Disability insurers often utilize the tactic of sending request after request for additional information for you to respond to. But what happens if you have a question for your insurer? Does your insurer have to respond?
Although it may feel that you are simply sending a letter into the void, Arizona actually requires your insurance company to respond to you. Specifically, your insurer must acknowledge receipt of correspondence within ten days, unless payment is made within this period of time. See Ariz. Admin. Code § 20-6-801(E)(1).
Further, in Arizona, “an appropriate reply [must] be made within 10 working days on all other pertinent communications from a claimant which reasonable suggest that a response is expected.” Ariz. Admin. Code § 20-6-801(E)(3).
In our experience, insurance companies often drag their feet in making a claim decision, especially in high dollar claims filed by dentists, physicians and other professionals. One way to ensure your case doesn’t end up on the back burner is to continue to engage with your insurance company.
If you have communicated with your insurance company, but aren’t receiving timely replies, please feel free to reach out to one of our attorneys directly.
Disability insurance policies are often difficult to understand, even for the most sophisticated buyers. The same policy provision may be explained differently at the time you are selecting it, at the time you receive it, and when you go to file a claim. In our experience, insurance companies are not always forthcoming when they explain your policy. Sometimes they fail to tell you about certain features of your policy, or explain ambiguities in their favor, or, in some instances, even misrepresent the terms of policy provisions.
For these reasons, many states, including Arizona, have adopted laws to protect consumers from these practices. For example, insurance companies in both Arizona and California must not misrepresent important facts or policy provisions relating to any issues of coverage. If the insured can show any misrepresentation related to these issues, there may be a bad faith claim.
We often speak with doctors who misunderstand how their own occupation policies work. Sometimes this is because their insurers did not explain the policies to them correctly, and other times it is simply because they didn’t take the time to read the policy when they purchased it. Many physicians and dentists seek out an own occupation policy because it generally allows for an insured to be considered totally disabled if they can no longer work in their occupation. However, some “own occupation” policies are not “true” own occupation policies, and can even shift to an “any occupation” policy after a certain amount of time has passed.
Additionally, most insurance companies today distance themselves from agents and brokers, and seek to avoid responsibility for misrepresentations made by the agents that sell their policies. While this does not necessarily mean that there are no consequences if a policyholder is mislead about the contents of their policy, it does mean that costly and time consuming litigation can be required to sort things out. For this reason, it is always best to take the time to read and understand your policy yourself, so that you know what you are paying for.
If your policy’s terms are not what you expected, an experienced Arizona disability insurance attorney can help you assess the situation and determine what options, if any, are available.
 A.R.S. § 20-461(A)(1) (2018); Cal. Ins. Code § 790.03(h)(1) (2018).
An Arizona disability insurance claim can be denied for a variety of reasons. Some reasons are legitimate, and some are not. This can be especially true for dentist and physician claims that can be targeted for denial simply because of the policies’ high benefit amounts and how much money is at stake.
Knowing the specific reason or reasons for a disability insurance claim denial is critical to deciding what your next step should be. Because of this, some states, including Arizona, have adopted laws that require insurers to provide you with timely information explaining the basis for a denial. In both Arizona and California, an insurer that denies a claim must provide a reasonable explanation for the denial based on the terms of the policy, the facts, or the applicable law. Some states’ laws also require that the notice of denial must be in writing, must reference any specific grounds for denial, and must explain how those grounds specifically apply to your claim. Failure to provide an explanation could lead to a finding that your insurer acted in bad faith.
When you receive the explanation of denial, chances are it may be confusing to understand. Even if an explanation is provided, it may still warrant a finding of bad faith if the explanation fails to clearly communicate the rationale behind a denial , or the denial was founded on an improper bases (e.g. a biased medical exam).
If you have already filed and your insurance company has wholly or partially denied your claim, there is often a short window of time in which to act if you wish to preserve your claim.
If you have filed a claim, or you are facing a denial from your insurance company, an experienced Arizona disability insurance attorney can help you assess the situation and determine what options, if any, are available.
 A.R.S. § 20-461(A)(15) (2018); Cal. Ins. Code § 790.03(h)(13) (2018).
 Cal. Code Regs. tit. 10, § 2695.7 (2018).
 See, e.g., the California case of du Mortier v. Mass. General Life Ins. Co., 805 F.Supp. 816, 823 (C.D. Cal. 1992).
If the claim involves a discrete practice area, disability insurers may use that as an excuse to drag their feet when making a claims decision. For example, they may make repeated requests for employer questionnaires, financial information and/or vocational examinations, among other things. Then, as time goes on, the financial pressures of being left with no income build, prompting some doctors to consider a return to work even though it’s not safe for them to be practicing on patients. Other doctors with specialty-specific policies reason that they can return to work in a different field and expect to receive their benefits as a supplement to the new job, only to find that their insurer disagrees that they were, in fact, a specialist, and refuses to pay total disability benefits.
This is what happened to Joanne Ceimo, M.D., a former invasive cardiologist from Scottsdale, Arizona who practiced at Banner Boswell Medical Center in Sun City, Arizona. Dr. Ceimo had an own occupation policy and was practicing within her medically recognized specialty of invasive cardiology. In 1994, doctors diagnosed Dr. Ceimo with cervical degenerative disc disease, which made it increasingly difficult for her to perform surgeries and prevented her from performing on call duties. Eventually, she was forced to stop performing surgeries as well and instead began practicing general cardiology.
In her mind, Dr. Ceimo’s new job as a general cardiologist was substantially different than her prior job as an invasive cardiologist. However, Dr. Ceimo ultimately had to sue General American, along with Paul Revere and Provident (the other insurance companies administering her claim) for the benefits she was due under her policy. She filed her disability insurance claim in 1995 and, after a long, drawn-out claim investigation, was eventually denied benefits in 1998. Due to the long delay, Dr. Ceimo was forced to continue working as a general cardiologist in the Phoenix area to meet her expenses, even though it was bad for her health and working made her pain worse.
When they denied her claim, the companies asserted that Dr. Ceimo was not a specialty cardiologist because she had only spent six to ten hours on surgeries per week. The companies then stated that her occupation before her date of disability was that of a general cardiologist, and concluded she was not eligible for total disability benefits because she continued to practice in that capacity. In making this argument, the companies ignored the fact that Dr. Ceimo had practiced invasive cardiology from when she was licensed by the Arizona Medical Board in 1982 through the onset of her disability in 1995. The companies also failed to mention that their own medical records review classified Dr. Ceimo as an “invasive cardiologist.”
Dr. Ceimo and her lawyers filed a bad faith lawsuit in the District of Arizona against General American, Paul Revere and Provident. In addition to arguing that the companies improperly interpreted her specialty, Dr. Ceimo and her attorneys also asserted that the companies improperly relied on biased in-house medical consultants and internal company practices geared towards denying high-dollar physician claims like Dr. Ceimo’s. The case ultimately produced a large verdict in favor of Dr. Ceimo, with almost $6.7 million in consequential damages, but it took nearly a decade of fighting before she obtained the benefits she was due under her policy.
Every claim is unique and the discussion above is only a limited summary of the court’s ruling in this case. If you are concerned that your company is improperly delaying a claims determination and/or targeting your claim for denial or termination, an experienced Arizona disability insurance attorney can help you assess your claim and determine what action, if any, needs to be taken.
 See Ceimo v. Gen. Am. Life Ins. Co., 2003 WL 25481095 (D. Ariz. Sept. 17, 2003).
While the difference between an injury and sickness may, initially, seem clear-cut, if you have certain disabling conditions (such as degenerative disc disease or carpal tunnel syndrome) whether you have a disabling sickness versus injury can be a very nuanced determination. For example, when a particular event causes a slowly progressive disease to become suddenly disabling to the point a dentist or doctor can no longer work in his or her occupation, the final determination may have to be made by a court.
This is what happened in a recent case before the Arizona District Court. Dr. Wood was an anesthesiologist who practiced in Page, Arizona within the Banner health system. Dr. Wood suffered from degenerative disc disease in his lumbar and cervical spine, but continued to practice (a common phenomenon among physicians and dentists called presenteeism). In 2015, he and a team of nurses lifted a patient from the operating table to a hospital bed—a routine maneuver that he had done thousands of times before. This time, however, the maneuver resulted in intense radiating pain in his spine and he found himself unable to work. Dr. Wood then filed a claim with his insurer, Provident, due to the disabling back condition.
While Dr. Wood felt his disability was caused by an accident, making him eligible for lifetime benefits under the terms of his policy, Provident classified his disability as a result of sickness, and maintained he was only eligible for 48 months of benefits. Dr. Wood sued Provident and the court had to determine what “injury” meant.
Fortunately for Dr. Wood, in this case, the Arizona judge determined that the policy had a vague definition of “injury” and ruled the provision should be interpreted in Dr. Wood’s favor. The court turned to precedent set by the Arizona Court of Appeals, finding that Arizona does not distinguish between ‘accidental means’ and ‘accidental results.’” The court also noted the Arizona Supreme Court’s findings that “accident” must be read in light of common speech, usage, and understanding of the average man. In the end, the court found that, under Arizona law, Dr. Wood became disabled when performing the lifting maneuver and he was eligible receive lifetime benefits.
Every claim is unique and the discussion above is only a limited summary of the court’s ruling in this case. If you are unsure of how your policy interprets sickness versus injury, an experienced Arizona disability insurance attorney can help you interpret this language and apply it to your particular situation.
 See Wood v. Provident Life & Accident Ins. Co., 2018 WL 2416190 (D. Ariz. May 29, 2018).
 Id. quoting Central Nat. Life Ins. Co. v. Peterson, 529. P.2d 1213 (Ariz. App. 1975).
 Id. quoting Knight v. Metro Life Ins. Co., 437 P.2d 416 (Ariz. 1968).
What is an incontestability clause? An incontestability clause protects you against being denied coverage because of a preexisting condition.
This clause precludes insurance carriers from inquiring into the representations dentists, physicians, and other professionals made on the policy application if the two-year incontestable period has lapsed. In essence, the clause gives insurers a two-year time limit to review policy applications. If the insurance company makes no inquiry in those two years, they lose the ability to rescind the policy based on a preexisting condition.
For example in the case of Robison v. Brotherhood of R. R. Trainmen Ins. Dept., the plaintiff had been treated for tuberculosis prior to the effective date of the policy. Three years after obtaining the policy he became disabled from tuberculosis. When the insurance company tried to deny the insured’s claim, the Arizona Supreme Court ruled from its bench in Phoenix that the incontestable clause of the contract precluded the insurance company from inquiring about the insured’s health prior to the effective date of the policy.
Second, this clause protects you against an insurance company’s attempt to deny a claim for disability insurance benefits based on a representation you made that is not material. For instance, when filling out the application for the insurance policy, you might write down the wrong year that you had some minor knee surgery. An insurance company cannot use such a miniscule and immaterial mistake to deny you coverage when your claim is for debilitating arthritis in your hands which doesn’t allow you to practice properly in your field of medicine.
Third, this clause protects an insured that is completely truthful when filling out the policy paperwork. In Paul Revere Life Ins. Co. v. Haas the court upheld a policy which limited “coverage to sicknesses that ‘first manifest’ themselves after the policy has been issued.” This means that if you have a condition before the insurer issued the policy, but you don’t become aware of it until after the policy has become effective, the condition should be covered.
It is important to remember that and incontestable clause usually includes a caveat: it does not protect an insured that knowingly or fraudulently misrepresents information during the application process. The Haas court stated that the language of the incontestable clause “does not protect insureds who make fraudulent misrepresentations in their applications. Rather, the language is intended to protect those insureds who are unaware of their diseases.” The insurance company in Haas (Paul Revere, a subsidiary of Unum) was allowed to deny coverage of the insured’s eye condition when the insured knew about and had been treated for the disease well before the start of the policy. The court believed that the legislature did not intend for the mandatory incontestable clause to be “an invitation for fraudulent applications for disability insurance.” The preexisting eye condition was deemed to be a fraudulent misrepresentation, and the insurance company denied its coverage. We also discussed this topic in a previous post entitled “Medical History Misstatements On A Disability Insurance Application Can Void The Policy In The Future.”
The outcomes of the cases based on incontestable clauses show how important it is to be truthful throughout the insurance claim process. The more accurate you are about your health condition, the fewer coverage problems you may have down the road.
If you have questions about your policy’s incontestability provisions, an experienced Arizona disability insurance attorney can help talk you through how they work, and how that could impact your disability insurance claim.
 Robison v. Brotherhood of R. R. Trainmen Ins. Dept., 73 Ariz. 352, 241 P.2d 791 (1952), opinion modified on reh’g on other grounds, 74 Ariz. 44, 243 P.2d 472 (1952).
 Paul Revere Life Ins. Co. v. Haas, 137 N.J. 190, 210, 644 A.2d 1098, 1108 (1994).
Imagine that you become disabled from your own occupation and the insurer is paying your disability claim. You are entitled to disability benefits until you turn 65, die, or are no longer disabled (according to most policies). What happens to your monthly benefit if your spouse should now leave you?
A recent Minnesota Court of Appeals case addressed the question of whether disability insurance benefits are considered marital property and as such, to be divided among the spouses. During most of Brent and Lori Luginbill’s 23-year-marriage, Brent was employed as a chiropractor. When he became disabled from practicing chiropractic, he applied for and received disability benefits under his employer-provided, own-occupation disability insurance policy. Lori Luginbill petitioned for divorce in August 2007. The question for the court was whether the disability insurance policy and its payments were marital property or income. As marital property, it would be subject to division with the wife receiving a share. As income, it would remain the husband’s income and would not be divided between him and his wife.
The husband argued that because the policy was intended to compensate him for his inability to earn income, the policy’s payments ought to be treated as income. However, because the policy was purchased during the marriage with marital property, the husband became injured during the marriage, and he received the disability insurance funds substituted for earned income during the marriage, the court upheld the classification of the policy’s benefits as marital property.
The court ordered 35% of the benefits to be paid to the wife, with the other 65% remaining the husband’s property. In setting these percentages, the court reasoned that the husband would no longer receive payments if he secured economically beneficial employment, which he had been so far unable to do. The wife, on the other hand, was free to pursue gainful employment without concern for any reduction or discontinuation of the benefits.
What about the dentist or physician who lives in Phoenix, Tucson, or other cities in Arizona? As Arizona is a community property state, the legal analysis differs. The question of whether disability insurance benefits are considered community property was addressed in the case of Hatcher v. Hatcher, a case involving a lump-sum payment received prior to the dissolution of marriage. The Arizona Court of Appeals held that the portion of the payment which represented compensation for the husband’s loss of earning ability was community property, while the portion of the payment which represented compensation for future, post-dissolution lost earning capacity remained the husband’s separate property. Although the facts of each case are different and should be reviewed by an attorney, had the Luginbills lived in Arizona, it is likely that the husband would have retained a complete share of his future disability insurance benefits.
Every claim is unique and the discussion above is only a limited summary of the courts’ rulings in these cases. If you have questions regarding about insurance benefits and dissolution, an experienced Arizona disability insurance attorney can help you assess your claim and determine what action, if any, needs to be taken.
Under Arizona insurance law, the relationship between a disability insurance company and its policyholder/insured is a special relationship giving rise to heightened duties not ordinarily found in other contractual agreements. Rawlings v. Apodaca, 151 Ariz. 149, 163, 726 P.2d 565, 579 (1986); Dodge v. Fidelity & Deposit Co., 161 Ariz. 344, 346-47, 778 P.2d 1240, 1242-43 (1989). Arizona courts further recognize that a disability insurance company’s duties to its insured are non-delegable and that an insurer remains liable for actions taken by a delegate (like reinsurers and third-party claim administrators) who take over disability claims and act in bad faith:
[A]n insurer who owes the legally imposed duty of good faith to its insureds cannot escape liability for a breach of that duty by delegating it to another, regardless of how the relationship of that third party is characterized. Clearly, an insurer may seek assistance by delegating performance of its duty of good faith to non-servants through whatever organizational arrangement it desires. In doing so, however, the insurer cannot give this delegate authority to deprive its insureds of the benefit of the insured’s bargain. If the insurer were allowed to delegate the duty itself, an injured insured would have no recourse for breach of the duty against either the insurer, from whom the duty is owed, or its delegate, with whom the insured has no contractual relationship. Such a result would render a cause of action for breach of the duty virtually meaningless. Thus, we hold that, although an insurer may delegate the performance of its duty of good faith to a non-servant, it remains liable for the actions taken by this delegate because the duty of good faith itself is non-delegable.
Walter v. Simmons, 169 Ariz. 229, 238, 818 P.2d 214, 223 (Ct. App. 1991) (citations omitted) (emphasis added); see also State Farm Mut. Auto. Ins. Co. v. Mendoza, 2006 WL 44376, at *12 (D. Ariz. Jan. 5, 2006) (“Insurers cannot escape their duty of good faith and fair dealing by delegating tasks to third-parties . . . .”) (citing Walter).
To establish a claim for bad faith, the a dentist or physician must show: (1) that the insurer acted unreasonably in the investigation, evaluation or processing of his/her claim; and (2) that the insurer acted knowingly or with reckless disregard as to the reasonableness of its actions. Leavey v. Unum/Provident Corp., No. CV-02-2281-PHX-SMM, 2006 WL 1515999, at *3 (D. Ariz. May 26, 2006); Zilisch v. State Farm Mut. Auto. Ins. Co., 196 Ariz. 234, 238, 995 P.2d 276, 280 (2000); Acosta v. Phoenix Indem. Ins. Co., 214 Ariz. 380, 153 P.3d 401, ¶ 13 (Ct. App. 2007). Intent can be inferred from the defendant’s conduct. Services Holding Co. v. Transamerica Occidental Life Ins. Co., 180 Ariz. 198, 207, 883 P.2d 435, 444 (Ct. App. 1994) (noting that “the intent requirement of the second element [of a bad faith claim] can be established by conduct”). Moreover, an insurer can be held liable in insurance bad faith for the distinct acts of misconduct discussed on our Homepage, regardless of whether the insured’s claim is even paid. As the Zilisch court held:
The carrier has an obligation to immediately conduct an adequate investigation, act reasonably in evaluating the claim, and act promptly in paying a legitimate claim. It should do nothing that jeopardizes the insured’s security under the policy. It should not force an insured to go through needless adversarial hoops to achieve its rights under the policy. It cannot lowball claims or delay claims hoping that the insured will settle for less. Equal consideration of the insured requires more than that.
196 Ariz. at 238, 995 P.2d at 280; see also Leavey, 2006 WL 1515999, at *5 (noting that “reasonable jurors could conclude that defendants acted unreasonably in their evaluation and processing of Plaintiff’s claim,” despite the fact that the insurer never missed a payment).
Disability insurance companies’ duties include the following:
To not impose requirements on the insured that are not contained in the policy.
To treat the insured fairly and honestly at all times.
To not try to gain an unfair advantage over the insured. To give as much consideration to the insured’s interests as its does to its own.
To make claims decisions without regard to profitability. To not attempt to influence the opinions of independent medical examiners.
To not destroy or alter documents to conceal evidence of claim handling.
To not lie about actions taken on a claim.
To act reasonably in handling the claim.
To not misrepresent facts or policy provisions to avoid paying benefits.
To reasonably interpret contract provisions.
To not take unreasonable legal positions.
Each of the foregoing duties remain the liability of the primary insurer and are non-delegable as noted above.
If you think that your Arizona disability claim has been denied in bad faith, a disability insurance attorney can help you determine what legal claims you might have against your insurer.