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?”
Case Study: Berkshire Attempts to Use the “Dual Occupation Defense”
When a professional that owns her own business files a disability insurance claim, the insurer will often try to exploit the claimant’s ownership status to deny total disability benefits. The insurance company will argue that the professional has not one, but two occupations: 1) professional and 2) business owner. The disability insurer will argue that the claimant isn’t actually disabled because she can still perform administrative or managerial functions, even if she can’t do the duties of her actual profession. This is sometimes called the “dual occupation defense.”
For example, in Shapiro v. Berkshire Life Insurance Company, Berkshire attempted to use the dual occupation defense to deny total disability benefits to a dentist. The dentist, Paul Shapiro, had an own-occupation policy, with “total disability” defined as “the inability to perform the material and substantial duties of your occupation.”
Dr. Shapiro owned his own practices, but spent the overwhelming majority of his time and effort doing clinical work. He spent 90 percent of his time in chairside dentistry, working on patients, and just 10 percent of his time doing the administrative work that any practice owner needs to accomplish. In fact, in the year before he became disabled, Dr. Shapiro saw nine to eleven patients each day, and performed an average of 275 dental procedures per month, working 40 to 45 hours each week. He only spent one and a half to four hours each week attending to various administrative and managerial duties like personnel decisions, staff meetings, and computer troubleshooting.
After progressive osteoarthritis and spondylosis of the elbow, neck and other joints left Dr. Shapiro unable to perform chairside dentistry, he filed for total disability benefits with Berkshire. Rather than paying him total disability benefits, however, Berkshire determined that Dr. Shapiro was only entitled to partial disability benefits:
Berkshire’s coverage position was that Shapiro’s occupation immediately preceding the onset of his disability was as an administrator and manager of his various dental practices as well as a practitioner of chair dentistry; because the disability did not prevent Shapiro from doing his administrative or managerial work, Berkshire reasoned, Shapiro did not satisfy the policies’ definition of total disability: “the inability to perform the material and substantial duties of your occupation.”
Dr. Shapiro brought a suit against Berkshire in the United States District Court for the Southern District of New York for breach of contract, among other things. That court found in his favor on the breach of contract claim, but Berkshire appealed. The Second Circuit Court of Appeals agreed with the lower court and affirmed the decision in Dr. Shapiro’s favor. The Court of Appeals determined that Dr. Shapiro “spent the vast majority of his time performing chair dentistry,” and that his administrative work was merely incidental to his material and substantial duties as a full-time dentist.
Though Berkshire’s attempt at the dual occupation defense was unsuccessful in this case, the Court of Appeals indicated that there could be some situations in which it might work:
At some point, a medical entrepreneur’s administrative and managerial responsibilities may well become the material and substantial duties of the insured’s occupation.
The message for disability insurance policyholders that own a business is to be careful how much time you spend in administrative tasks, and how you explain your occupation to your insurer. Otherwise, you could be inadvertently setting your claim up for denial.
Berkshire Criticized by Maryland Insurance Commissioner for “Artful Neglect”
Disability insurers have a duty to fully investigate claims for benefits, as the insurance companies are well aware. Unfortunately, some claims departments may focus their efforts on looking like they are investigating and considering information rather than actually doing so.
Berkshire, a disability insurance company that sells own-occupation policies to dentists and doctors, has garnered criticism from at least one state’s insurance commissioner for this very practice.
In Berkshire Life Insurance Company v. Maryland Insurance Administration, 142 Md. App. 628, 791 A.2d 942 (App. 2002), Berkshire attempted to claim that its insured was only partially disabled, and therefore it was only obligated to pay a fraction of the total benefits that were payable under the policy. In finding that Berkshire’s conduct was “arbitrary and capricious” in violation of Maryland’s insurance statutes and ordering it to pay restitution to the policyholder, the Maryland Insurance Commissioner also found:
Overall, Berkshire’s actions here represent what may be termed as “artful neglect.” Berkshire gives the appearance of investigating a claim in order to render a good faith claims determination. As part of this appearance, Berkshire timely requests financial information from its insured and then timely requests more information from its insured. In direct contrast to this “appearance,” however, Berkshire does not analyze the information at all, much less use an analysis in a cogent and rational way to support a proper claims determination.
In a more recent Arizona case, Nunley v. Berkshire Life Insurance Company of America, 2009 WL 529901 (D. Ariz. 2009), Berkshire tried to have the United States District Court rule that it could not be subject to punitive damages in a case involving a disabled dentist’s total disability claim. The Court, however, denied Berkshire’s motion, finding that Berkshire might have to pay punitive damages because it did not investigate the dentist’s claim adequately or in a timely fashion.
This “artful neglect” is unlawful, and may subject a disability insurance carrier to bad faith liability. A disability insurance claimant who thinks her insurer is not adequately investigating the claim should contact an attorney to help protect her rights.
Nearly 1 in 5 Americans Have a Disability
Almost one in five people in the United States have a disability, according to the new U.S. Census Report Bureau that was just released today. The disability report was released to coincide with the 22nd Anniversary of the Americans with Disability Act, which is tomorrow. Here is some of the highlights from the disability report cited from the U.S. Census Bureau’s disability news release:
- 56.7 million people, 19 percent of the U.S. population, had a disability in 2010. And more than half of these disabilities were reported as severe.
- People in the oldest age group — 80 and older — were about eight times more likely to have a disability as those in the youngest group — younger than 15 (71 percent compared with 8 percent). The probability of having a severe disability is only one in 20 for those 15 to 24 while it is one in four for those 65 to 69
- About 8.1 million people had difficulty seeing, including 2.0 million who were blind or unable to see.
- About 7.6 million people experienced difficulty hearing, including 1.1 million whose difficulty was severe. About 5.6 million used a hearing aid.
- Roughly 30.6 million had difficulty walking or climbing stairs, or used a wheelchair, cane, crutches or walker.
- About 19.9 million people had difficulty lifting and grasping. This includes, for instance, trouble lifting an object like a bag of groceries, or grasping a glass or a pencil.
- Difficulty with at least one activity of daily living was cited by 9.4 million noninstitutionalized adults. These activities included getting around inside the home, bathing, dressing and eating. Of these people, 5 million needed the assistance of others to perform such an activity.
- About 15.5 million adults had difficulties with one or more instrumental activities of daily living. These activities included doing housework, using the phone and preparing meals. Of these, nearly 12 million required assistance.
- Approximately 2.4 million had Alzheimer’s disease, senility or dementia.
- Being frequently depressed or anxious such that it interfered with ordinary activities was reported by 7.0 million adults.
- Adults age 21 to 64 with disabilities had median monthly earnings of $1,961 compared with $2,724 for those with no disability.
- Overall, the uninsured rates for adults 15 to 64 were not statistically different by disability status: 21.0 percent for people with severe disabilities, 21.3 percent for those with nonsevere disabilities and 21.9 percent for those with no disability.
To read the disability news release, click here.
Applying California’s Total Disability Standard
Under California law, “the term ‘total disability’ does not signify an absolute state of helplessness but means such a disability as renders the insured unable to perform the substantial and material acts necessary to the prosecution of a business or occupation in the usual or customary way. Recovery is not precluded under a total disability provision because the insured is able to perform sporadic tasks, or give attention to simple or inconsequential details incident to the conduct of business.” Erreca v. Western States Life Ins. Co., 19 Cal.2d 388, 396 (1942). Thus, a disability claimant may be “totally disabled” in California despite being physically capable of performing some occupational duties. However, California courts are generally chary to find total disability if a disabled claimant continues working after filing for disability benefits, notwithstanding his physical limitations, and when the income generated from that work is substantially the same as it was before becoming disabled.
Hecht v. Paul Revere Life Ins. Co. offers a good illustration of this. In Hecht v. Paul Revere Life Ins. Co., an executive owner of a successful retail clothing business in Southern California filed for disability benefits with his disability insurance company, Paul Revere, after a car accident resulted in his suffering from neck pain and upper and lower back pain. Although the disability claimant was President and Owner, he involved himself with significant portions of laborious tasks such as lifting, loading and unloading merchandise and climbing ladders. After the accident, he could no longer perform the physical labor.
The disability claimant argued he was “totally disabled” under his disability insurance policy because he could no longer perform the physical labor aspect of his work in “the usual or customary way” as he did pre-disability. The California court agreed that he could no longer perform the physical labor; however, it concluded that such was not a “substantial and material” aspect necessary to the prosecution of his business. In reaching this conclusion, the California court found persuasive the fact that the disabled claimant continued to work every day, notwithstanding his physical limitations, and that the income generated from his contributions to the business was substantially the same as the income pre-disability. Applying Erreca’s “total disability” standard, the California court said:
He has proven by his own actions that he is able to perform “substantial and material acts necessary to the prosecution of a business,” that he is doing more than “sporadic tasks,” and that he is performing more than “simple or inconsequential details incident to the conduct of business.
Therefore, for the purposes of the disability insurance policy, he could not be considered “totally disabled.”
In California, what constitutes “substantial and material acts necessary to the prosecution of a business” is a fact-intensive inquiry. In this case, the facts favored the disability insurance company because the disabled business executive was still capable of performing some occupational duties post-injury, and his participation in these occupational duties generated significant income. When total disability cases involve disabled doctors and disabled dentists, however, they may not be so black-and-white (for an example, check out this blog post). In part, this is because the success of doctor and dental practices depends almost exclusively on a doctor’s or dentist’s ability to perform certain physical acts, such as drilling a hole in a patient’s tooth or performing surgery; this is quite different than the physical demands required of the disability claimant in the California case above. Additionally, injuries deemed less crippling in other fields could have a more substantial impact on medical and dental professionals whose highly specialized skills require greater precision to ensure patient safety.
Thus, even though the California standard for “total disability” is the same across the board, it applies differently to different professions. For this reason, when you file for disability benefits, you should seek a disability insurance attorney who has experience representing clients within your own occupation.
Disability Insurers Revamping Consumer Image
Many healthcare providers, some of whom also offer disability insurance such as Aetna and Cigna, have introduced elaborate marketing campaigns this past year in an effort to change their image, according to Tanzina Vega of the NY Times. These insurers want to be perceived as consumer-friendly healthcare companies, rather than merely insurance providers. The timing of the major shift in marketing makes sense as speculation increases over the pending U.S. Supreme Court decision on the Affordable Care Act. If the Supreme Court upholds the individual mandate, which would require millions of uninsured Americans to purchase insurance, then the market will expand considerably. Therefore, a favorable ruling would enable insurers like Aetna and Cigna to target the uninsured Americans directly, instead of marketing health care packages to employers.
But even if the individual mandate in the Affordable Care Act is struck down, Vega says that many insurers will likely continue their direct-consumer marketing campaigns. Why? Many healthcare providers believe their future economic success largely depends on their ability to market directly to the consumer. Therefore, they will continue designing, marketing and selling insurance packages tailored to individuals, the end consumer.
Although the NY Times article focuses primarily on marketing campaigns of healthcare providers, we may see a similar, albeit less dramatic shift in the way disability insurance companies market their products as well. Disability insurance companies are already focusing on the end consumer because, like healthcare providers, they believe that future economic success depends on their ability to reach people directly. Furthermore, it makes sense that disability insurers would implement similar marketing strategies as healthcare providers because often times the health insurance companies are also disability insurers, like Aetna and Cigna.
But actions often speak louder than words. Although disability insurers may try to alter their marketing strategies to reposition themselves as consumer-friendly companies, there likely will not be a corresponding shift in the way they treat disabled professionals when handling disability claims. Unfortunately, their own financial interests too often trump those of disabled persons.
Private Investigators “Pretexting” to Deny Disability Claims
Private investigators hired by disability insurance companies pretext to acquire your personal information from others. They do this by pretending to be someone else (often you), contacting people you know, and then probing them for your sensitive information. Pretexting is not only deceptive and unprincipled, but it may also be illegal. Private investigators engage in this conduct to produce evidence that will enable insurance companies to deny your disability insurance claim.
The Gramm-Leach-Bliley Act specifically addresses pretexting as it pertains to obtaining personal information from financial institutions. Many private investigators believe the scope of the Act is limited to pretexting with financial institutions only, therefore, they assume other pretexts—those not involving contacts with your financial institution—are legal. This is a misconception, however, according to Joel Winston, the Associate Director of the FTC, Division of Financial Practices. In an interview with PI Magazine, Winston clarifies the scope of the Act:
First, we should dispel the misimpression, if there is one, that the pretexting provisions of [the Gramm-Leach-Bliley Act] only apply if the pretexter is getting “financial information.” Actually, what the statute says is if you are getting any personal, non-public information from a financial institution or the consumer, that is covered by the statute.
(emphasis added). Winston also answers other questions about pretexting as they relate to private investigators. Although the Q-A session is mainly designed to illuminate private investigators of legal fences surrounding the practice of pretexting, it is also an excellent source of information for those who fear they might become victims of unlawful pretexts, or for people who want to learn more about the illegality of pretexting.
To view the article click here.
Report Says Insurance Software Unfair to Disabled Insureds
Many large insurance companies use claims software that enables them to “low-ball” consumers and manipulate claims payments, according to a new report from Consumer Federation of America. This software may also enable insurance companies to more easily deny disability insurance claims.
The report examines Colossus, injury evaluation software widely used in the insurance industry. According to the report, Computer Sciences Corporation (“CSC”) developed the software and originally marketed it to insurance companies as a cost-saving product. The marketing campaign changed quickly, though, as companies became concerned that the word “savings” would expose them to litigation—injured consumers could argue the so-called “savings” were actually a result of unjustifiably low claims offers. The “savings” concept was familiar to insurance companies, but according to the report, CSC never mentioned the “savings” word when it presented the software to the California Department of Insurance.
Even though CSC changed the marketing semantics, it did not modify Colossus in any important way. The report shows how insurance companies manipulate the software to achieve significant savings. These “savings” are actually the result of computer-generated “low-ball” claims offers and payments to consumers, according to the report.
To read Consumer Federation of America’s the full report click here.
Your Most Valuable Financial Asset
What is your most valuable financial asset? According to Chicago Tribune columnist, Gregory Karp, for most people “the answer isn’t in their golden eggs, but in the goose that laid them.” That is, their most valuable financial asset is not their car, house or retirement account, but their ability to make money.
When you suffer from long-term or short-term disability, you will likely be unable to continue working and, therefore, will lose your most valuable financial asset – your ability to earn money. For many Americans without disability insurance, this financial blow can be devastating.
For this reason, in his article entitled Disability Insurance Primer, Karp stresses the importance of long-term disability insurance and provides a basic overview of what disability insurance is, what it is not, and how to find an appropriate plan. The article is a good source for those seeking disability insurance or looking to change their current disability benefits plan.
Ed Comitz, disability insurance attorney in the greater Phoenix area, Tucson, and Flagstaff, also provides answers to frequently asked disability insurance questions. For example, in his blog post, Disability Insurance Policies: Which type do you own?, Mr. Comitz describes fundamental differences between individual, group and employer-sponsored disability insurance policies. In another post, How to Get a Copy of Your Disability Insurance Policy, Mr. Comitz explains the process of obtaining a copy of your policy from the insurance company. Finally, in How Specific is Your “Own Occupation”?, Mr. Comitz provides understanding about key terms within your policy and how insurers may try to classify these terms in a way to deny your disability insurance claim.
May 2012 is Disability Insurance Awareness Month
It is once again Disability Insurance Awareness Month, and while the insurance companies may like to celebrate by encouraging people to purchase disability insurance, we’d like to take this opportunity to repeat some information from one of our previous blog posts regarding what your disability insurer can and can’t legally do in Arizona if you file a claim.
What your disability insurance company can do
- Audit your billing records and tax returns
- Review your medical files
- Use a private investigator to conduct photographic and video surveillance
- Look at your public Facebook profile and photos
- Follow your tweets on Twitter
- Order an Independent Medical Exam
- Have their doctor opine about your disability
- Ask for a Functional Capacity Evaluation
- Contact your treating physician
- Schedule in-person interviews with you
- Interview your friends, family, co-workers and employees
- Demand precise quantifications of how you spent your time in every professional activity pre- and post-disability
- Pay your claim under a reservation of rights
What the disability insurance company cannot do
- Impose requirements on you that are not contained in your insurance policy
- Attempt to influence the opinions of independent medical examiners
- Misrepresent policy provisions
- Conduct abusive interviews
- Unfairly delay a decision on your claim
- Fail to conduct a timely, adequate investigation of your disability claim
- Destroy key documents
- Lie about actions taken on a claim
- Place their financial interests ahead of your contractual rights
- Force you to litigate by offering an unreasonably low lump-sum buyout
When it comes to claims investigation, disability insurance companies sometimes skirt the limits of what they can legally do. If you believe your insurance carrier might be acting in bad faith, contact an attorney to protect your disability benefits.
Unum’s CEO Gets a $750,000 Increase in Pay for an Annual Income of $12.2 million
While some disabled Unum insureds struggle to make ends meet while fighting unfair claim denials or termination of their benefits, the Times Free Press reports that Tom Watjen, the President and CEO of Unum, received a pay increase of $750,000.00 in 2011 — for a total annual income of $12.2 million — in reward for “delivering strong results in a difficult environment,” according to Unum’s compensation committee.
Watjen receives a base salary of $1.1 million, with the remaining $11.1 million tied to performance-related cash and stock incentives. In 2011, Unum had after-tax earnings of $887.6 million, an 11% return on equity, and $10.2 billion in revenue.
Even Unum CEO Admits Their Insurance Policy Language Is Confusing
As we have blogged many times, even seemingly straightforward terms like “total disability” or “appropriate medical treatment” in your disability insurance policy may have different meanings in the context of a disability insurance claim than they do in everyday English. In a video posted on YouTube, Jack McGarry, CEO, Unum UK, is surprisingly candid in addressing how their insurance policy language is confusing.
Insurance is so confusing, in large part because we’ve made it that way, the insurance companies. We use acronyms instead of words, we use lingo instead of language. We’ve made it easy for us to communicate with each other, but we’ve made it very, very difficult for consumers to understand what we’re saying, and we need to change that.
[Consumers] are confused by our products, they don’t understand the choices, they don’t understand the coverage, and one of the reasons they don’t understand it is because the language we use to describe it, they find it confusing, and a little scary, so we’re partnering with Plain English to help simplify the language we use to describe what we do so everybody can understand it.
While Unum is apparently taking steps to clarify the language in its policies in the United Kingdom, it is of little help to American insureds who purchased policies written in language that is, in the words of Unum’s UK CEO, ”very, very difficult for consumers to understand.” The help of an experienced disability insurance attorney to interpret the language of your policy can be critical in ensuring you receive the benefits to which you are entitled.
Will New Demands on Healthcare Professionals Lead to More Disabled Doctors?
A recent article by health insurance writer Allison Bell explains, from an insurance industry perspective, why the new administrative demands on health care professionals might lead to an increase in doctors facing disability:
[I]t seems reasonable to ask whether, for example, the new pressure to convert to electronic health records will lead to some physicians at small or understaffed practices to develop carpal tunnel syndrome and blurry vision from trying to enter, or at least, check, many of the records themselves. Will sleep deprivation related to an increase in workload cause or aggravate objective conditions, such as lack of exercise, obesity and high blood pressure, that will, in turn, lead to an increase in the number of doctors with disability insurance who suffer heart attacks. strokes and disabling car accidents?
Healthcare professionals: Do you think the push for electronic health records and the Patient Protection and Affordable Care Act will lead to an increase in disabled doctors?
Timing Is Everything: When to Discuss Your Potential Claim with a Physician
When it comes to disability insurance, your treating physician’s support can be critical to getting your legitimate disability claim approved. If your doctor can’t provide adequate documentation of your condition or is reluctant to get involved, there is a much higher chance that your claim will be denied. However, fully discussing your condition with a professional, compassionate treating physician will help ensure supportive medical records. When you are involved in a disability insurance claim, it is important to understand how to approach your treating doctor so that he or she can help you.
When to discuss your potential claim with a physician is an important timing issue. Instead of trying to enlist your doctor’s help at the very first visit, you should wait to talk to your treating physician until after he or she knows you and your condition well enough to opine accurately as to your ability to work. It is vital that you develop a relationship of trust and confidence with your doctor before inviting him or her to assist you in your claim. Physicians are often reluctant to support claims for disability insurance benefits if they question the motivations behind the claims. A physician who has treated, without success, the policyholder making a legitimate disability claim will be more willing to cooperate with the extensive process.
What is a Reservation of Rights?
When a disability insurance company is fighting a claim, it will often agree to pay benefits – but with a “reservation of rights.” What is a reservation of rights and how can it impact a legitimate disability claim?
When an insurer pays a disability claim under a reservation of rights, it is essentially providing a provisional payment. Though the insurance company may be sending you a check, it is not admitting that it actually has any liability under the policy. Instead, it is “reserving the right” to stop paying your disability claim if it can find evidence to deny it later. Once the company denies your disability claim, they can also demand you to repay them whatever proceeds they have distributed to you.
This practice is good for the insurance company, as it buys it extra time to investigate – and often later deny – a claim without putting it at risk of violating the laws against undue delay in payment. However, because the insurance company can still investigate the claim and then demand full repayment at any moment, the reservation of rights provides no peace of mind for the policyholder. Fortunately, a disability insurance attorney can protect you from this uncertainty by properly presenting your claim and thoroughly monitoring the insurance company’s actions to reach a beneficial result.
Disability Insurance Bad Faith: Different States – Part 7 (Washington)
A disability insurance company may be subject to a lawsuit for bad faith when it wrongly denies a claim. There are differences from state to state in what constitutes insurer bad faith. In previous posts in this series, we outlined the standards of Arizona, California, Colorado, Nevada, New Mexico, and Texas. In today’s post, we outline the bad faith law of Washington.
Insurance companies who use unfair claim settlement practices can be found to have committed bad faith under Washington’s tort law or under the Washington Consumer Protection Act. According to Washington law, an insurance company’s violation of the consumer protection statute constitutes an automatic unfair trade practice violation, and also a breach of the duty of good faith and fair dealing. If a policyholder brings a claim under the Consumer Protection Act, he or she will have to show economic (monetary) damages, but if he or she brings a tort bad faith claim, the injury need not be economic and can include emotional distress or other personal injuries.
The Statutes: R.C.W. 48.01.030 and Wash. Admin. Code § 284-30-330
The Rules: Washington regulations define the following as unfair or deceptive practices for settlement of insurance claims:
- Misrepresenting pertinent facts or policy provisions.
- Failing to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies.
- Refusing to pay claims without conducting a reasonable investigation.
- Failing to affirm or deny coverage within a reasonable time after fully completed proof of loss documentation has been submitted.
- Not attempting in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear.
- Compelling an individual disability claimant to initiate or submit to litigation, arbitration, or appraisal to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in such actions or proceedings.
- Attempting to settle a claim for less than the amount to which a reasonable person would have believed he or she was entitled by reference to written or printed advertising material accompanying or made part of an application.
- Asserting to a disability insurance claimant that the company has a policy of appealing arbitration awards in favor of insureds for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration.
- Delaying the investigation or payment of claims by requiring a first party claimant or his or her physician to submit a preliminary claim report and then requiring subsequent submissions which contain substantially the same information.
- Failing to promptly settle claims, where liability has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage.
- Failing to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement.
- Failing to expeditiously honor drafts given in settlement of claims.
- Failing to adopt and implement reasonable standards for the processing and payment of claims after the obligation to pay has been established—normally within 15 business days after receipt by the insurer or its attorney of properly executed releases or other settlement documents.
- Negotiating or settling a claim directly with any claimant known to be represented by an attorney without the attorney’s knowledge and consent.
The Tort Law Standard: An insurance company’s actions can be considered bad faith if its breach of the insurance contract was unreasonable, frivolous, or unfounded.
