Case Study: Interpreting Policy Language – Part 2

In Part 1 of this post, we started to look at the recent case Leonor v. Provident Life and Accident Company[1].  The key issue in this case was whether the policy language “the important duties” meant “all the important duties.”  In Part 2 of this post, we will look at how the court addressed the parties’ arguments and see how the court ultimately resolved the dispute.

The Law

Under Michigan law, ambiguous words in a disability policy are construed in favor of the insured.  A word or phrase is ambiguous if the word or phrase may “reasonably be understood in different ways.”  Because of these rules, in order to win his case, the claimant, Leonor, did not have to come up with an interpretation that was superior to the interpretation offered by the insurer, Provident Life.  Instead, Leonor merely had to establish that the policy language was ambiguous and then come up with a reasonable interpretation of the policy language that supported his claim for benefits.

The Analysis

The court began its analysis by recognizing that context is important when interpreting a contract.  The court acknowledged that the definition of “residual disability” was obviously intended to be a less severe category of disability, and even acknowledged that the terms “total disability” and “residual disability” had to be mutually exclusive for the rest of the policy to make sense.  Nonetheless, the court determined that the phrase “the important duties” was ambiguous.

By way of illustration, consider the following continuum, beginning with no limitations and ending at the inability to perform all of the important duties of an occupation.

    |———————————–|———————————–|———————————–|

No Limitations            Unable to Perform            Unable to Perform                  Unable to Perform                                             Some Duties                      Most Duties                         All Duties

Essentially, the court determined that the “residual disability” definition was broad enough to encompass individuals who could not perform “some” of the duties of their occupation, but was not broad enough to encompass individuals who could not perform “most” or “all” of the duties of their occupation.  Thus, the policy language remained ambiguous because the “total disability” definition could still mean either the inability to perform “most” duties or the inability to perform “all” duties.

Next, the court determined that Leonor’s interpretation of the policy language was reasonable.  The court explained that, under the rules of grammar, the definite plural does not necessarily apply to each thing in the group referred to.  To support its position, the court noted that Provident Life’s own counsel argued at oral argument that its position was supported by “the rules of grammar” even though Provident Life’s counsel obviously did not mean to suggest that its position was supported by “all the rules of grammar.”

Finally, the court held that a claimant’s income is “far from dispositive” in disability cases.  Specifically, the court determined that Leonor should not be penalized for earning more income after his injury than he did before the injury.  The court noted that because investing in businesses is inherently risky, it was entirely appropriate for Leonor to insure himself against the loss of the guaranteed, steady income provided by the dental procedures.

The Decision

In the end, the court determined that Leonor was “totally disabled” under the policies because the phrase “the important duties” was ambiguous and Leonor had offered a reasonable application of the phrase that supported an award of benefits.  The court ordered Provident Life to pay Leonor his benefits under the policy, plus 12% interest as a penalty for failing to pay the claim in a timely fashion.

Conclusion

This case demonstrates how the presence or absence of a single word in a policy can dramatically affect your ability to recover benefits.  Even language that is not necessarily unfavorable, but merely ambiguous, can delay your recovery of benefits if you have to go to court to resolve a dispute with the insurer.  For example, in the Leonor case, Leonor made his initial disability claim in July 2009, but the court did not conclusively establish he was entitled to benefits until June 2015—nearly six years later.

If possible, you should avoid ambiguous and unfavorable language when purchasing a policy.  If you already have a policy, an experienced disability insurance attorney can review your policy and identify words or phrases that could impact your ability to recover benefits in a timely fashion.

[1] 790 F.3d 682 (6th Cir. 2015).

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Case Study: Interpreting Policy Language – Part 1

Can the presence or absence of a single word in your disability policy determine whether you receive your disability benefits?

In the recent case Leonor v. Provident Life and Accident Company[1], the key issue was whether the policy language “the important duties” meant “all the important duties.”  In Part 1 of this post, we will look at each party’s position in the case and examine why this policy language was so important.  In Part 2 of this post, we will look at how the court addressed the parties’ arguments and see how the court ultimately resolved the dispute.

The Facts

In the Leonor case, the claimant, Leonor, was a dentist who could no longer perform dental procedures due to an injury and subsequent cervical spine surgery.  Prior to the injury, Leonor spent approximately two-thirds of his time performing dental procedures, and spent the rest of his time managing his dental practice and other businesses he owned.  After the injury, he no longer performed dental procedures; instead, he sought out other investment opportunities and devoted his time to managing his investments.  Interestingly, Leonor’s income actually increased after he stopped performing dental procedures because his investments turned out to be very successful.

The Policy

Leonor’s disability policy provided for benefits if he became “totally disabled,” and defined “totally disabled” as follows:

“Total Disability” means that because of Injury or Sickness:

You are unable to perform the important duties of Your Occupation; and

You are under the regular and personal care of a physician.

Leonor’s policy also provided for benefits if he became “residually disabled,” and defined “residually disabled” as follows:

“Residual Disability,” prior to the Commencement Date, means that due to Injury or Sickness:

(1) You are unable to perform one or more of the important duties of Your Occupation; or

(2) You are unable to perform the important duties of Your Occupation for more than 80% of the time normally required to perform them; and

Your loss of Earning is equal to at least 20% of your prior earnings while You are engaged in Your Occupation or another occupation; and

You are under the regular and personal care of a Physician.

The Arguments

The insurer, Provident Life, argued that Leonor’s managerial duties were “important duties” of his occupation prior to his injury, and therefore Leonor was not “totally disabled” because he could still perform managerial duties in spite of his injury.

Leonor responded that the policy language only required him to be unable to perform “the important duties” of his occupation.  He pointed out that Provident Life could have required him to be unable to perform “all the important duties” of his occupation.  Since Provident Life did not include the word “all,” Leonor argued that it did not matter whether he could still perform managerial duties because he could no longer perform other “important duties” of his occupation—namely, performing dental procedures.

In response, Provident Life argued that, when read in context, “total disability” plainly meant the inability to perform “all the important duties” because the policy separately defined “residual disability” as being unable to perform “one or more of the important duties.”  Thus, according to Provident Life there was already a category under the policy that covered individuals like Leonor who could not perform “some” of the important duties of their occupation.  Provident Life also argued that Leonor should not receive total disability benefits because Leonor’s income after the injury was higher than it was prior to the injury.

Stay tuned for Part 2, to find out how the court addressed Principal Life’s arguments and resolved the dispute.

[1] 790 F.3d 682 (6th Cir. 2015).

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Can My Disability Insurance Company Contact My Employer?

We previously posted about the breadth of authorization forms that disability insurers request you sign at the beginning of your claim.  These forms allow your insurance company not only to obtain medical records and other relevant information, but also to contact your employer to discuss your specific job duties, among other things.

This can be unsettling as you may not want your employer to know about your medical condition, or you may fear what your employer might say that could jeopardize your claim. Unfortunately, there is little that you can do to stop the interview from occurring, but you can prepare yourself and your employer beforehand.

Most policies require that, in order to be considered “Totally Disabled,” you must be unable to perform the material and substantial duties of your occupation, and be under the regular care of a physician.  Accordingly, your insurance company needs to ascertain your important occupational duties.

If you can still perform some of your important occupational duties, though not all of them, you will not be considered “Totally Disabled” under most policies.  It is important, therefore, to anticipate that your insurer will contact your employer so that you can ensure that only accurate and relevant information is communicated.

There is a critical difference between important occupational duties, and those that are merely incidental.  Duties that encompass only a small percentage of your time are incidental or peripheral duties and not part of your regular profession.  It is therefore improper for your insurance company to consider these duties when determining your eligibility for benefits.

For example, a licensed dentist who works 90% of the time treating patients and 10% of the time on administrative duties is regularly engaged in chair dentistry for purposes of an own- occupation disability insurance claim.  Administrative work such as overseeing office staff, paying bills or attending continuing education classes are merely incidental to his material and substantial duties as a full-time dentist.

By focusing on insignificant duties, and getting your employer to sign off on those duties as important parts of your regular occupation, your insurance company will have made it much more difficult for you to collect your rightful benefits.  While this is an unscrupulous practice, it often occurs and produces an unfair result. Considering each and every incidental duty and allowing a finding that you are Totally Disabled only if you are unable to perform each and every one of those duties is a nitpicking approach that would equate Total Disability with utter helplessness.  Obviously, that is not the type of coverage that you purchased, nor what had been marketed to you at the point of sale.

To ensure that your employer does not provide misinformation to your insurance company during the interview, here are some tips:

Prepare an Occupational Description:  Prepare an occupational description listing your important duties and have your employer sign off on it.  Then provide the occupational description to your insurance company at the beginning of your claim.  By reviewing this document with your employer, it will be less likely that your insurance company will be able to focus on the irrelevant, incidental duties of your job.

Explain How Your Policy Works to Your Employer:  Let your employer know that you have an occupation-specific policy that entitles you to benefits if you cannot perform the important duties of your job.  Further explain that your occupational description is intended to outline your important duties, and other duties you may perform are merely incidental.  This way, you are focusing your employer on what’s relevant and preparing him or her for the interview.

Being prepared and vigilant at the beginning of your claim increases the likelihood that you will be paid the benefits that you deserve.

The 10 Biggest Legal Mistakes Physicians Make
When Filing a Disability Claim (Mistake #1)

If you are a medical or dental professional and are thinking that you may need to file a claim under your disability policy, you may be wondering “Do I need to hire an attorney to file a disability claim?”

Given the voluminous, complex language of modern policies and the amount of money at stake, failing to consult with a lawyer is one of the biggest mistakes professionals make when filing a disability claim. An experienced disability attorney can explain the significance of key policy terms, and work with you to present the best claim possible while avoiding the pitfalls we have identified in our previous posts on this topic.

Ed Comitz’s article, “The 10 Biggest Legal Mistakes Physicians Make When Filing a Claim for Disability,” published by SEAK, Inc. (2005), discusses ten of the most significant mistakes to avoid. The excerpt below explains the importance of consulting with an attorney before filing a long-term disability claim:

MISTAKE NO. 1:  Failing to Consult With a Disability Insurance Lawyer

Physicians who are considering filing a claim for disability insurance benefits are advised to meet with an attorney experienced in the area before submitting a claim for payment.  Disability provisions vary greatly in the language used, and coverage is often circumscribed and restricted by qualifying words and phrases.  Accordingly, each insurance policy must be individually reviewed to determine whether a particular claim is covered and, if so, how that claim is best presented to ensure payment.

Action Step:  Physicians should make a coordinated effort with the assistance of an attorney when interpreting their policy, presenting their claim, and providing subsequent information to their carrier.

Insurers have laid plenty of traps throughout the claims process. They will use private investigators, video surveillance, social media platforms, and similar tactics to harvest information and set up your claim for denial or termination.  To learn more about these tactics and other mistakes to avoid, click here.

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The 10 Biggest Legal Mistakes Physicians Make
When Filing a Disability Claim (Mistake #2)

Any medical or dental professional considering filing a claim or weighing long-term disability insurance policy options should be familiar with two key policy terms: “total disability” and “occupation.”

Misinterpreting the definitions of “total disability” and “occupation” and/or falling prey to other common pitfalls can lead to having your claim denied or your benefits terminated.

Ed Comitz’s article “The 10 Biggest Legal Mistakes Physicians Make When Filing a Claim for Disability,” published by SEAK, Inc. (2005), details ten of the most significant mistakes to avoid. The excerpt below explains the importance of understanding these crucial definitions in your policy:

MISTAKE NO. 2:   Misunderstanding the Definitions of “Disability” and “Occupation”

Because there is no such thing as a “standard” disability insurance policy, the definitions of “disability” can significantly vary.  Most physicians purchase “own-occupation” policies, which provide compensation following a disability that prevents the insured from performing the particular duties of his or her occupation.  Thus, the insured may be entitled to benefits even if he or she could in fact perform work of a different nature.  The central issue in many cases is the definition of “total disability,” which could variously mean that the insured cannot perform “all” or “every” duty of his or her occupation, or the “substantial and material duties” of his or her occupation. 

Similarly, the term “occupation” may be specifically defined in the policy (e.g., “invasive cardiologist”) or may refer to the insured’s occupation immediately prior to the time that disability benefits are sought.  In the latter situation, if the physician reduces his or her hours in the months preceding claim filing, the insurer may consider his or her occupation to be part-time rather than full-time.  Similarly, the term “occupation” may be comprised not only of the duties of a physician’s specialty, but also of significant travel time, teaching engagements, or other areas in which the physician spends time or draws revenue.  For example, “occupation” may be defined as “internist/professor/business owner,” in which case the physician may not be “totally disabled” if he or she can still teach or perform management functions.

Action Step:  Physicians should read and fully understand their policy terms before filing a claim for benefits.

Even if you read how these terms are defined in your own policy, you may not realize the significance of the definitions if you do not have a full understanding of the claims process and/or you have never seen any other policies for comparison as a frame of reference. Being familiar with the several variations of “own occupation” policies being sold by insurers can help you determine whether you have a true own occupation policy.

To learn more about some of the tactics insurers use to deny claims and other mistakes to avoid, click here.

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The 10 Biggest Legal Mistakes Physicians Make
When Filing a Disability Claim (Mistake #3)

When you file a claim, at some point you will have phone calls with the insurance company regarding your claim. In fact, many companies are now conducting phone interviews when you first call in to request forms. Oftentimes these conversations will be recorded and incorporated into the insurance company’s claim file, but you likely will not receive a copy of the recording unless your claim is denied and you end up filing a lawsuit challenging the denial. And even if the conversation is not recorded, it likely that, following your call, the analyst will be making a note in the claim file summarizing what was said in the conversation.

Because of this, it’s important that you do the same, to ensure there is a complete and accurate record of your interactions with the insurance company. Keeping records of what was said in these phone calls and evading other common pitfalls can help protect your claim from denial and your benefits from termination.

Ed Comitz’s article “The 10 Biggest Legal Mistakes Physicians Make When Filing a Claim for Disability,” published by SEAK, Inc. (2005), details ten of the most significant mistakes to avoid. The excerpt below explains the importance of establishing a paper trail with your insurer:

MISTAKE NO. 3:  Inadequate Documentation

When submitting a claim and speaking with their carrier, it is important that physicians take notes to assist them in remembering what was said in the event that their claim is denied.  They should keep notes of all telephone conversations (including the date and time of the call, and what was said) and identify the person with whom they were speaking.  Every conversation with the carrier should be confirmed in a letter sent by certified mail so that there are no misunderstandings.  The “paper trail” may later be used as evidence to establish unreasonable treatment during the claim administration process.

Action Step:  Starting with their first telephone call to their insurer, physicians should document in detail their conversations and meetings, and confirm everything in writing, sent by certified mail.

While you may have jotted down the occasional note when speaking with your disability insurer, you should now have a greater appreciation for the importance of establishing a record of what your insurer says and how they treat you. Detailed notes of conversations with your insurer can help shield valid claims from wrongful denial and even help prove bad faith treatment.

To learn more about some of the tactics insurers use to deny claims and other mistakes to avoid, click here.

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The 10 Biggest Legal Mistakes Physicians Make
When Filing a Disability Claim (Mistake #4)

As part of your long-term disability insurance claim, your insurer may require you to attend an independent medical examination (IME), ostensibly to assess the validity of your filing. Many physicians, dentists, and other professionals (understandably) feel anxious and concerned about attending an IME set up by their insurer.

Ed Comitz’s article “The 10 Biggest Legal Mistakes Physicians Make When Filing a Claim for Disability,” published by SEAK, Inc. (2005), details ten of the most significant mistakes to avoid. The excerpt below notes policy language to watch for and covers several helpful steps to consider before, during, and after your IME:

MISTAKE NO. 4:  Blindly Attending an Independent Medical Exam

After submitting their claim, physicians may be asked to submit to an “independent” medical examination by someone chosen and paid for by their insurer.  They may also be asked to undergo exams by someone other than a physician.  Before submitting to an independent medical exam or any other exam or evaluation, physicians must first ensure that their carrier has a right to conduct the exam per the policy language.  For example, a neuropsychological exam is conducted over several days by a psychologist, not a physician, and insurers often use the subjective findings from such an exam to deny benefits.  If the policy requires submitting only to “medical exams” or exams “conducted by a physician,” there is certainly an argument that a physician need not submit to neuropsychological testing.  Further, physicians may wish to be accompanied by an attorney or other legal or medical representatives who can monitor the independent medical exam.  Other considerations include receiving the examiner’s curriculum vitae in advance; limiting the scope of the exam to ensure that no diagnostic test that is painful, protracted, or intrusive will be performed; having the exam videotaped or audiotaped; and receiving a copy of all notes and materials generated.

Action Step:  Because the “independent” medical exam is a tool used for denying benefits where possible, physicians should work with an attorney to ensure that their rights are protected during this process.

Reviewing your policy’s requirements and preparing to attend an independent medical examination can make the process less stressful and protect valid claims from wrongful denial.

An IME is often just one part of your insurer’s broader investigation of your claim. To learn more about other common pitfalls to avoid, click here.

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The 10 Biggest Legal Mistakes Physicians Make
When Filing a Disability Claim (Mistake #5)

Many disability policies now contain provisions that limit coverage for mental conditions. However, each policy also contains specific definition of the types of conditions that are limited and/or excluded, and these definitions can vary greatly from policy to policy.

Ed Comitz’s article “The 10 Biggest Legal Mistakes Physicians Make When Filing a Claim for Disability,” published by SEAK, Inc. (2005), details ten of the most significant mistakes to avoid. The excerpt below explains why you should read your policy carefully, to ensure that limitation provisions in your policy are correctly applied to your particular situation:

MISTAKE NO. 5:  Believing All Mental Conditions Are Excluded or Subject to Limitations

Most disability insurance contracts differentiate between mental and physical disabilities.  Most recent policies cut off benefits for psychiatric conditions after two or three years.  Insureds often blindly accept their carrier’s decision to deny or limit benefits based on these conditions without considering numerous relevant factors, including whether there are any physical aspects to the mental condition, whether the mental condition has a biological/organic cause, or whether another, covered condition was the legal cause of the disability.  Without exploring these issues in detail, insureds often blindly accept that certain conditions are limited or excluded from coverage when in fact they are not.

Action Step Physicians should understand their policy’s mental conditions limitation and work with counsel on submitting their claim in such a manner as to ensure payment of benefits.

If you have submitted, or are considering submitting a disability claim, based on a mental illness, be sure to carefully review your policy’s language and do not simply assume that all mental conditions are excluded. And if your insurance company relies on one of these limitation provisions to deny your claim or limit your benefit period, you should consult with a disability insurance attorney and assess whether the insurance company’s decision is proper under the terms of your policy.

To learn more about the tactics insurers use to deny claims and other mistakes to avoid, click here.

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The 10 Biggest Legal Mistakes Physicians Make
When Filing a Disability Claim (Mistake #6)

[Excerpt from disability insurance attorney Edward O. Comitz’s article, The 10 Biggest Legal Mistakes Physicians Make When Filing a Claim for Disability, SEAK, Inc. (2005)]

MISTAKE NO. 6:  Engaging in Inadequate Communication with Treating Physician

Physicians should not discuss their claim or that they are considering filing for disability insurance benefit with their treatment provider until after they have had several visits.  Physicians are often reluctant to support claims for benefits if they question the motivations behind the claims.  A physician who has treated, without success, the physician making the claim will likely be more willing to cooperate.  It is also important that the physician making the claim communicate his or her symptoms and limitations to the treating physician in an organized and detailed manner so that all relevant information is recorded in the medical records, which the insurer will ultimately request.  When finally speaking to the treating physician about the claim, the physician should ensure that the treating physician understands the definition of “disability” under the insurance policy, so that he or she can accurately opine as to the inability of the physicians making the claim to work.

Action Step:  Physicians should fully discuss their condition with their treating physician to ensure supportive medical records and, after several appointments, work with him or her on submitting the claim for “disability” as defined in the policy.

The 10 Biggest Legal Mistakes Physicians Make
When Filing a Disability Claim (Mistake #7)

Next in the list of The 10 Biggest Legal Mistakes Physicians Make When Filing a Claim for Disability, excerpted from the article of the same name by disability insurance attorney Edward O. Comitz, and published by SEAK, Inc. (2005):

MISTAKE NO. 7:  Quantifying Time

Physicians should be wary of insurance companies asking them to compartmentalize in percentages what activities they were engaged in pre- and post-disability.  To the extent that there is any crossover, companies will often deny benefits or provide benefits for merely a residual disability.  It is important that physicians broadly describe their important duties—rather than their incidental duties—so that the insurer has a clear understanding of the thrust of their occupation.  For example, in response to a question about principal duties and the percentage of time spent on each duty, an anesthesiologist may be better off stating “100% surgical anesthesia” rather than compartmentalizing each and every incidental task (e.g., patient intake, supervising nurses during surgery, postoperative visits) into discrete percentages.  The reason is the insurer may erroneously consider an incidental task a “principal duty,” and therefore downgrade the amount of benefits.  For example, where a physician has duties as a businessman (e.g., supervising staff, overseeing payroll), the insurer may argue that the disabled physician can still manage his or her practice and is therefore only partially disabled.

Action Step:  Physicians should not quantify their time until after they fully understand the definitions of “principal duties,” “disability,” and “occupation” under their policy.