Understanding Residual Disability Benefits: Are They Worth The Cost? Part 2 – Prior Monthly Income
In the first post in this series, we identified the basic formula disability insurers use to calculate residual (partial) disability benefits. Now, we will examine how each of the components of that formula can change, depending on the insurer, and how those changes can affect the calculation of residual disability benefits, beginning with Prior Monthly Income (alternatively called Prior Earnings or Prior Net Monthly Income, depending on the insurer).
Prior Monthly Income, broadly speaking, is the baseline against which any loss of income is measured. If you are pursuing a residual disability claim, it is in your best interest to have the highest Prior Monthly Income possible. However, many doctors who file disability claims have conditions that are both chronic and progressive, like degenerative disc disease, which cause a slow, steady decline in productivity, and thus in earnings, for years before they ever make a claim for disability benefits. In addition to lowering the Prior Monthly Income, this can cause other problems with a disability claim, as discussed in our recent article on residual disability claims.
ABC News Investigates
CIGNA’s Disability Claims Handling Practices
UPDATE: Since this story was originally posted in 2008, the insurance regulators of Maine and Massachusetts initiated targeted market conduct examinations of CIGNA’s disability claims handling practices. The concerns raised by Maine and Massachusetts prompted the insurance commissioners of Connecticut and Pennsylvania to also open market conduct examinations and for the California Insurance Commissioner to reopen his previous examination of CIGNA. In 2013, the examinations resulted in fines against the CIGNA companies, corrective actions being required in its handling of disability claims, and for CIGNA to reevaluate certain claims that were denied or terminated. Information on the CIGNA Multi-State Regulatory Settlement Agreement can be found here.
ABC News/Good Morning America‘s investigation by Chris Cuomo into CIGNA disability claim denials has uncovered some disturbing stories. In the video above, claimants describe some of the hardships they have been forced to endure due to denials of their claims or unreasonable delays in having their claims paid.
One breast cancer survivor, who eventually was paid on her claim with the assistance of a disability insurance attorney, describes her two-year ordeal with CIGNA as a “daily, eight-hour job just to fulfill the information that CIGNA was requesting.” The tactic of wearing down a disabled claimant with repeated requests for documentation that has already been provided multiple times — thereby deliberately delaying payment of the claim — is called “slow walking” by some in the industry. While CIGNA denies engaging in this practice, many claimants who are already emotionally and physically vulnerable due to their disability will eventually quit pursuing benefits to which they are entitled in this battle of attrition that is widespread in the disability insurance industry. In this situation, it is often necessary for a claimant to retain the services of an attorney, not only to take on legal issues with the insurance company but also to shoulder the burden of the excessive and repetitive requests for documentation.
Other claimants in Chris Cuomo’s GMA piece describe (a) three years of fighting CIGNA for their benefits, all the while sinking deeply into debt and losing everything; (b) being caught between a rock and a hard place when told by an employer that he could not return to work due to his disability, but simultaneously having CIGNA deny disability benefits; (c) purchasing insurance to protect herself and her family, only to have her business destroyed, savings depleted and fighting to keep her family home when benefits were denied or delayed.
Another of the claimants profiled, Ursula Guidry, a young wife and mother with advanced breast cancer, initially had her benefits paid by CIGNA, but after awhile, they terminated her benefits and told her she could return to work full-time. Eventually CIGNA settled the claim with her. She passed away three months later. As her husband says, it is tragic that her last year on earth was spent being in a panic over financial issues and fighting an unethical insurance company instead of enjoying as much time as possible with her husband and children.
CIGNA did not respond to GMA re any of the specific claimants profiled, but their Chief Medical Officer stated they pay 90% of disability claims filed and that the majority of their customers are satisfied.
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 for disability insurance benefits. 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 disability 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 disability 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 disability insurance benefits that you deserve.
Understanding Residual Disability Benefits: Are They Worth The Cost? Part 1 – The Basics
Disability insurers often market “residual disability” or “proportionate disability” benefits to doctors as an added benefit of a disability insurance policy. “Residual disability” is industry parlance for a partial disability and the residual disability benefit is typically attached as a rider to an individual disability policy.
Doctors pay additional premiums for these residual disability riders, so it is important for them to determine whether the benefit they are receiving is worth the price they are paying. This series will explain each component of the residual disability benefit, examine how residual benefits differ between insurance companies and identify some of the problems associated with residual disability claims.
Residual disability is generally defined as a condition that either prevents a doctor from working as long as he previously did or one that prevents a doctor from performing all of the duties he previously did. The insurance company will pay the claim on a pro rata basis, based on what it determines to be the doctor’s loss of income.
The formula for calculating residual disability benefits varies from company to company, but it typically begins with a calculation of the doctor’s pre-disability “prior monthly income” (PMI). The insurer will next examine the doctor’s “current monthly income” (CMI), for every month in which the doctor claims to be disabled. Then, the insurer subtracts the current monthly income from the prior monthly income and divides the result by the prior monthly income. That ratio is then multiplied by the maximum benefit amount (MBA) to arrive at the residual disability benefit. The formula can be illustrated as follows:
(PMI – CMI)/PMI x MBA = Residual Disability Benefit
While this is the general rule, each insurer defines prior and current monthly income differently, which can result in the same doctor with the same financial information receiving widely different benefit amounts from different insurers. To further complicate matters, some insurers will have different minimum and maximum loss of income amounts. Some examples of the differing loss of income requirements include:
- Berkshire/Guardian: Requires a minimum 15% loss of income before any benefits are payable, only pays actual loss of income thereafter.
- Northwestern Mutual: Requires a minimum 20% loss of income before any benefits are payable, pays full MBA if there is a loss of 80% or more.
- Unum/Provident/Paul Revere: Requires a minimum 20% loss of income before any benefits are payable, pays full MBA if there is a loss of 75% or more.
- MetLife: Requires a minimum 20% loss of income before any benefits are payable, pays full MBA if there is a loss of 80% or more.
Even with policies issued by the same insurer, residual disability riders have changed over time. The loss of income requirements in your policy may be different than these, depending on when it was issued. If you are in a situation where you are contemplating filing a disability claim, whether for total or residual benefits, make sure you obtain a copy of your policy and review it carefully to understand the benefits to which you may be entitled.
Medical History Misstatements On A Disability Policy Application Can Void The Policy In The Future
Under Pennsylvania law, as affirmed by the Third Circuit Court of Appeals, insurance companies can legally void a disability insurance policy if the insured has made fraudulent misstatements about their past mental or medical history. This is known as “rescission” and is a common tactic insurance companies use to avoid paying claims. In Sadel v. Berkshire Life Insurance Company of America, 473 Fed.Appx. 152 (2012), pharmacist Michael Sadel (“Sadel”) owned two pharmacies in Philadelphia. In 2002, Sadel underwent treatment with Linda May, a clinical social worker, for abuse of prescription narcotics. Sadel continued treatment, in individual and group therapy sessions, through 2006. In 2005, Sadel purchased disability insurance from Berkshire Life Insurance Company of America (“Berkshire”), whose parent company is Guardian, but did not disclose his past drug use or treatment for various mental or emotional disorders to Berkshire when completing the disability insurance coverage application. This could have been due to an ambiguous question on the application form. For example, if the question had asked if Sadel had been or was under the care of a medical doctor, he may not have understood that this also includes care for mental or emotional disorders.
In January of 2007, Sadel lost several fingers on his left hand during a robbery at one of his pharmacies. When treated for the injury, Sadel admitted his past drug use to emergency room workers so that they would not administer drugs to him that would cause a relapse. In February of 2007, Sadel exercised an option to purchase a Future Increase Option policy with Berkshire, which increased his disability insurance coverage. Sadel returned to work at his two pharmacies, but stopped working after an incident at his pharmacy in June of 2007, in which a customer approached him from behind and said “stick ‘em up.” During the incident Sadel said his life flashed before his eyes and he realized he could no longer work at the pharmacy. Sadel put his pharmacies up for sale, and notified Berkshire, in August of 2007, of his intent to claim disability benefits under his Berkshire disability insurance policies.
After receiving Sadel’s notification, Berkshire sent Sadel several forms to fill out, and obtained Sadel’s emergency room medical records documenting the robbery incident and treatment. Berkshire also received a report and chart prepared by Linda May, where she indicated that she had treated Sadel for narcotics abuse from 2002 through the time he purchased the original disability insurance coverage with Berkshire. In June of 2008, Berkshire notified Sadel that they had found inconsistencies with his medical records and the insurance policies. Berkshire informed Sadel, in November of 2008, that they were still reviewing the validity of his policies.
Sadel filed suit against Berkshire in January of 2009, alleging bad faith and breach of contract, and sought money damage for the unpaid disability income benefits. Berkshire counterclaimed for rescission of his disability insurance policies, alleging that Sadel had made fraudulent statements on his disability insurance coverage applications. Berkshire was able to make this counterclaim because the disability insurance benefits contract specifically stated that the policy could be voided due to fraudulent misstatements during the application process. Berkshire was successful in District Court, and Sadel appealed to the Third Circuit.
Though Sadel tried to justify his application statements by arguing that he was doing well when he filled out the initial disability insurance application, and that his drug abuse was a small matter which he dealt with in a matter of weeks, Sadel did not prevail in his Berkshire disability claim. The Third Circuit Court upheld the Pennsylvania District Court’s ruling that Berkshire had not acted in bad faith. In fact, the Third Circuit agreed with the District Court finding that Sadel had “knowingly provided fraudulent misrepresentation on his disability insurance applications . . . and he [could not] establish bad faith on the grounds that Berkshire lacked a reasonable basis to deny him benefits.”
This Pennsylvania case is important because it shows that inaccurate or fraudulent statements on a long term disability insurance coverage application, though undiscovered at the time of purchasing disability insurance, will likely come to light when the insured tries claim disability insurance benefits under their policy. Thus, for the insured, when in doubt about what to disclose on long term disability insurance application forms, it is better to err on the side of caution and always disclose your medical history. Insurance purchasers should also keep a copy of the application, which is considered part of the disability insurance policy that will be delivered with the final executed policy to the inured. Furthermore, when filing an insurance claim it is important to have a disability insurance attorney review not just the policy, but the application as well, to see if there are potential problems to claiming the benefits of a disability insurance policy.
Disability Insurer MassMutual Opens West Coast Center in Phoenix, Arizona
Disability insurer Massachusetts Mutual Life Insurance Company aka MassMutual Financial Group has for the first time in its 162-year history opened a West Coast business center. The new 60,000 sq. ft. center is located on Black Canyon Highway near the I-17 and Peoria Avenue in Phoenix, Arizona and will employ as many as 400 people. Arizona Governor Jan Brewer and Phoenix Mayor Greg Stanton were among those on hand for the ribbon-cutting ceremony of the facility on October 16, 2013.
MassMutual CEO Roger Crandall told the Arizona Republic that the new Phoenix center will primarily serve customers and policyholders in the Western U.S., allowing for faster expansion and also mitigating operational risks to the company through diversification of the location of its resources and staff. During Superstorm Sandy, we blogged about the temporary shutdown of many of the disability insurance companies located on the East Coast, including MassMutual, Unum Group/UnumProvident, The Hartford, New York Life, and Berkshire Life/Guardian Life. With locations now in Arizona as well as Massachusetts, the company may be able to avoid a situation where its call center and other operations, such as issuance of disability benefit checks, are suspended due to a natural disaster.
MassMutual employs approximately 6,700 persons nationwide, including nearly 3,500 at its Massachusetts headquarters, which is currently in the midst of a major renovation. Roughly 25 employees have been transferred from MassMutual’s headquarters to the Phoenix facility and an additional 70+ employees, who were a part of The Hartford’s Retirement Plans business prior to its $400 million acquisition by MassMutual in September 2012, will become a part of MassMutual’s Phoenix staff. To round out its staff, MassMutual has announced plans to hire an additional 200-250 employees in the Phoenix, Arizona area.
According to the Arizona Republic, MassMutual has approximately 25,000 clients in Arizona and parts of New Mexico holding roughly $4 billion dollars in insurance coverage. While we are hopeful that MassMutual’s Phoenix facility will bring improvements to MassMutual’s disability insurance claims service, we would also advise disability claimants that having an additional 400 MassMutual local employees could also mean increased and potentially intrusive surveillance.
Guardian Life Insurance Offers Student Loan Protection Program
Guardian Life Insurance Company of America, parent company of Berkshire Life Insurance Company of America, recently launched a new program offering medical and dental professionals insurance for student loans in the event of total disability. This program, which can pay up to $2,000 per month in student loan payments is available to those with advanced degrees – including those in the dental and medical industries – and to new and future practitioners for whom this kind of protection can seem quite appealing. Understanding that most graduates will begin practicing with an increasingly heavy debt load, Guardian represented the program as a simple preventative solution – but will this “win-win” policy be there when you need it?
Statistically speaking, 1 in 4 people will suffer a long-term disability during his or her career, and claimants are responsible for proving disability prior to receiving benefits. Because insurance companies are notorious for employing a number of tactics to “disprove” a disability and avoid paying claims (including subjecting claimants to “independent” medical exams, conducting video surveillance, and otherwise causing undue delays), it is critical that you understand your policy before you buy. As Guardian Life Insurance states, only those who are deemed totally disabled will benefit from this new student loan insurance policy. We expect that claims under these policies will be highly scrutinized, just as they would be with a traditional disability insurance claim. Those considering purchasing disability insurance or filing a disability claim should consult with an attorney to ensure they are prepared with the best possible policy in the event of a disability.
Disability Insurance Q&A: How Should Doctors Approach Their Treating Physicians About a Disability Claim?
Question: How should doctors approach their treating physicians about a disability claim?
Answer: Your treating physician’s support can often be critical to getting your claim approved. A hurried, uninterested physician may not have time to devote to your claim. In addition, fully discussing your condition with a professional, compassionate treating physician will help ensure supportive medical records. When to discuss your potential claim with a physician is an important timing issue. Also, when the time comes to speak to the treating physician about the claim, a disabled dentist or doctor 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 doctor or dentist to work.
Some of our previous blog posts on this important issue are available here and here.
Pennsylvania and California Market Conduct Examinations of Guardian Life Insurance Company/Berkshire Life Insurance Company
Pennsylvania: On February 28, 2013, the Commonwealth of Pennsylvania Insurance Department issued a report on its Market Conduct Examination of Guardian Life Insurance Company during the period of January 1 – December 31, 2010. Guardian Life Insurance Company is also commonly known by the name of its subsidiary Berkshire Life Insurance Company of America and is one of the nation’s largest providers of disability insurance.
While Pennsylvania’s market conduct examination reviewed both Guardian health insurance and individual disability insurance in order to ensure compliance with Pennsylvania laws and regulations, for purposes of this blog we will only summarize the Insurance Department’s findings relating to Guardian/Berkshire’s individual disability insurance claims handling.
The claims review portion of the Market Conduct Examination consisted of reviewing Berkshire’s claim manuals and reviewing the claim files for any inconsistencies which could be considered discriminatory, specifically prohibited by statute or regulation or unusual in nature. The Department of Insurance noted 17 violations and further noted that Berkshire’s claims handling documents did not adhere to the examination because their procedures had changed during the examination period but the prior records were not retained. “The company indicated to the department that when new claim procedures or manuals are updated, the prior editions are not retained.” In this digital age, it is difficult to understand why prior records could not and would not be retained.
The Department of Insurance also raised a Department Concern that, “[Berkshire] should implement guidelines and standards to avoid any potential discriminatory action in the processing and handling of claims relevant to reservation of rights and advance payment.”
Finally, the Pennsylvania Department of Insurance found Guardian/Berkshire in violation of the regulation that “every insurer shall completion investigation of a claim within 30 days after notification of a claim . . . If the investigation cannot be completed within 30 days, and every 45 days thereafter, the insurer shall provide the claimant with a reasonable written explanation for the delay and state when a decision on the claim may be expected.”
California: On October 19, 2009, the California Department of Insurance issued a report regarding the results of its limited desk examination of the claims, rating, and underwriting practices of Berkshire Life Insurance Company of America during the period of May 1, 2008 through April 30, 2009. The Department of Insurance found that Berkshire was in violation of California Code of Regulations § 2695.6(b) which requires that “All licensees shall provide thorough and adequate training regarding the regulations to all their claims agents. Licensees shall certify that their claims agents have been trained regarding these regulations and any revisions thereto…” Berkshire Life responded that it did not certify that its claims adjusters had received the required training in accordance with California law but stated that instead their adjusters are trained on a “one-on-one basis.” Berkshire was asked whether it intended to take appropriate action in all jurisdictions where applicable and responded that it would implement corrective actions.
Disability Insurance Q&A: What Does Your Firm Do To Help Doctors File a Successful Claim for Disability Insurance Benefits?
Question: What does your law firm do to help doctors file a successful claim for disability insurance benefits?
Answer: From the beginning of the process, we help doctors, dentists and other professionals by analyzing complex claims applications and disability insurance policies and identifying potential coverage issues. We have particular skill in documenting claims, completing claim forms, and communicating with treating physicians. Once the claims process begins, we fiercely protect our clients against unreasonable delays and abuse by the disability insurer. We also provide knowledgeable advice and practical guidelines on how to handle an independent medical examination or other testing that may be required by the disability insurance carrier.
Further information about what we do and what to expect is available on our website at this link.
Disability Insurance Q&A: What is the Difference between “Own Occupation” and “Any Occupation” in Disability Insurance?
Question: What is the difference between “own occupation” and “any occupation” in disability insurance?
Answer: Most doctors purchase an “own-occupation” policy, which provides compensation following a disability that prevents the insured from performing his or her particular duties. If an insured doctor or dentist does not have an “own-occupation” policy, he or she must be disabled from performing the duties of any occupation for which he or she is reasonably qualified in order to receive disability benefits.
Some disability insurance policies are a hybrid, providing own-occupation benefits for a limited period of time, and then converting coverage to the “any occupation” standard.
Some of our previous blog posts analyzing some of the potential loopholes that disability insurers will try to apply to an own-occupation policy can be read here and here.
Insurers’ Law Firms Using New Technology
to Track Your Social Media Activity
As many disability insurance policyholders already know, insurance companies regularly look to claimants’ social media accounts (Facebook, LinkedIn, Twitter, Instagram, etc.) for information to help justify a claim denial.
What you may not know is just how important those social media searches are to the insurance company’s lawyers whenever a claim goes to litigation.
At a recent disability insurance law conference attended by attorneys for both claimants and insurers, one insurance company defense attorney spoke about just how crucial it can be to find supposedly damaging information about claimants on social media. “I don’t know how we defended these cases before Facebook,” she said. “It’s a great resource. We’ve found pictures of claimants dancing . . . all kinds of things!”
Your insurance company’s lawyers are so eager to use social media to find information that can make you look bad that they are now shelling out extra money on software specifically designed to monitor and archive everything you say and do on social media. This trend is explained in further detail in the ABA Journal’s recent article: 6 tools to help firms track social media. While the article states that some firms are using the tools to monitor their own clients, there is no doubt that they are being used to monitor their clients’ legal adversaries.
The information that can be gleaned using this type of software is unsettling. One example from the article:
“For instance, if a post says something like ‘I’m having breakfast at this great restaurant’ and there is a picture of what they are eating . . . the software should also be able to show the GPS coordinates, other people they are with, information about the restaurant, etc., so that the whole story is presented, not just the text.”
What this means for claimants is that they must be extra vigilant about what kind of image they are projecting on social media. Everyone, no matter how disabled, has moments of joy in life. But if those joyful moments are posted on social media, they can easily be misconstrued, especially without context.
New: Disability Insurance Newsletter
We receive many, many requests for more information on disability insurance companies, disability insurance claims, and other relevant news and updates.
This blog is a great way for us to keep you informed about general disability news and claim topics, but we wanted a way to keep those most interested in what our firm does up to date in a more comprehensive way.
Coming soon, we will be distributing a monthly e-mail newsletter. The newsletter will contain information not included on this blog, such as:
- Detailed tips for filing disability insurance claims with various carriers;
- Examples of best practices vs. worst practices when interacting with your insurer;
- Updates on recent disability cases relevant to your claim or potential claim;
- Specific answers to common questions, which newsletter recipients can submit anonymously; and
- Information on lectures and classes you can attend to hear the firm’s attorneys speak about choosing disability insurance policies and filing claims.
If you are interested in subscribing (at no cost, of course), please sign up here:
Disability Insurance Newsletter.
Your name is not required. Please rest assured that we will not use or distribute your e-mail address for any other reason.
Changes in DSM-5 Could Affect Some Disability Insurance Claims
More than a decade after work began on updating and revising the Diagnostic and Statistical Manual of Mental Disorders, DSM-5 replaced DSM-IV-TR in May 2013. While some of the changes in diagnostic criteria for disabilities such as intellectual developmental and specific learning disorders or the addition of new diagnoses in DSM-5 for disorders such as hoarding and gender dysphoria are unlikely to affect the private disability insurance claim of a doctor or dentist, the changes in the criteria for diagnosing post-traumatic stress disorder or substance-related and addictive disorders and the addition of the diagnoses of social (pragmatic) communication disorder and mild neurocognitive disorder have potential implications in the context of private disability insurance claims. Additionally, the elimination of the Global Assessment of Functioning (GAF) scale, widely used by insurance companies in determining the medical necessity of treatment, is likely to have an effect on some disability insurance claim determinations.
Some of the changes in DSM-5 are outlined below.
Social (Pragmatic) Communication Disorder: This new diagnosis, which cannot be diagnosed unless autism spectrum disorder has been ruled out, is described by the American Psychiatric Association as pertaining to individuals “who have significant problems using verbal and nonverbal communications for social purposes, leading to impairments in their ability to effectively communicate, participate socially, maintain social relationships, or otherwise perform academically or occupationally. . . Symptoms must be present in early childhood even if they are not recognized until later. . .”
Substance-Related and Addictive Disorders: The categories of substance abuse and substance dependence have been combined, and the criteria for a diagnosis have been strengthened. Where DSM-IV required only one symptom for a diagnosis of substance abuse, DSM-5 requires 2-3 symptoms from a list of 11 potential symptoms. Drug craving has been added to the list of symptoms and “problems with law enforcement” has been eliminated due to cultural differences in law enforcement internationally.
Post-Traumatic Stress Disorder: There are a couple of significant changes in the diagnostic criteria for post-traumatic stress disorder (PTSD). The requirement of DSM-IV that the person personally experience or witness the traumatic event has been eliminated and DSM-5 allows for a PTSD diagnosis when the person has learned that the traumatic event occurred to a close family member or friend, or experiences first-hand repeated or extreme exposure to aversive details of the traumatic event (from sources other than media, photos, television or movies, unless work-related). Additionally, the requirement that the person experience “fear, helplessness or horror at the time of the traumatic event” has been deleted.
The criteria has also been changed to require “actual or threatened death, serious injury, or sexual violence.” The previous manual also allowed for “a threat to the physical integrity of self or others” but did not specify sexual violence.
Mild Neurocognitive Disorder: The American Psychiatric Association describes this new disorder in DSM-5 as “an opportunity for early detection and treatment of cognitive decline before patients’ deficits become more pronounced and progress to major neurocognitive disorder (dementia) or other debilitating conditions.” The APA goes on to characterize the disorder as:
Mild neurocognitive disorder goes beyond normal issues of aging. It describes a level of cognitive decline that requires compensatory strategies and accommodations to help maintain independence and perform activities of daily living. To be diagnosed with this disorder, there must be changes that impact cognitive functioning. These symptoms are usually observed by the individual, a close relative or other knowledgeable informant, such as a friend, colleague, or clinician, or they are detected through objective testing.
Global Assessment of Functioning (GAF) Scale: The GAF scale of 1-100, which was a single global assessment combining separate assessments of symptom severity, danger to self or others, and ability to care for oneself and function socially, has been eliminated from DSM-5. In the place of assigning a GAF number, separate assessments of severity and disability are recommended. The World Health Organization Disability Assessment Schedule (WHODAS 2.0) was determined to be the best current measure of disability for routine clinical use by the DSM-5 Disability Study Group.
The changes in DSM-5 are, of course, far more complex and detailed than what we have outlined above, but if you are suffering from a mental disorder and thinking of filing a private disability insurance claim, we recommend that you coordinate with not only your psychiatrist but an attorney before filing your claim with your insurer.
More information related to DSM-5 is available at this link.
CIGNA fined in Multi-State Regulatory Settlement Agreement Re Group Long-Term Disability Claims Handling; Some CIGNA Claims to be Re-Evaluated
Following a Targeted Market Conduct Examination of CIGNA’s disability insurance claims handling practices, CIGNA companies — Life Insurance Company of North America, Connecticut General Life Insurance Company, and Cigna Health and Life Insurance Company (fka Alta Health and Life Insurance Company) — entered into a Regulatory Settlement Agreement in May 2013 with the California Department of Insurance, the Connecticut Department of Insurance, the Maine Bureau of Insurance, the Massachusetts Division of Insurance, and the Pennsylvania Insurance Department. Insurance regulators of other states may adopt the terms by becoming a Participating State. As of this time, Arizona is not amongst the Participating States.
The targeted market conduct examinations were initiated by the Maine Superintendent of Insurance and the Massachusetts Commissioner of Insurance in 2009 to investigate whether CIGNA’s claim handling practices conformed with the standards upheld by the National Association of Insurance Commissioners. The regulatory concerns raised by the initial examinations prompted Connecticut and Pennsylvania’s insurance commissioners to open similar examinations and for the California Department of Insurance to reopen its 2006 examination.
As a result of the examination, the CIGNA companies were ordered to pay fines in the amounts of $500,000.00 to the California Commissioner of Insurance, $175,000.00 to the Maine Superintendent of Insurance, and $250,000.00 to the Massachusetts Commissioner of Insurance, and to take certain corrective actions in the handling of group disability insurance claims, to include:
- Giving significant weight in a claimant’s favor if the SSA has awarded SSDI disability income;
- Improving procedures for gathering medical information, attempting to resolve discrepancies in medical statements or conclusions, documenting and outlining the medical conclusions upon which a determination of disability is made, and evaluating functional capacity with the presence of co-existing or co-morbid conditions;
- Following written guidelines for using external medical resources if medical opinion/information is unclear or contradictory or if the claims adjuster disagrees with the opinions of the treating physician(s); Continue reading “CIGNA fined in Multi-State Regulatory Settlement Agreement Re Group Long-Term Disability Claims Handling; Some CIGNA Claims to be Re-Evaluated”
Financial Stability of Disability Insurance Companies
Over the past few months, A.M. Best, Fitch Ratings, Standard & Poor’s (S&P’s) and Moody’s Investors Services have updated their ratings of the stability of several insurers that sell disability insurance.
In March 2013, A.M. Best affirmed the financial strength rating (A) (Excellent) of Union Central Life Insurance Co. Concurrently, they affirmed the debt rating (a-) of Union Central. Also in March 2013, Fitch affirmed the rating outlook of Stable for Hartford Financial Services Group and its insurance subsidiaries.
In June 2013, A.M. Best affirmed the A++ (Superior) rating of Berkshire Hathaway Homestate Insurance, in part because of Berkshire’s reputation for “aggressive claims management, effective loss control services and history of conservative loss reserving standards.” Berkshire may be better known to some disability insureds as Guardian Life, and insureds should consider seeking the advice of an experienced disability insurance attorney before filing a claim with a company with a reputation for aggressive claims handling.
The financial outlook in June 2013 also improved for some other disability insurers, including New York Life Insurance Co., Massachusetts Mutual (MassMutual), and Northwestern Mutual. Standard & Poor’s upgraded all of those companies from Negative to Stable, and the Stable rating for New York Life was affirmed by Moody’s in July.
Penn Mutual saw its rating from Moody’s drop from Stable to Negative in June 2013 due to its weaker business profile as a result of increasing product risk and modest earnings and profitability.
Disability Insurance for College Athletes
In a recent article, written in the wake of NCAA basketball player Kevin Ware’s traumatic leg fracture, The Atlantic explores whether college athletes should purchase disability insurance.
Like doctors and dentists, whose physical health can be crucial to performing their job duties, many professional athletes purchase disability insurance. By doing so, they attempt to protect their income from sickness or injury that interferes with their work.
For college athletes, disability insurance is intended to protect potential, future income that they expect to earn once drafted to professional sports teams. Because the term of the policies is so short – ordinarily just one to two years – and the potential benefits so high – often millions – these disability policies can be extremely expensive. The article discusses athletes and their families that paid upwards of $40,000 in premiums over one or two years.
As the article explains, though, this type of disability insurance is rarely collected. Though these athletes’ disability insurance policies are unique, the difficulty of collecting may sound familiar to many other types of professionals facing disability insurance claims:
[T]hese policies, meant to hedge against risk, are risky in themselves: None of these student-athletes is likely to ever collect a dime, even if they are hurt. These guarantees cover “permanent total disability,” meaning only policyholders who are never able set foot on a field or court again—not simply those who suffer injuries that may reduce their earning potential—can file a claim.
Read the full article here: The $5 Million Question: Should College Athletes Buy Disability Insurance?
For Doctors, Risk of Relapse Can Cause Total Disability
Because of the high-stress nature of their occupations and their ready access to pharmaceuticals, both physicians and dentists are at high risk of developing substance abuse issues. In a recent disability insurance case, Colby v. Union Security Insurance Company & Management Company for Merrimack Anesthesia Associates Long Term Disability Plan, the United States Court of Appeals for the First Circuit recognized the challenges that doctors can face when they are disabled due to substance dependence.
The insured in this case, Dr. Colby, was a partner in an anesthesiology practice. Like many anesthesiologists, she kept a demanding schedule, working 60 to 90 hours per week. In 2004, her colleagues discovered that she had been struggling with chemical dependence after she was found sleeping or unconscious on a table in the hospital. She tested positive for Fentanyl, an opioid used in her practice.
This led to the revelation that Dr. Colby had been self-administering opioids, and had become addicted. Shortly thereafter, Dr. Colby entered inpatient substance abuse treatment. As of January of this year, Dr. Colby had not resumed using Fentanyl.
When her drug dependence first came to light, Dr. Colby filed a claim with her disability insurer. Even after completing her treatment, Dr. Colby feared that returning to the anesthesiology environment, where Fentanyl (along with many other drugs) was easily accessible, would lead to her relapsing. However, the insurance company denied her claim for disability benefits. The insurer argued that she had been discharged from substance abuse treatment, and that although she was still under a doctor’s care and feared a relapse, “a risk for relapse is not the same as a current disability.”
Ultimately, the Court of Appeals disagreed. Judge Selya explained:
In our view, a risk of relapse into substance dependence—like a risk of relapse into cardiac distress or a risk of relapse into orthopedic complications—can swell to so significant a level as to constitute a current disability.
As this case demonstrates, doctors struggling with substance dependence should be cognizant of the fact that their occupation puts them at higher danger for relapse, and may contribute to their total disability from practicing. If you are facing this situation, it’s important to talk to your treating providers, disability insurance attorney, and disability insurer about how your work environment affects your risk of relapse.
Review the entire Colby opinion here.
When Are Internal Insurer Memos Discoverable?
The recent 9th Circuit case Stephan v. Unum Life Insurance provides new guidance on when an insurance company’s internal documents may be discoverable.
Mark Stephan, a resident of California, suffered a bicycle accident that injured his spinal cord, rendering him quadriplegic. He filed for total disability benefits under his employer-sponsored Unum disability insurance policy, which was part of a plan governed by ERISA.
Mr. Stephan’s policy required Unum to pay him a benefit equal to a percentage of his pre-disability earnings. When Unum calculated how much Mr. Stephan was earning, it included his monthly salary, but not his annual bonus. This allowed Unum to calculate a much lower earnings rate—and thus a much lower amount that Unum had to pay in disability benefits.
Mr. Stephan sued Unum, seeking to overturn its benefit determination. After the trial court found in Unum’s favor, Mr. Stephan appealed, and the 9th Circuit Court of Appeals examined his case. Continue reading “When Are Internal Insurer Memos Discoverable?”
Case Study: What Does “Material and Substantial” Mean?
In 2007, the Georgia Court of Appeals had to address this question in Pomerance v. Berkshire Life Insurance Company of America. 654 S.E.2d. 638 (2007). Alan Pomerance was an obstetrician/gynecologist with four disability insurance policies from Berkshire. These policies provided own-occupation coverage, meaning that “total disability” was defined as “your inability to perform the material and substantial duties of your occupation.”
Dr. Pomerance’s occupational duties included delivering babies, surgeries, C-sections, office visits, making hospital rounds, and being on call. After being diagnosed with a degenerative knee condition, Dr. Pomerance filed a total disability claim with Berkshire, explaining that he could no longer stand for long period of time, so he couldn’t perform deliveries and hospital surgeries, be on call, or assist in the emergency room. Because of his disability, Dr. Pomerance was forced to restrict his practice solely to wellness office visits, which included patient exams, counseling, nonsurgical care, and minor biopsies, but none of his other former duties.
Berkshire declined to pay Dr. Pomerance total disability benefits, arguing that he was only partially disabled because he could still perform one of his “substantial” duties, i.e., office visits. Dr. Pomerance contacted Berkshire and objected to its determination, but Berkshire still refused him total disability benefits. Dr. Pomerance filed suit against Berkshire, claiming breach of contract and bad faith refusal to pay the amounts owed. Continue reading “Case Study: What Does “Material and Substantial” Mean?”
