data can be presented as objective evidence that the claimants weren’t telling the truth.  For instance, if a claimant wrote on a claim form that he “never” walks for more than 10 minutes at a time, then he has a very unusual day where he had to walk for 30 minutes, the insurance company could use the fitness tracker data to argue that the claimant is a liar.  (In such a scenario, the claimant should have told the insurer that he “rarely” walks more than 10 minutes, or that he tries to avoid doing so, as opposed to saying he “never” does).

Third, inaccurate data could lead the insurer to make inaccurate conclusions. Wearable fitness trackers aren’t perfect.  Step trackers tend to log movements other than walking as steps, such as when the wearer raises her arms up and down.  Heart rate monitors will track increases in heart rate that are the result of mental or emotional stress in the exact same way they track increases caused by physical exertion.  There is also the possibility of human error that affects the accuracy of the data.  For example, if you forget to turn your device into “sleep” mode, it can’t track how restless your sleep is.

When Data Can Be Required.  An insured may or may not want to provide fitness tracking data to an insurance company voluntarily, but if the insurance company requests it, does the claimant have to comply?  The answer is less than clear.

In the claim context (when no litigation has ensued), the insurance company can only impose requirements covered in the policy.  Of course, policies don’t explicitly state that a claimant has to provide fitness tracker data–at least not yet.  However, an insurance company could argue that policy clauses requiring you to “cooperate” with the claims investigation or provide “proof of loss satisfactory to us” include a requirement to produce this type of data.  In those instances, it’s best to have an attorney evaluate the request to see if it is, in fact, required under the policy.

If a lawsuit has been filed, the insurance company may have more leeway when it comes to requesting wearable fitness tracker data.  While it is doubtful that an insurer could force a claimant to wear a tracker if he or she isn’t already, it’s easy to imagine a case where an insurer requests existing data from a device that a claimant already uses.

In federal courts, where most disability insurance cases are litigated, the insurance company can ask for any information that is relevant, or reasonably calculated to lead to the discovery of information that is relevant, to the claims or defenses in the case. The only exceptions are for things like privileged information (such as communications with your attorney) or requests that cause undue annoyance, embarrassment, oppression, or burden.

For data stored online, insurers could subpoena the data directly from the device manufacturer.  Fortunately, some fitness tracker manufacturers have already publicly stated that they will resist such subpoenas to the extent possible.  Insurance company lawyers are more likely to request that data from the claimant directly, in which case it becomes very important for the claimant’s attorney to evaluate whether that request is allowed under court rules.

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What Is A Discretionary Clause?

Discretionary clauses grant your insurance company substantial discretionary authority to interpret your disability insurance 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 disability 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 disability benefits much more difficult.  If your disability insurance 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 disability 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 disability policies which include discretionary clauses.  If you already have a disability policy which includes one, talk to your insurance agent about finding a new policy.

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[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.



Disability Insurer Profiles: Great-West

Great-West Life & Annuity Insurance Company (“Great-West”) is the final disability insurance provider we will look at in our series profiling insurance companies that specifically market to physicians and dentists.

See our profiles of MassMutualMetLifeNorthwestern MutualGuardian, Hartford, and Standard.

Great-West, which also goes by the registered mark of “Great-West Financial,” was incorporated in 1907, and traces its roots to a Canadian parent company that was incorporated in 1891.  Due to the nature of the economy and other factors, many insurance companies have suffered substantial losses in the past few years, and Great-West is no exception.  Great-West’s net income recently dropped from 238.1 million in 2012 to 128.7 million in 2013.  Consequently, Great-West may be looking to substantially increase its profits by, for example, denying high paying disability claims.

Company:  Great-West Life & Annuity Insurance Company.

Location:  Greenwood Village, Colorado.

Associated Entities:  Great-West Lifeco Inc.; Great-West Lifeco U.S. Inc.; Great-West Life Assurance Company; Great-West Life & Annuity Insurance Company of New York; Great-West Capital Management, LLC; Great-West Funds, Inc.; GWFS Equities, Inc.

Assets:  $55.3 billion in 2013.

Notable Policy Features:  Great-West is the insurance company that provides group disability insurance for the American Dental Association (ADA), so if you have a Great-West policy, your claim will probably be governed by the terms of the ADA’s group disability policy.

Great-West frequently sends out notices of updates and changes to the underlying contract between the ADA and Great-West, so there is a chance that you may end up with insurance coverage that you did not bargain for at the point of sale.  Oftentimes these notices are full of legalese and insurance jargon, and may be difficult to understand.  Nevertheless, it is important for you to promptly review any notices you receive, because they may impact your disability coverage in significant ways.  If you receive such a notice and are unsure about what it means, an experienced disability insurance attorney can explain how the changes outlined in the notice will impact your policy.

Additionally, if you have a Great-West policy, you should be aware that your policy may contain a very strict provision requiring you to obtain proper medical care for your condition.  For this reason, if you are thinking about filing a disability claim with Great-West, you should make sure that your medical treatment is both well-documented and “appropriate” under the policy’s terms.

Claims Management Approach:  How Great-West administers your disability claim will depend on the terms of the policy at the time you file your claim.  Because the terms of the ADA’s group disability policy are renegotiated on a regular basis, the terms of your disability policy will likely change over time.  Since your initial copy of the policy may no longer be accurate by the time you file your disability claim with Great-West, be sure to ask for a copy of the current version of your policy so that you know your rights under your disability insurance policy.

These profiles are based on our opinions and experience. Additional source(s): Great-West Financial’s 2013 Annual Report; www.greatwest.com.

 

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Disability Insurer Profiles: Standard

Standard is another disability insurer we will look at that specifically markets its policies to physicians and dentists.

See our profiles of MassMutual, MetLife, Northwestern Mutual, Guardian, and Hartford.

StanCorp Financial Group (“StanCorp”) was founded in 1906 and uses the marketing name “The Standard” to refer to its primary subsidiaries, which include the Standard Insurance Company and the Standard Life Insurance Company of New York.  In 2013, StanCorp received $351.7 million in pre-tax income, and $272.4 million (approximately 77%) of that income was attributable to profits from StanCorp’s insurance services.  StanCorp is particularly proud of its consistent long term growth and—given the fact that 77% of StanCorp’s profits come from its insurance services—StanCorp has an obvious incentive to deny high paying disability claims submitted by physicians and dentists.

Company: StanCorp Financial Group, Inc.

Location: Portland, Oregon.

Associated Entities: Standard Insurance Company; The Standard Life Insurance Company of New York; StanCorp Investment Advisers, Inc.; Standard Retirement Services, Inc.; StanCorp Mortgage Investors, LLC.

Assets: $22.73 billion in 2014.

Notable Policy Features:  If you are considering a Standard disability insurance policy, you should pay particular attention to whether the policy allows for total disability benefits if you are working in another occupation.  Oftentimes, Standard policies will pay nothing more than residual disability benefits if you are able to secure other part-time employment.  For example, if you can no longer practice dentistry, but you are able to teach classes at a dental college, Standard may refuse to pay you total disability benefits.  If you are eligible for residual benefits, Standard will require you to submit proof of your income every single month.

Read more about the difference between total disability benefits and residual disability benefits.

Claims Management Approach:  Standard tends to demand strict compliance with its claims procedures, and Standard will generally not be very accommodating if you make a mistake.  This can be problematic, because, for many policyholders, the disability claims process is unfamiliar and daunting.  If you are dealing with Standard, be sure to ask for a detailed explanation of what is required of you.  You should pay close attention to deadlines, as they will likely not be flexible.  You should also make sure that you use Standard’s forms when providing attending physician statements or other documentation of your disability, because Standard will not accept other insurers’ forms.

These profiles are based on our opinions and experience. Additional source(s): “Quick Facts About the Standard” and “About the Standard,” available at www.standard.com; StanCorp 2014 KBW Conference Presentation, available at investor.stancorpfinancial.com.

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Disability Insurer Profiles: Hartford

Hartford is the next disability insurer we will look at that specifically markets its disability policies to physicians and dentists.

See our profiles of MassMutualMetLifeNorthwestern Mutual, and Guardian.

The Hartford Financial Services Group, Inc. (“Hartford”) was founded over 200 years ago and now has more than 100 offices located throughout the U.S.  In 2013, Hartford’s revenues were approximately $26.2 billion.  However, in 2014, Hartford’s revenues dropped to $18.6 billion.  Given this significant decrease in revenue, Hartford will likely go to great lengths to avoid paying high paying claims submitted by physicians and dentists, and may even attempt to revoke disability benefits that it approved before the company experienced this dramatic drop in profits.

Company: The Hartford Financial Services Group, Inc.

Location: Hartford, Connecticut.

Associated Entities:  Hartford Fire Insurance Company; Hartford Life, Inc.; Hartford Accident and Indemnity Company; Hartford Casualty Insurance Company; Hartford Life and Accident Insurance Company; Hartford Life and Annuity Insurance Company; Hartford Life Insurance Company; Property and Casualty Insurance Company of Hartford.

Assets: $245 billion in 2014.

Notable Policy Features:  Hartford offers disability insurance policies that define total disability as being unable to perform one of your prior substantial and material duties.  If your disability policy contains such a definition, it will be much easier for you to demonstrate that you are totally disabled.  In contrast, if your disability policy does not define total disability in this manner, you may have to prove that you cannot perform any of your prior substantial and material duties in order to receive total disability benefits.

Claims Management Approach:  Hartford only offers group disability policies (as opposed to individual disability policies).  This means that if you have a Hartford policy, it will probably be governed by ERISA.  For many reasons, it will likely be harder for you to obtain your disability benefits if your policy is governed by ERISA.

For example, normally, if you become disabled and you have an individual disability policy, you can collect your disability benefits without filing for Social Security.  However, if you have a Hartford group policy, your policy may require you to apply for Social Security benefits before you can receive your disability benefits.  Hartford requires its policyholders to apply for Social Security because, under ERISA, any Social Security benefits the policyholder receives automatically offset the amount of disability benefits Hartford must pay the policyholder.

Read more about how ERISA claims are treated differently than non-ERISA claims.

These profiles are based on our opinions and experience. Additional source(s): Hartford’s 2014 Annual Report; “The Hartford Fact Sheet (2013),” and “The Hartford Fact Sheet (2014),” available at www.thehartford.com.

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Disability Insurer Profiles: Guardian

In the last few posts, we’ve looked at a few of the most common disability insurance companies for doctors.  See our profiles of MassMutual, MetLife, and Northwestern Mutual.  Guardian is another disability insurer that specifically markets its disability policies to physicians and dentists.

Guardian has been around for over 150 years and is one of the largest individual disability income insurance providers in the United States. Guardian’s business model emphasizes the need for continuous growth, and Guardian reports that it has paid out dividends to its owners every year since 1868. To reach its goal of uninterrupted growth and live up to its owners’ expectations that it will pay out dividends each year, Guardian must not only maintain its past levels of profitability, but also come up with new ways to be more profitable. Obviously, from Guardians’ perspective, denying high paying disability claims submitted by physicians and dentists is an attractive method of increasing its profits.

Company: The Guardian Life Insurance Company of America.

Location: New York, New York.

Associated Entities: The Guardian Insurance & Annuity Company, Inc.; Berkshire Life Insurance Company of America; Guardian Investor Services, LLC; Park Avenue Securities LLC; RS Investment Management Co. LLC; Reed Group, Ltd.

Assets: $84.1 billion in 2013.

Notable Policy Features:  Guardian policies oftentimes attach a “Residual Disability Rider” to their disability policies. This rider could impact you in significant ways if you are partially disabled and considering part-time work. For instance, the residual disability rider to your policy might contain the following provisions:

Income. Income means your gross earned income, less business expenses, but before any other deductions. It includes salaries, wages, fees, commissions, bonuses, business profits or other payments for your personal services.”

“Prior Income. Prior income means your average monthly income for the tax year with the highest earning in the three years just prior to the date on which you became disabled.”

“Current Income. Current income means all income which you receive on a cash basis in each month while you are residually disabled.”

“Loss of Income. Loss of income means the difference between your prior income and your current income.”

“Residual Indemnity. Residual indemnity  =  (loss of income/prior income)  x  monthly indemnity.”

“Termination of Residual Indemnity. Residual indemnity will stop when the first of the following events occurs:

  • you become totally disabled; or
  • the benefit period ends; or
  • your loss of income is less than 20% of prior income . . . .”

When read together, these provisions essentially mean that if you are partially disabled and working in another occupation, Guardian includes the additional income earned in that occupation when determining your current monthly income. This is important because you could lose your residual disability benefits if, after adding in your additional income, your loss of income amounts to less than 20% of your prior income. If you have this residual rider in your disability insurance policy, you should be aware that accepting part time work could jeopardize your ability to collect residual disability benefits.

Read more about residual disability benefits.

Claims Management Approach: Like many of the other insurance companies we have profiled, Guardian frequently conducts in-home field interviews, in an effort to catch you off guard and observe you in a state of activity that may not accurately reflect the severity of your condition. In-home field interviews also allow Guardian to collect personal information, such as your daily routine, hobbies and interests, names of friends and family, and work hours, so that its private investigators can more easily conduct surveillance of you.

If your disability claim involves a psychological disability, Guardian will likely require you to submit proof that you are being treated by a PhD level therapist, even if you have been working with a non-PhD level therapist for a significant period of time. Consequently, if you have a Guardian disability insurance policy and are in need of therapy, you might want to consider consulting with a PhD level therapist from the start.

A final tactic frequently used by Guardian is the peer-to-peer call, which consists of Guardian directly contacting your treatment providers over the phone without your consent. This tactic is similar to the in-home field interview in the sense that it is an attempt to catch your treating physicians off-guard by ambushing them with detailed questions about your disability. Since these discussions take place over the phone, your treating physicians will likely not have an opportunity to provide well thought out, thorough answers, and there will likely be little, if any, documentation of the call. Although this tactic is alarming, it is easily countered. As we explained in a previous post, peer-to-peer calls can be preempted in most cases if you have your disability insurance attorney notify the insurance company that all communications with your treatment providers must be coordinated through your attorney’s office.

These profiles are based on our opinions and experience. Additional source(s): Guardian’s 2013 Annual Report; Guardian Fact Sheet 2013; guardianlife.com.

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Disability Insurer Profiles: MetLife

Today we’re profiling another popular insurer that issues private disability policies to dentists and physicians: MetLife.

Company: Metropolitan Life Insurance Company, a.k.a. MetLife.

Location: New York, NY.

Associated Entities: MetLife, Inc. (parent company), General American Life Insurance Company, New England Life Insurance Company.

Assets: MetLife, Inc. held over $885 billion in assets as of May 2014, according to Forbes.

Notable Policy Features:  One thing to watch out for in MetLife disability insurance policies is a limitation on benefits for mental disorders and/or substance use disorder.  Under the Limited Monthly Disorders and/or Substance Use Disorders provision of some MetLife policies, policyholders are only entitled to a total of 24 months of benefits for any mental or substance abuse disorder, such as depression, panic disorder, post-traumatic stress disorder (PTSD), bipolar disorder, and alcohol abuse or dependency.  The 24 month limitation is cumulative.  So, for example, if you have depression that disables you for 23 months, then start suffering from disabling alcohol dependency later in your life, you would only have one month of benefits still available to you.

Claims Management Approach: In its 2013 Annual Report, MetLife, Inc. reported that “unfavorable morbidity experience in our individual income disability business resulted in a $6 million decrease in operating earnings.”  In other words, in 2013, more private disability insurance policyholders experienced disabling illnesses or injuries than in years before, and that hurt MetLife’s profits.  In these situations, where an insurer is facing increased liability for disability benefit payments, we often see that insurer put additional resources towards managing disability claims.  In this way, the insurer can spend extra time and effort looking for ways to deny or terminate disability claims, with the goal of limiting its liability.

In our experience, one way that MetLife attempts to dispose of claims as quickly as possible is by ordering surveillance early on in the claim.  While some companies will wait until they have received more information before starting surveillance, MetLife has started following and videotaping claimants within weeks of the claim being filed.

With respect to its medical investigation, we have found that MetLife often follows a similar strategy to MassMutual’s.  The insurer will often attempt to have its own medical personnel schedule “peer-to-peer” telephone consultations with claimants’ treating physicians, with the aim of catching the treating physician off guard and persuading them into saying their patient isn’t disabled.  However, we have found that, in certain circumstances, MetLife can be amenable to submitting medical questions to the treating doctor in writing instead.  That way, the treating doctor can more carefully consider the issues, without feeling pressured or put on the spot.

 

These profiles are based on our opinions and experience. Additional source(s): MetLife’s 2013 Annual Report; Forbes.com

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Disability Insurer Profiles: MassMutual

We have written about Unum, arguably the most notorious disability insurance company, in great detail.  However, we realize that many physicians and dentists may not know very much about other disability insurance companies, including those whose policies they own.  In the next few posts, we’ll profile some of the most common doctors’ disability insurers.

Company: Massachusetts Mutual Life Insurance Company, a.k.a. MassMutual.

Location: Springfield, Massachusetts.

Associated Entities: Mass Mutual Financial Group (parent  company), C.M. Life Insurance Company, MML Bay State Life Insurance Company.

Assets: Over $195 billion in 2013.

Notable Policy Features:  As part of its product offerings, MassMutual sells own-occupation disability insurance policies to physicians and dentists.  One notable aspect of some MassMutual policies we’ve seen recently is an especially restrictive definition of “Total Disability,” which we sometimes refer to as a “no work” own-occupation definition.  Under the “no work” own-occupation definition, an insured is Totally Disabled if he or she is unable to perform the material and substantial duties of his or her own occupation and not working in any occupation.  Unlike traditional own-occupation policies that allow a physician or dentist to collect total disability benefits and return to work in a different occupation, this one will not pay total disability benefits if the policyholder is doing any type of gainful work.

Claims Management Approach: MassMutual is a highly successful insurer.  In June 2014, it was ranked number 96 in the Fortune 500.  However, Fortune reports that MassMutual is currently experiencing a dramatic reduction in profits.  If MassMutual follows the current trends in the disability insurance industry, we believe it will increase scrutiny on disability insurance claims in order to try to regain its former profit levels.

In our experience, one of the ways MassMutual aggressively approaches disability claims is to hire a medical consultant to evaluate claimants’ medical records.  The consultant then tries to insert himself or herself between the claimant and the treating physician, writing or calling the treating physician and suggesting treatment methods that, in the consultant’s opinion, will get the claimant back to work as soon as possible.

 

These profiles are based on our opinions and experience. Additional source(s): MassMutual’s 2013 Annual Report; Fortune 500 2014; Bloomberg.com

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Field Interviews:
What to Expect After the Interview Ends

We’ve discussed why a disability insurer might want to schedule a field interview and what to expect before and during the interview itself.  Now we review what claimants can expect can expect after the interview ends.  Again, the process is usually different depending on whether not a disability insurance attorney is involved.

After the Field Interview

After your interview ends, the field representative will leave to do some additional reconnaissance.  Without telling you, the representative may drive to your office to talk to people on your staff.  He or she will see what the office looks like, if it’s busy, and whether your name is still listed on the door.  If you have a disability insurance attorney, the attorney will have discussed this with you ahead of time, and together you will have taken steps to make sure the representative doesn’t bother your staff or catch them off guard.

Some days after the field interview, the representative will send you a copy of his or her report, which purports to summarize your conversation.  The report will ordinarily be 8 to 10 pages or more.  He or she will ask you to review the report, make any changes you see fit, and return it.  The representative will advise that if you don’t make any changes by a certain date, he or she will assume that everything in the report is accurate.

For claimants with legal representation, the report will be sent to your attorney’s office. Your attorney will review the report to make sure that it accurately reflects the facts of your disability claim.  He or she should be able to correct any seemingly harmless statements that a claims adjuster may take out of context to support denying or terminating your disability claim.  If any important information is missing, your attorney will make sure to include it along with the report.

Meanwhile, the field representative will usually send a separate report to the insurance company.  This second report will have the representative’s personal observations about you, their conversations with your staff, and any other information he or she was able to gather about your outside of the interview.  You will not be provided with a copy of this report unless you’re able to obtain the claim file after your disability claim has been terminated or denied.  If you have an attorney, this second report will be much more limited, as the representative will not have had the opportunity to visit your home or to pry into irrelevant or confidential information.  If your disability claim is denied or terminated, your attorney will obtain and review this report for any inaccuracies or misstatements.

A field interview can be intimidating, but knowing why the interview is being conducted and what to expect during the process can make you better prepared to handle it in a way that doesn’t prejudice your claim.  If you have questions or concerns about a field visit, contact a disability insurance lawyer right away.

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