Policy Riders: A Guide to the Bells and Whistles of Individual Disability Insurance – Part 2
Benefit Increase Riders
In the first post of this series, we introduced you to disability policy riders and discussed a common rider designed to help protect your benefits from a fluctuating economy. Policy riders can be useful for protecting your growing income as well, and we continue this with an evaluation of two riders intended to ensure that your monthly benefits remain in alignment with your current income and lifestyle.
The vast majority of doctors and dentists will experience significant increases in income as their careers develop. If you are a dentist who purchased a disability policy right after graduating from dental school, it is likely that after ten or twenty years there will be a significant difference between your current monthly income and your monthly benefits under your policy.
If debilitating carpal tunnel syndrome forces you to stop practicing dentistry, the basic terms of your policy will not cover the gap between your monthly benefits and your current income. The automatic benefit increase rider and the future increase option rider are designed to fill that gap in different ways. However, both are intended to ensure that in the event of a disability, your benefits will be sufficient to cover the monthly expenses associated with your current lifestyle.
Automatic Benefit Increase Rider
The automatic benefit increase rider adjusts your monthly benefit on an annual basis to account for anticipated increases in income after you purchase your policy. The annual increases are typically for a term of five years, after which you will generally be required to provide evidence of increased income in order to renew the rider. If you renew the rider, it often includes a corresponding premium increase as well. A typical automatic benefit increase schedule looks like this:
| Increase Date | Monthly Benefit Increase | Annual Premium Increase |
| December 12, 2003 | $500.00 | $74.16 |
| December 12, 2004 | $500.00 | $75.82 |
| December 12, 2005 | $500.00 | $77.52 |
| December 12, 2006 | $500.00 | $79.18 |
| December 12, 2007 | $500.00 | $80.88 |
| Total Increase | $2,500.00 | $387.56 |
An automatic benefit increase rider can help ensure that your monthly benefits adjust to compensate for increases in income throughout your career. If you are purchasing a disability insurance policy and you are concerned with maintaining your lifestyle in the event of a disability, you may consider adding an automatic benefit increase rider to your policy.
Future Increase Option Rider
This policy rider guarantees you the right to purchase additional coverage at predetermined dates in the future without going back through the long and tedious process of reapplying for a policy. Additional coverage purchases are typically limited to half the original benefit amount, and most insurers will not let you purchase this rider after age 45. The increase in your premiums will often be a function of the amount of additional coverage purchased and your age at the time of the purchase. This future income option rider was taken from a standard Unum policy:
You may apply for up to one Unit of Increase as of any Option Date. You may apply for part of a Unit of Increase as of any Option Date.
If all or part of a Unit of Increase is not used as of an Option Date, You may carry it over and apply for it on the next Option Date. But You cannot carry it over beyond that Option Date.
On the first Option Date, You may also apply for up to one additional Unit of Increase if You are not disabled. But You must also exercise all of Your current Unit of Increase. This additional Unit of Increase cannot be carried over.
In no event may You exercise more than two Units of Increase as of any Option Date. To use all or part of a carried-over Unit of Increase You must also exercise all of Your current Unit of Increase. The total number of Units of Increase exercised can never exceed the maximum number of Units of Increase shown on the policy schedule.
If You qualify, We will increase Your Policy Benefit by the amount for which You apply.
Like the automatic benefit increase rider, this option helps ensure that your monthly benefits are proportionate with your current income. As such, if you elect to purchase additional coverage you may be required to show that your current level of income warrants additional coverage.
The future increase option is one of the most common and most popular policy riders, and it is cheaper than the automatic benefit increase rider because all you’re paying for is the right to purchase additional coverage. Keep in mind, however, that the value of that right is the guarantee of your ability to increase your coverage regardless of subsequent changes in your disability risk factors.
Before you purchase an individual disability insurance policy, take the time to evaluate your financial goals and look carefully at the benefits provided by the basic terms of the policy you are considering. If the policy basic policy benefits do not cover your needs, you may consider adding one of these riders to ensure your investment in your career is fully protected. In our next post in this series, we will discuss provisions that may appear either in the basic terms of your policy or as a policy rider and how to identify them.
Policy Riders: A Guide to the Bells and Whistles of Individual Disability Insurance – Part 1
An Introduction to Policy Riders
In this series of posts we will evaluate the policy riders offered by most disability insurance companies in addition to their basic terms of their policies. A policy rider is an add-on provision at an additional cost that provides you with additional disability benefits and/or terms not included in a standard policy. Individual disability insurance policies have very little room for modification or customization outside of choosing your monthly benefit amount. Policy riders allow you to customize certain aspects of your disability insurance policy based on your individual needs.
Doctors, dentists, and other professionals purchase disability insurance policies to protect their earning potential and the time and money they’ve invested in their careers. The basic provisions of an individual disability insurance policy, however, may not be enough to protect you in the event of a disability. Policy riders may be necessary to ensure that your financial future is secure if you become disabled.
In this first post, we will evaluate a common and widely-available policy rider that can help you protect your benefits from a changing economy: the Cost-of-Living Adjustment rider.
Cost-of-Living Adjustment (COLA) Rider
A COLA rider automatically increases your benefit amount by a certain percentage every year to account for increased cost-of-living due to inflation. To determine the annual percentage increase, your disability insurer will often let you choose between a set percentage and tying it to an establish index such as the Consumer Price Index (CPI). Most insurers will cap the overall increase in benefits – often at one or two times the original benefit amount.
Imagine that you become permanently disabled at age 45 due to severe cervical spinal stenosis. Your individual disability insurance policy pays $20,000.00 per month to age 65. Ten years in, you’re still receiving $20,000.00 per month, but inflation has risen at an average of 1.6% per year according to the CPI. Without a COLA rider, your $20,000.00 has approximately $3,440.00 less buying power than it did ten years ago. With a COLA rider tied to the CPI, your benefit amount will increase along with inflation and at ten years you will receive $23,440.00 per month rather than $20,000.00 per month.
This particular rider is very important for long-term individual disability insurance, and if you are considering purchasing a policy you should strongly consider a COLA rider for the best long-term income protection. It is a fairly expensive increase to your monthly premium, but it will ensure that your buying power and lifestyle are not affected by inflation in the event of a long-term disability.
In our next post, we will discuss the Automatic Benefit Increase rider, the Future Increase Option rider, and how they both allow you to increase your disability benefits down the road without jumping through the hoops of reapplying for additional disability coverage.
Ninth Circuit Determines That Persons Who Can’t Sit for More than Four Hours Can’t Perform Sedentary Work
In a previous post, we summarized the five exertion levels (sedentary work, light work, medium work, heavy work, and very heavy work), as defined by the Dictionary of Occupational Titles (DOT), and discussed why they matter in the context of disability claims. Essentially, these exertion levels function as broad classifications that are used to categorize particular jobs and occupations. The physical requirements under each exertion level increase as you move up from level to level, with sedentary work requiring the least physical exertion and very heavy work requiring the most physical exertion.
If you have an “own occupation” policy, these exertion levels will likely not come into play, because the terms of your policy will require your insurer to consider the particular duties of your specific occupation, as opposed to the broader requirements of the various exertion levels. However, if you have an “any occupation” policy, which requires you to establish that your disability prevents you from working in any capacity, your insurer will likely seek to determine your restrictions and limitations at the outset of your claim, using claim forms or possibly a functional capacity evaluation (FCE). Once they have done so, they will then likely seek to fit you into one of the five exertion levels listed above and have their in-house vocational consultant provide them with a list of jobs that you can perform given your limitations.
Not surprisingly, your insurer will generally try to fit you into the highest category possible, and then argue that you can perform all of the jobs at that exertion level, and all jobs classified at a lower exertion level. Typically, someone suffering from a disabling condition can easily establish that they cannot perform medium, heavy, or very heavy work, so, in most cases, the insurer will be trying to establish that you can perform light work, or sedentary work, at the very least.
As you might expect, one of the key differences between sedentary and light work is that sedentary work mostly involves sitting, without much need for physical exertion, whereas light work involves a significant amount of walking and standing, in addition to other physical requirements, such as the ability to push or pull objects and the ability to operate controls. Given the low physical demands of sedentary work, it can often be difficult to establish that you cannot perform sedentary work. This can be problematic, because there are many jobs that qualify as sedentary work. However, if you have a disability that prevents you from sitting for extended periods of time, the very thing that makes sedentary work less physically demanding—i.e. the fact that you can sit during the job—actually ends up being the very reason why you cannot perform sedentary work.
While this is a common sense argument, many insurance companies refuse to accept it and nevertheless determine that claimants who cannot sit for extended periods of time can perform sedentary work. However, the Ninth Circuit Court of Appeals recently held in Armani v. Northwestern Mutual Life Insurance Company that insurers must consider how long a claimant can sit at a time when assessing whether they can perform sedentary work.
Avery Armani was a full-time controller for the Renaissance Insurance Agency who injured his back on the job in January 2011. He eventually stopped working as a result of the pain from a disc herniation, muscle spasms, and sciatica. Multiple doctors confirmed that Avery was unable to perform the duties of his job, which required him to sit for approximately seven hours per day. In July 2011, Northwestern Mutual classified Avery’s occupation as “sedentary” and approved his claim under the “own occupation” provision of his employer-sponsored plan.
Despite regular statements to Northwestern Mutual from his doctor that he could only sit between two and four hours a day and must alternate between standing and sitting every thirty minutes, Avery’s disability benefits were terminated in July 2013. Northwestern Mutual’s claims handler identified three similar positions in addition to Avery’s own position that he could perform at a “sedentary” level, and determined that his condition no longer qualified as a disability under his policy.
When his benefits were terminated, Avery sued Northwestern Mutual. After several years, his case ultimately reached the Ninth Circuit Court of Appeals. In resolving the case, the Ninth Circuit held that an individual who cannot sit more than four hours in an eight-hour workday cannot perform “sedentary” work that requires “sitting most of the time.” In reaching its conclusion, the Ninth Circuit cited seven other federal courts that follow similar rules, including the Second Circuit Court of Appeals, the Sixth Circuit Court of Appeals, the District of Oregon, the Central District of California, the Northern District of New York, the Southern District of New York, and the District of Vermont.
While this case is not binding in every jurisdiction, it does serve to reinforce the common sense argument that a claimant who cannot sit for extended periods of time due to his or her disability cannot perform sedentary work. Additionally, though this rule was created in the context of a disability insurance policy governed by ERISA, the court did not qualify its definition or expressly limit its holding to cases involving employer-sponsored policies. Accordingly, in light of this recent ruling, it would be reasonable to argue that a court assessing an “own occupation” provision of an individual policy should similarly consider whether sitting for extended periods of time is a material and substantial duty of the insured’s occupation. If it is, and the insured has a condition that prevents him or her from sitting for more than four hours of a time—such as deep vein thrombosis (DVT) or chronic pain due to degenerative disc disease—then the insured arguably cannot perform his or her prior occupation and is entitled to disability benefits.
In short, the Armani case is noteworthy because its reasoning could potentially be applied to not only ERISA cases, but also disability cases involving individual policies and occupations—such as oral surgeon, endodontist, periodontist, attorney, accountant, etc.—that require the insured to sit for long periods of time in order to perform the occupation’s material duties. It will be interesting to see if, in the future, courts expand the Armani holding to cases involving individual policies outside of the ERISA context.
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Source: Armani v. Northwestern Mutual Life Insurance Company, No. 14-56866, 2016 WL 6543523 (2016)
Can Your Disability Insurance Company Dictate The Medical Treatment You Must Receive To Collect Benefits? Part 4
Care Dictation Provisions
Throughout this series of posts we’ve addressed the increasingly restrictive medical care provisions in disability insurance policies. In Part 1, we discussed the evolution of the care standard and its effect on an insured’s ability to collect disability benefits and control their own medical treatment. In Part 2 we looked at the “regular care” standard, which places no obligation on the insured to undergo any unwanted medical treatment. In Part 3 we looked at the “appropriate care” and “most appropriate care” standards, which require much more vigilance on the part of policyholders, because they must be prepared at any time to establish that the treatment they are receiving is justified under the circumstances. In this final post, we are going to look at the most aggressive and intrusive language that has been adopted by disability insurance companies in an effort to dictate the care of their policyholders.
Here is an example of a very strict care provision, taken from a Great West disability insurance policy:
Regular Care of a Physician means personal care and treatment by a qualified Physician, which under prevailing medical standards is appropriate to the condition causing Total Disability or Residual Disability. This care and treatment must be at such intervals as will tend to lead to a cure, alleviation, or minimization of the condition(s) causing Total Disability or Residual Disability and which will lead to the Member’s return to the substantial and material duties of his own profession or occupation or maximum medical improvement with appropriate maintenance care.
Clearly, this provision was designed with one goal in mind: to give the insurer nearly unlimited power to scrutinize a policyholder’s course of treatment, including the ability to insist that any given procedure is necessary to cure or minimize the disability and maximize medical improvement. It is easy to see how a disability insurer might invoke this provision to assert its control over the medical decision making of their policyholder and use the leverage of disability benefit termination and claims denial to dictate their treatment.
Imagine that you are a surgeon with a herniated disc in your cervical spine, and that your policy contains the provision cited above. Your insurer insists that a fusion of the surrounding vertebra is the procedure most likely to alleviate your disability. Your doctor disagrees, recommending a more conservative course of treatment, such as physical therapy, modified activity and medication, such as muscle relaxants. Your doctor also warns you that if you have the surgery, you will experience reduced mobility and risk adjacent segment degeneration. However, your disability benefits are your only source of income. Fearing a claim denial, you agree to the procedure despite your doctor’s concerns. This results in a no-lose scenario for the disability insurer.
The best case scenario, from your insurer’s perspective, is that the surgery (for which you bore all the risk both physically and financially) is successful and you are no longer disabled. At worst, the procedure fails and the insurer merely has to pay the disability benefits it was obligated to pay to you in the first place. For you, however, an unsuccessful procedure can mean exacerbation of your condition, increased pain, and prolonged suffering. It is therefore vital that you understand your rights under your disability insurance policy.
Insurers are risk-averse by nature, and disability insurance is no different. Modern disability insurance policies, and particularly the medical care provisions, are designed to minimize the financial risk to the insurer. Disability insurers place an enormous burden on claimants to prove that their course of treatment meets the rigorous standards in their policy. Though stringent policy language can make it significantly more difficult to obtain the disability benefits you are entitled to, it does not strip you of your right to make your own medical decisions.
In order to preserve your medical autonomy in the disability claims process, you must become familiar with the details of your disability insurance policy before filing a disability claim. Understanding the terms of your disability insurance policy—including the care provision in your policy—is critical to successfully navigating a disability claim. You need to be familiar with your policy’s care requirements from the outset, so that you can communicate effectively with your physician to develop a plan of treatment that you are comfortable with and that comports with the terms of your disability insurance policy.
Even if you have a basic understanding of your rights under your disability insurance policy, it can be daunting to deal with an insurer that is aggressively seeking to dictate your medical care. In some cases, you may be forced to go to court to assert your right to make your own medical decisions—particularly if your policy contains one of the more recent, hyper-restrictive care provisions like the Great West provision above. Insurers know this, and they also know that most claimants are in no position to engage in a protracted court battle over whether they are receiving appropriate care. However, simply submitting to the medical mandates of your insurer to avoid the stresses and costs associated with litigation can have drastic consequences, depending on the nature of the medical care you are being asked to submit to. If you should find yourself in this difficult position, you should contact an experienced disability insurance attorney. He or she will be able to inform you of your rights under your disability policy and help you make an informed decision.
Can Your Disability Insurance Company Dictate The Medical Treatment You Must Receive To Collect Benefits? Part 3
“Appropriate Care” and “Most Appropriate Care”
In this series, we are looking at the different types of care provisions disability insurers insert into their policies so that they can later argue that they have a right to dictate the terms of your medical care. In Part 1, we discussed how many policyholders do not even realize that their disability insurance policy contains a care provision until the insurance company threatens to deny their claim for failure to obtain what the insurer perceives as sufficient medical care. We also discussed how care provisions have evolved over time to become more and more onerous to policyholders. In Part 2, we looked at one of the earliest and least stringent care provisions—the “regular care” provision—in detail.
In this post, we will be looking at a stricter care provision—the “appropriate care” provision. Here is an example of a typical “appropriate care” provision:
“Appropriate Care means you are receiving care by a Physician which is appropriate for the condition causing the disability.”
Disability insurance carriers implemented this policy language to allow their claims handlers and in-house doctors to weigh in on the type and quality of care their policyholders receive. As you’ll remember from Part 2 of this series, “regular care” provisions only required policyholders to be monitored regularly by a physician. Thus, under a “regular care” provision, as long as the policyholder was seeing a doctor, the insurer could not scrutinize or direct his or her treatment. Only by changing the policy language could they hope to have greater influence over the medical decisions of their policyholders.
This prompted disability insurers to add the additional requirement that the care must be “appropriate.” But what is “appropriate?” If you are suffering from cervical spinal stenosis, you likely have several reasonable treatment options available to you. For example, your physician might recommend physical therapy, but also indicate that you would be a candidate for more invasive treatment, such as steroid injections. If you have an “appropriate care” provision, does that mean that your disability insurer gets to decide which treatment you receive?
When presented with this question, most courts determined that “appropriate care” limits the insurer’s review of its policyholder’s care to whether it was necessary and causally related to the condition causing the disability.[1] Courts also held that “appropriate” care does not mean perfect care or the best possible care—it simply means care that is suitable under the circumstances.[2] Thus, if physical therapy, steroid injections, and surgery are all suitable treatments for cervical stenosis, most courts agree that your insurer cannot deny your disability claim or terminate your benefits based upon your decision to undergo a course of treatment they view as less effective than another.
In response to these cases, disability insurers again modified their policy language and created the “most appropriate” care provision. Here is an example of what a “most appropriate” care provision looks like:
“[You must receive] appropriate treatment and care, which conforms with generally accepted medical standards, by a doctor whose specialty or experience is the most appropriate for the disabling condition.”
This change places significant restrictions on a claimant’s autonomy not only because it limits the type of physician the claimant may choose, but because it restricts the claimant’s medical care to a singular “appropriate” course of treatment.
These types of provisions can make collecting disability benefits extremely difficult. For example, take the experience of Laura Neeb, a hospital administrator whose chemical sensitivity allergies became so severe that they rendered her totally disabled. After one of her doctors—Dr. Grodofsky—concluded that she had no identifiable allergies, Ms. Need sought another opinion from Dr. William Rea, founder of the Environmental Health Center in Dallas, Texas. Dr. Rea concluded that Ms. Neeb’s hypersensitivity to chemicals was so severe that she was “unable to engage in any type of work,” and required extensive treatment to manage the condition. Ms. Neeb’s insurer, Unum, nonetheless denied the disability claim. The court ultimately held that Ms. Neeb failed to obtain the “most appropriate care” by treating with Dr. Rea, agreeing with Unum that Dr. Grodofsky’s conclusions were correct.[3]
Ms. Neeb’s case illustrates just how restrictive the “most appropriate care” provision can be. It places the burden squarely on the policyholder to show that their chosen course of treatment and treatment provider are most appropriate for their condition. If your disability insurance policy contains a “most appropriate care” provision, it is essential that you find a qualified, supportive treatment provider who is willing to carefully document your treatment and the reasoning behind it. You do not want to place yourself in a position where you cannot justify the treatment you are receiving and must choose between an unwanted medical procedure and losing your benefits.
In the final post of this series, we will discuss the hyper-restrictive care provisions appearing in disability insurance policies being issued today and the serious threats they pose to patient autonomy.
[1] 617 N.W.2d 777 (Mich. Ct. App. 2000)
[2] Sebastian v. Provident Life and Accident Insurance Co., 73 F.Supp.2d 521 (D. Md. 1999)
[3] Neeb v. Unum Life Ins. Co. of America, 2005 WL 839666 (2005).
Edward O. Comitz Named Southwest Super Lawyer for 2017
Ed Comitz has been named a 2017 Southwest Super Lawyer for excellence in the field of insurance for the sixth consecutive year.
Super Lawyers is a rating service of outstanding lawyers from more than 70 practice areas who have attained a high-degree of peer recognition and professional achievement. Only 5% of attorneys in the Southwest receive this distinction. The selection process is comprised of independent research, peer nominations and peer evaluations.
Can Your Disability Insurance Company Dictate The Medical Treatment You Must Receive To Collect Benefits? Part 2
“Regular Care”
If you are a doctor or dentist and you bought your individual disability insurance policy in the 1980s or 1990s, the medical care provision in your policy likely contains some variation of the following language:
“Physician’s Care means you are under the regular care and attendance of a physician.”
This type of care provision is probably the least stringent of all the care provisions. If your disability insurance policy contains a “regular care” provision, courts have determined that you are under no obligation to minimize or mitigate your disability by undergoing medical treatment.[1] In other words, you cannot be penalized for refusing to undergo surgery or other procedures—even if the procedure in question is minimally invasive and usually successful.[2]
Let’s look at an actual case involving a “regular care” provision. In Heller v. Equitable Life Assurance Society, Dr. Stanley Heller was an invasive cardiologist suffering from carpal tunnel syndrome who declined to undergo corrective surgery on his left hand. Equitable Life refused to pay his disability benefits, insisting that the surgery was routine, low risk, and required by the “regular care” provision of Dr. Heller’s policy. The U.S. Court of Appeals disagreed, and determined that the “regular care” provision did not grant Equitable Life the right to scrutinize or direct Dr. Heller’s treatment. To the contrary, the Court held that “regular care” simply meant that Dr. Heller’s health must be monitored by a treatment provider on a regular basis.[3]
Unfortunately, the Heller case didn’t stop insurance companies from looking for other ways to control policyholders’ care and threaten denial of benefits. For instance, some disability insurance providers argued that provisions requiring policyholders to “cooperate” with their insurer grants them the right to request that a policyholder undergo surgery. Remarkably, when insurers employ these tactics, they are interpreting the policy language in the broadest manner possible–even though they know that the laws in virtually every state require that insurance policies be construed narrowly against the insurer.
Why would insurance companies make these sorts of claims when it is likely that they would ultimately lose in court? Because insurance companies also know that even if their position is wrong, most insureds who are disabled and/or prohibited from working under their disability policy cannot handle the strain and burden of protracted litigation. They know that if they threaten to deny or terminate disability benefits, many insureds will seriously consider having surgery—if only to avoid the stress and expense of a lawsuit. Unfortunately, this can lead to insureds submitting to unwanted medical procedures, despite having no legal obligation to do so.
As time went on, and more and more courts began to hold that “regular care” simply meant that the insured must regularly visit his or her doctor, Unum, Great West, Guardian, and other insurers stopped issuing policies containing that language. Instead, disability insurers started to insert “appropriate care” standards into policies. In the next post, we will discuss this heightened standard and how disability insurers predictably used it as a vehicle to challenge the judgment of policyholders’ doctors, in a renewed effort to dictate their policyholders’ medical care.
[1] Casson v. Nationwide Ins. Co., 455 A.2d 361, 366-77 (Del. Super. 1982)
[2] North American Acc. Ins. Co. v. Henderson, 170 So. 528, 529-30 (Miss. 1937)
[3] Heller v. Equitable Life Assurance Society, 833 F.2d 1253 (7th Cir. 1987)
Can Your Disability Insurance Company Dictate The Medical Treatment You Must Receive To Collect Benefits? Part 1
Imagine that you are a dentist suffering from cervical degenerative disc disease. You can no longer perform clinical work without experiencing excruciating pain. You have been going to physical therapy and taking muscle relaxers prescribed by your primary care doctor, and you feel that these conservative treatments are helping. Like most dentists, you probably have an “own occupation” disability insurance policy. You are certain that if you file your disability claim, your insurer will approve your claim and pay you the disability benefits you need to replace your lost income and cover the costs of the medical treatment that has provided you with relief from your pain and improved your quality of life.
You file your disability claim, submit the forms and paperwork requested by the insurer, and wait for a response. To your dismay, your disability insurer informs you that its in-house physician has determined that the treatment prescribed by your doctor was inadequate. Your insurer then tells you that you should have been receiving steroid injections into your cervical spine, and tells you that if you do not submit to this unwanted, invasive medical procedure, your disability claim could be denied under the “medical care” provision in your policy.
You were not aware that such a provision existed, but, sure enough, when you review your policy more carefully, you realize that there is a provision requiring you to receive “appropriate medical care” in order to collect disability benefits. You think that your insurer is going too far by dictating what procedures you should or should not be receiving, but you are afraid that if you don’t comply with their demands, you will lose your disability benefits, which you desperately need.
This is precisely the sort of scenario presented to Richard Van Gemert, an oral surgeon who lost the vision in his left eye due to a cataract and chronic inflammation. Dr. Van Gemert’s disability insurance policies required that he receive care by a physician which is “appropriate for the condition causing the disability.” After years of resisting pressure from his insurers to undergo surgery, Dr. Van Gemert finally capitulated. Once Dr. Van Gemert received the surgery, you might expect that his insurer would pay his claim without further complaint. Instead, Dr. Van Gemert’s insurer promptly sued him to recover the years of disability benefits it had paid to him since it first asserted that he was required to undergo the surgery.[1]
Unfortunately, “appropriate care” provisions, like the provision in Dr. Van Gemert’s policy, are becoming more and more common. The language in such provisions has also evolved over time, and not for the better. In the 1980s and 1990s, the simple “regular care” standard was commonplace. In the late 1990s and into the 2000s, insurers began using the more restrictive “appropriate care” standard. And, if you were to purchase a policy today, you would find that many contain a very stringent “most appropriate care” standard.
These increasingly onerous standards have been carefully crafted to provide disability insurers with more leverage to dictate policyholders’ medical care. However, there are several reasons why your insurance company should not be the one making your medical decisions. To begin, if you undergo a surgical procedure, it is you—and not the insurance company—who is bearing both the physical risk and the financial cost of the procedure. Perhaps you have co-morbid conditions that would make an otherwise safe and routine surgical procedure extremely risky. Perhaps there are multiple treatment options that are reasonable under the circumstances. Perhaps you believe conservative treatment provides better relief for your condition than surgery would. These are decisions that you have a right to make about your own body, regardless of what your disability insurer may be telling you.
In the remaining posts in this series, we will be looking at the different types of care provisions in more detail, and how far insurance companies can go in dictating your care in exchange for the payment of your disability benefits. We will also provide you with useful information that you can use when choosing a disability insurance policy or reviewing the policy you have in place. In the next post we will be discussing the “regular care” standard found in most policies issued in the 1980s and early 1990s.
[1] See Provident Life and Accident Insurance Co. v. Van Gemert, 262 F.Supp.2d 1047 (2003).
The Devil Is In the Details: Long Term Disability Policies and Benefit Offsets
In a previous post, we discussed a feature of long-term disability insurance policies that is easily overlooked and frequently leaves policyholders feeling cheated and deceived by their insurer: the benefit offset provision. When a person signs up for a disability insurance policy, he or she expects to pay a certain premium in exchange for the assurance that the insurance company will provide the agreed-upon monthly benefit listed in the policy, should they ever become disabled. What many people do not realize is that some disability insurance policies contain language that permits the insurer to reduce the amount of monthly disability benefits it is required to pay if the policyholder receives other benefits from another source.
Worker’s compensation, supplementary disability insurance policies, state disability benefits, and social security are some of the most common “other sources” from which policyholders may unexpectedly find their disability insurance benefits subject to an offset. The frequency of offset provisions varies by policy type. They are more likely to appear in group policies and employer-sponsored ERISA policies, and are rarely found in individual disability insurance policies.
Benefit offset provisions can have significant and often unforeseen financial repercussions, as illustrated by the recent account of a couple from Fremont, Nebraska. As reported by WOWT Channel 6 News, Mike Rydel and his wife Carla were receiving monthly benefits under Mr. Rydel’s disability insurance policy with Cigna. Mr. Rydel had suffered a stroke in the fall of 2015 that had left him incapacitated and unable to work. The Rydels’ financial situation was made even more dire by Mr. Rydel’s need for 24-hour care, which prevented Mrs. Rydel from working as well.
In an effort to supplement his family’s income, Mr. Rydel applied for Social Security disability benefits. When his claim was approved, the Rydels expected a much needed boost to their monthly income. Unfortunately, due to an offset provision in Mr. Rydel’s policy, his monthly disability benefits under the Cigna policy were reduced as a result of the approved Social Security claim, and his family did not realize any increase in income.
The Rydels were understandably shocked when they were informed by Cigna that Mr. Rydel’s monthly disability insurance benefits would be reduced by the amount he was now receiving from Social Security, and that Cigna would be pocketing the difference. Perversely, the only party that benefited from Mr. Rydel’s SSDI benefits was Cigna, which was off the hook for a portion of Mr. Rydel’s monthly benefits. In response to an inquiry from WOWT, Cigna simply asserted that “coordination” of private insurance benefits and government benefits was a long-standing practice – an assurance that likely provided no solace to the Rydels.
The Rydels’ story highlights the importance of carefully reviewing every aspect of your disability insurance policy before signing. Benefit offsets, policy riders, occupational definitions, and appropriate care standards in your policy can significantly impact your ability to collect full benefits if you become disabled. You should review your disability insurance policy carefully to determine if it contains any offset provisions that may affect your benefits. If it does, you will need to take them into account when estimating your monthly benefits.
References:
http://www.wowt.com/content/news/Stroke-Victim-Suffers-Disability-Insurance-Set-Back-385758411.html
Ed Comitz selected as an Arizona Business Leader in 2017
Ed Comitz has been named as an Arizona Business Leader in 2017 by Arizona Business Magazine. The 500 business leaders were selected from a pool over of 5,000 names considered. Editor in Chief, Michael Gossie, writes of the 500 leaders selected, “They are catalysts for Arizona’s economy. They are leaders. They are innovators. They have influence. And when they speak, they make things happen.”
Unum Study Shows an Increase in Musculoskeletal Disability Claims Over the Past Decade
As we have discussed in previous posts, musculoskeletal disorders are very common among dentists due to the repetitive movements and awkward static positions required to perform dental procedures. Unum, one of the largest private disability insurers in the United States, recently released statistics showing an increase in the filing of musculoskeletal disability claims over the past 10 years.
According to Unum’s internal statistics, long term disability claims related to musculoskeletal issues have risen approximately 33% over the past ten years, and long term disability claims related to joint disorders have risen approximately 22%. In that same period of time, short term disability claims for musculoskeletal issues have increased by 14%, and short term disability claims for joint disorders have risen 26%.
This trend may lead to Unum directing a greater degree of attention towards musculoskeletal claims as the volume of these claims continues to increase. Musculoskeletal claims are often targeted by insurance companies for denial or termination because they are easy to undercut—primarily due to the limitations of medical testing in this area. For instance, it can be difficult to definitively link a patient’s particular subjective symptoms to specific results on an MRI, and other tests, such as EMGs, are not always reliable indicators of the symptoms that a patient is actually experiencing. Insurers also typically conduct surveillance on individuals with neck and back problems in an effort to collect footage they can use to deny or terminate the claim. While such footage is usually taken out of context, it can be very difficult to convince the insurance company (or a jury) to reverse a claim denial once the insurer has obtained photos or videos of activities that appear inconsistent with the insured’s disability.
As we have noted in a previous post, Unum no longer sells individual disability insurance policies, so its disability insurance related income is now limited to the premiums being collected on existing policies. Because benefit denials and termination are the primary ways insurers like Unum can continue to profit from a closed block of business, and musculoskeletal claims are on the rise, Unum may begin subjecting this type of claim to even higher scrutiny.
References:
http://www.businesswire.com/news/home/20160505006009/en/Aging-obesity-tip-scales-10-year-review-Unum
Dealing with the Demands of Dentistry: It’s Ok to Ask for Help
Dentistry is not an easy profession. The clinical aspects of dentistry are physically and emotionally demanding. Performing repetitive procedures and holding static postures for prolonged periods of time can leave dentists feeling mentally drained, sore and fatigued. And given the frequent exposure to patient anxiety and the need for precision when performing dental procedures, it is not uncommon for dentists themselves to develop anxiety about causing pain to patients or making a mistake when performing a procedure.
The other aspects of dentistry are no less challenging. Many dentists work long hours, which makes balancing work, family, and other responsibilities difficult. Other stressors include difficult and uncooperative patients, dissatisfied patients, finances, business problems, collecting payments, paperwork/bureaucracy, time pressure, cancellations, no-shows—the list goes on and on. And that is not even taking into consideration major stressors, such as staff issues, board complaints, audits, and malpractice lawsuits.
When presented with these difficulties, dentists can become anxious and depressed. Some even seek out mood altering drugs and/or begin to abuse alcohol, in an effort to alleviate the stress.
Thankfully, there are resources available where dentists can turn to for help. Most dental associations have a subcommittee or group designed to provide confidential help to dentists struggling with emotional, mental and/or substance abuse issues.
For example, the Arizona Dental Association (AzDA) has a group called the Dentists Concerned for Dentist Committee (DCD). The DCD is a group of fellow dentists who work with other dentists to help them with substance abuse problems, with an emphasis on “cure and return to practice.” When the DCD is contacted, everything remains strictly confidential, and the State Board is not notified. As explained by the DCD, “[t]here should be no grief or shame in seeking help.” Accordingly, DCD records are “sealed and cannot be accessed by anyone.”
If you are a dentist in Arizona struggling with substance abuse, or you know a dentist who is, consider contacting the AzDA so that a referral can be made to the DCD. You can find the contact information for the AzDA here.
If you live outside Arizona, consider contacting your local dental association to see if it has a similar program.
Remember, it’s ok to ask for help.
References:
“When Life Feels Just Too Hard,” INSCRIPTIONS, Vol. 30, No. 8 (August 2016) at p. 24.
Ed Comitz Named as Top Lawyer in Field of Insurance Law
Ed Comitz, one of the firm’s founding members, was recently named as a Top Lawyer and one of Phoenix’s best attorneys in the field of insurance law in Phoenix Magazine’s special, 50th Anniversary Issue.
Mr. Comitz’s practice primarily focuses on helping physicians and dentists secure private disability insurance benefits. Mr. Comitz and the legal team at Comitz | Stanley also represent doctors in several other areas, including practice transitions, employment law, business litigation, estate planning, regulatory compliance, and licensing issues.
Thinking About a Policy Buyout?
How Lump Sum Settlements Work: Part 2
In this two-part series we are addressing the two most common scenarios in which insurance companies pursue lump sum buyouts. In Part 1, we talked about buyouts for individuals who are totally and permanently disabled and have been on claim for several years. In Part 2, we will address the other scenario in which buyouts occur: after a lawsuit has been filed.
In the context of an individual disability insurance policy, a lawsuit is generally filed in one of two common scenarios: (1) a person on claim with a legitimate disability has their benefits terminated; or, (2) a person with a legitimate disability has their claim denied. A lawsuit is typically considered to be the last line of defense in the disability claims process. By the time a lawsuit has been filed, the claimant’s attorney has likely exhausted every available means to resolve the claim without legal action. Litigation is costly, time-consuming, and can drag on for years.
If an insurance company offers a lump sum buyout during litigation, it will typically be at one of three stages in the case: (1) after the Complaint and Answer are filed; (2) after all stages of pretrial litigation and discovery are complete; or (3) after the claimant/plaintiff wins at trial.
The first stage of any lawsuit is the filing of the Complaint. This is a document the plaintiff files with the court outlining all of the claims and allegations against the defendant. After receiving a copy of the Complaint, the defendant then has a specified period of time in which to file an Answer responding to the plaintiff’s allegations.
Prior to the filing of a lawsuit, a contested claim has likely been reviewed only by the insurance company’s in-house attorneys. However, once litigation begins, the insurance company will retain a law firm experienced in insurance litigation to handle the case. After the filing of the Complaint, the insurance company’s outside counsel will have the opportunity to evaluate the strength of the case and the claim. Viewing the case through the prism of their experience, the insurer’s litigation team may recommend offering a buyout to avoid the risk, costs, and time associated with the lawsuit.
The second point of a lawsuit at which a buyout may occur is after all stages of pretrial litigation are complete. Once the parties have had the opportunity to conduct discovery and litigate any pretrial motions, they will have a full picture of the case and their prospects at trial. Through discovery both sides will be able to obtain all documents and interview all witnesses the other side intends to use at trial. Through the filing of pretrial motions the parties can attempt to prevent or limit the use of certain evidence or witnesses at trial.
At this juncture, the insurance company may seek to avoid the risks of trial and settle the claim before the first juror is ever impaneled. The disability insurance company’s incentive to resolve the case at this point – even after both sides have invested substantial resources in the litigation – is the financial exposure and bad publicity it faces with a loss at trial. Additionally, a bad result at trial for the insurance company could create undesirable legal precedent for future cases.
If a jury (or a judge, depending on the case) determines that the insurance company has unlawfully denied or terminated a legitimate disability claim, the insurer will not only be required to pay the disability benefits the claimant/plaintiff is entitled to, but may also be liable for damages and other costs. The disability insurer may be required to pay back benefits, plaintiff’s attorneys’ fees and costs, consequential damages, and punitive damages.
In the context of a disability insurance lawsuit, consequential damages come in the form of any financial harm to the claimant/plaintiff resulting from the insurer’s denial or termination of benefits. For example, if the insurer’s termination of benefits led to the claimant/plaintiff losing their house in foreclosure, the insurer could be liable for consequential damages. Punitive damages are designed to deter the insurer from denying legitimate disability claims in the future, and can be multiplied several times over if the insurer is found to have acted in bad faith. Additionally, some states allow acceleration of benefits – in which the courts can order the insurer to immediately pay future benefits that would owed to the claimant/plaintiff over the full life of the policy.
The final stage at which a lump sum buyout may be offered is after a victory at trial by the claimant/plaintiff. You may be wondering why anybody would entertain a settlement offer right after a being awarded back benefits, damages, and costs at trial – why accept anything less? The answer is simple: appeals. The insurance company can tie up a trial court victory in the court of appeals for years, which they can use as leverage to offer a settlement smaller than the trial award.
Though these three stages of litigation are the most common points at which a buyout may occur, buyouts themselves are uncommon during litigation. Depending on the situation, the specter of a long, drawn out legal battle can either provide the insurance company with the incentive to settle the lawsuit early with a buyout or harden its resolve to fight the claim to the bitter end. You cannot count on simply filing a lawsuit and expecting the insurance company to be eager to settle. Some insurance companies want to settle early and avoid the financial risks and bad publicity of a defeat at trial, while others take a hard line and use their nearly limitless resources to fight a war of attrition. Ultimately, whether or not a disability insurer offers a lump sum buyout in the midst of litigation depends largely on the individual facts of the case, the risks at trial, and the parties and attorneys involved.
Thinking About A Policy Buyout?
How Lump Sum Settlements Work: Part 1
Lump sum buyouts are a frequent source of questions from our clients and potential clients. With that in mind, the next few posts will address different aspects of the buyout process.
Buyouts typically occur in one of two situations: 1) after you’ve been on claim for several years, or 2) after a lawsuit has been filed. This blog post will focus on the first scenario.
Lump sum buyouts that occur outside of litigation normally won’t occur unless and until the insurance company decides that you are totally and permanently disabled under the policy definition. Typically, the disability insurer won’t consider whether this is the case until you’ve been on claim for at least two years. If the insurer determines that you’re totally and permanently disabled, it will then determine whether it makes sense financially for the company to offer you a percentage of your total future benefits rather than keep paying your monthly benefits for the entire duration of your claim.
To understand how the insurance company calculates whether a buyout is in its financial interest, you should understand how insurance company reserves work. The purpose of reserves is to ensure that the insurance company has the resources to fulfill its obligations to policyholders even if the company has financial difficulties. Thus, disability insurers are required by state regulators to keep a certain amount of money set aside, or “reserved,” to pay future claims. Any money required to be kept in a reserve is money that the insurer can’t spend on other things or pay out in dividends. The amounts required to be kept in the reserve are determined by the state, depending on factors like how much the monthly benefit is and how long the claim is expected to last.
For a disability insurance claim, a graph of the required reserve amount over time looks like a Bell curve: low at the beginning, highest in the middle, and low again towards the end of the benefit period. The ideal time for a settlement, from an insurance company’s perspective, is at or just before the high middle point–typically about five to seven years into the claim, depending on the claimant’s age and the duration of the benefit period. At this point, the company is having to set aside the highest amount of money in the reserve.
If the insurance company can pay you a percentage of your total future benefits, it can not only save money in the long run, but it can release the money in the reserve. The disability insurer can then use those funds for other purposes, including providing dividends for its investors. In addition, the insurance company will save all of the administrative expenses it was putting towards monitoring your disability claim.
In the next post, we’ll address how and why buyouts occur after a lawsuit has been filed.
Should Women Pay More for Disability Insurance? Part 2
In a previous post, we discussed how a woman with the same age, job and health history as a man can end up paying an average of 25% (and in some cases, 60%) more for the same level of disability insurance protection. We also discussed how some insurance companies raise premiums based on conditions unique to one’s sex, such as pregnancy.
When we first addressed this issue, the Massachusetts legislature was considering a bill that prohibited insurers from charging higher rates to women than to men. At the time, Massachusetts law prohibited insurance companies from using race and religion as rating factors when determining the cost of insurance, but there was no law against using gender as a rating factor.
Recently, the Massachusetts Senate voted to approve a budget amendment adding gender to other rating factors that insurance companies are not allowed to consider when determining the cost of premiums. The bill passed by a wide margin: 32 senators in favor of the amendment, and only 6 senators voting against the amendment.
It will be interesting to see if, in the future, other states follow suit and start to pass laws requiring insurance companies to give men and women the same premium rates for the same level of disability coverage.
References:
http://www.masslive.com/politics/index.ssf/2016/05/senate_votes_to_exclude_gender.html
Long Term Disability by Diagnosis
In previous posts, we have been looking at the findings from the most recent study on long term disability claims conducted by the Council for Disability Awareness. In this post we will be looking at the types of diagnoses associated with long term disability claims, and which types of claims are most common.
As you can see from the chart above, the most common type of both new and existing long term disability is musculoskeletal disorders—a category which includes neck and back pain caused by degenerative disc disease and similar spine and joint disorders.
This is particularly noteworthy because physicians and dentists, who often have to maintain uncomfortable static postures for several hours each day, are very susceptible to musculoskeletal disorders. In addition, claims involving musculoskeletal disorders can be challenging, because oftentimes there is little objective evidence to verify the pain. If you suffer from degenerative disc disease or a similar disorder, an experienced disability insurance attorney can explain how to properly document your disability claim to the insurance company.
References:
http://www.disabilitycanhappen.org/research/CDA_LTD_Claims_Survey_2014.asp
Case Study: Factual Disability v. Legal Disability – Part 3
In the last post, we discussed the facts of the court case Massachusetts Mutual Life Insurance Company v. Jefferson[1]. In that case, the court was asked to determine whether a clinical psychologist whose license had been suspended was entitled to disability benefits. In this post, we will discuss how the court ultimately ruled, and go over some takeaways from this case.
The Court’s Ruling
As explained in the last post, the key question was whether Dr. Jefferson’s legal disability (i.e. the suspension of his license to practice psychology) happened before the onset of Dr. Jefferson’s factual disability (i.e. his depression). In the end, the court determined that Dr. Jefferson was not entitled to disability benefits for the following reasons:
- Dr. Jefferson’s claim form stated that he was not disabled until April 29, 1990, which was two days after the licensing board revoked his license.
- Although Dr. Jefferson later claimed that his depression went as far back as May 1989, the court determined that such claims were inconsistent with:
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- Jefferson’s representations to the licensing board that he was a “highly qualified and competent psychologist”;
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- The fact that Dr. Jefferson had been consistently seeing patients up until the day his license was revoked; and
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- The fact that Dr. Jefferson had scheduled patients during the month following the licensing board’s hearing.
Thus, under the circumstances, the evidence showed that Dr. Jefferson’s was not entitled to benefits because his legal disability preceded his factual disability.
Takeaways
Dr. Jefferson’s case provides a good example of the challenges that can arise in a disability claim if the claimant has lost his or her license. Here are some of the major takeaways from this case:
Be Precise When Filling Out Claim Forms. The date you list as the starting date of your disability can be very significant. Take your time when filling out claim forms, and make sure that the date you provide is accurate and consistent with the other information you are submitting with your claim forms. It is always a good idea to double check everything on the form at least once after you have completed it, to make sure that you did not make a mistake.
Recognize that Your Claim Will Not Be Evaluated in a Vacuum. Other proceedings—such as board hearings—can directly impact your disability claim. You should always assume that anything you say in such a proceeding will at some point end up in front of the insurance company. This is particularly problematic when, as in Dr. Jefferson’s case, the goals of the other proceeding are inconstant with the goals of the disability claim. In such a situation, you may have to decide which goal is more important to you. An experienced disability insurance attorney can help you assess the strengths and weaknesses of each available option so that you can make an informed decision.
Do NOT Engage in Activities that Place Your License in Jeopardy. Losing a license that you worked hard for several years to obtain is not only emotionally devastating, it can severely limit your options going forward. Even if you have a disability policy, it is very difficult to successfully collect on a disability claim if your license has been revoked or suspended. Once again, if you find yourself in Dr. Jefferson’s position, you should talk with an experienced attorney who can help you determine what your available options are, if any.
[1] 104 S.W.3d 13, 18 (Tenn. Ct. App. 2002).
