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.

Edward Comitz Named Top Valley Lawyer for Insurance

Edward O. Comitz, Esq. has been named a Top Valley Insurance Lawyer by North Valley Magazine, a publication serving the Greater Phoenix metropolitan community.

Each year, North Valley Magazine partners with Avvo, Inc., to publish a list of the area’s leading legal professionals.  Check out the full article here.

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.

Private Investigators Track Disability Claimants with Stingrays

Disability insurance companies often hire private investigators to conduct surveillance on disabled insureds after they file for disability benefits.  In a previous blog post, we discussed some methods private investigators use to monitor disability claimants.  In this post, we will take a closer look at one of the latest tools private investigators now use to assist them with tracking disability claimants—stingrays.

A stingray is a new tracking device that operates as a miniature cellphone tower from inside a private investigator’s vehicle.  A private investigator can use this mobile tower to connect to a disability claimant’s cellphone—even when the disability claimant is not using the phone to make a call—and measure the cellphone’s signal strength.  Once he measures the signal strength from a particular location, the private investigator drives the stingray to another position for another measurement.  After the private investigator does this a few times, the stingray device then uses the collected data to triangulate and locate the disability claimant’s cellphone.  Since most people tend to always carry their cellphones, the device has proven to be an effective locator.

Stingrays are a relatively new technology and therefore the law surrounding the device is still largely unsettled.  The technology is becoming more and more popular, though, in part because of the limitations the Supreme Court put on GPS tracking devices in United States v. Jones.  In Jones the Court held that law enforcement officials needed a search warrant before physically attaching a GPS tracking device to someone’s vehicle because the physical attachment of a GPS tracking device to another’s property constituted trespass.

Because the stingray does not require physical attachment, some police departments have opted to invest in this newer technology, believing that the law permits them to use the equipment without first obtaining a search warrant.  In Arizona, for example, the Gilbert police department has already spent $244,000 on stingray equipment.  Many private investigators also advertise this technology and use it when conducting surveillance on disability claimants.

The legal assumptions that police officers rely upon to justify use of stingray equipment without first obtaining a search warrant are questionable and in dispute.  Civil liberty organizations, like the ACLU, argue that warrantless cellphone tracking is a serious invasion of privacy that is prohibited by the Fourth Amendment.  The Department of Justice, on the other hand, believes that requiring a search warrant is not only unnecessary, but would also severely limit law enforcement’s ability to operate effectively.  Until these issues are resolved by the courts, or until legislatures pass laws addressing stingrays, private investigators will likely continue taking advantage of the law’s gray area by using stingray equipment to assist disability insurance companies with denying claimants’ disability benefits.

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.

New Case Explains ERISA Payroll Practice Exemption

In a recent case from the Northern District of California, Behjou v. Bank of Am. Group Benefits Program, Omid Behjou filed suit against his employer, Bank of America, after his  disability insurance benefits were denied when he became injured.  The issue before the court was whether Behjou’s disability insurance plan was an ERISA plan, which would preempt his California state law claims, or whether the disability insurance plan was exempt as a payroll practice under 29 C.F.R. § 2510.3–1(b)(2).  The court in California held that the plan was not subject to ERISA-application.  It reasoned as follows:

1. A regulation from the Secretary of Labor, 29 C.F.R. § 2510.3–1(b)(2), excludes certain “payroll practices” from application of ERISA.

2. Under this regulation, an ERISA plan does not include: “Payment of an employee’s normal compensation, out of the employer’s general assets, on account of periods of time during which the employee is physically or mentally unable to perform his or her duties, or is otherwise absent for medical reasons. . . .”  29 C.F.R. § 2510.3–1(b)(2) (emphasis added).

3. To determine whether regulation or ERISA applies, a court must look to the actual method of payment to see if it constitutes “normal compensation.”  The payment need only “closely resemble wages or salary to constitute normal compensation.”  If the payment method constitutes normal compensation, then the court must next determine whether it is paid out of the employer’s general assets.  The “salient inquiry here is the source from which the benefits are actually paid.”

4. In this case, the court in the Northern District of California determined that Bank of America’s method of payment constituted normal compensation because payments “[were] made through the regular payroll process with deductions taken for tax withholding, insurance coverage, 401(k) contributions, and [were] considered taxable income.”  After making this initial determination, the court in California then looked to whether payment came out of the employer’s general assets.  It did in this case: “the uncontroverted evidence shows that the payment of short term disability benefits is made from Bank of America’s general assets.”

The court order can be found here.

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.

 

Insurance Bad Faith: Private Investigators and Their Surveillance Practices

Insurance companies often will hire a private investigator to aid in terminating disability insurance claims.  Ostensibly, the purpose of a private investigator is to expose dishonest individuals of fraudulent disability insurance claims.  A private investigator may even advertise as a “Disability Insurance Fraud Specialist.”  All too often, however, insurance companies and their investigators are not seeking to expose fraud, but to manufacture it.  They produce “evidence” only to aid in denying disability insurance claims—even wholly legitimate ones.  They do so because there is a strong financial incentive to deny disability insurance claims.

Our firm has dealt with these insurance companies and their private investigators time and again.  We know how they operate and how to prepare our clients.  We have developed a short list of basic information about private investigators so you can know what to expect:

  • When are they watching?  In a previous post, we noted the five most popular times for disability surveillance: (1) holidays, (2) birthdays, (3) weekends, (4) activities claimant listed in insurance company’s activity log; and (5) near the end of fiscal quarters.
  • Who are they?  Typically, private investigators are just as the name indicates – private people from private companies.  Disability insurance companies contract with these private companies to conduct surveillance on disability claimants.
  • What are their surveillance methods?  Particular tactics will vary depending upon the private investigator, the disability insurance company and the disability claimant.  However, many methods are common across the board.  Basically, the private investigator will inconspicuously follow a disabled claimant with a video-capturing device as the disabled claimant undergoes day-to-day activities.  If the private investigator has difficulty locating the disabled claimant, the investigator may use different tactics, such as pretexting, stake-outs or tracking devices, to locate and track the claimant.  Our last blog post describes these other tactics in detail.

Private Investigator Surveillance Methods and Terms

Private investigators use a variety of tactics to produce evidence that may be used to deny your disability insurance claim.  Below is a list of different private investigator surveillance methods and terms.  

Disability Surveillance – refers to the monitoring, recording and documenting of activities or behavior of another.  In the disability context, this surveillance is called sub rosa surveillance.  Sub rosa, a Latin phrase which translated means “under the rose,” denotes the secretive and clandestine nature of private investigator actions.

Disability Stake outs – according to Shannon Detective Service, Inc.—a private investigation company whose client list includes Arizona Counties Insurance Pool, CNA Commercial Insurance, Danielson Insurance, Farmers Insurance, Federated Mutual Insurance Company, Hartford Insurance, Insurance Company of the West, Liberty Mutual Insurance, Nationwide Insurance, Progressive Insurance, Seabright Insurance Company, Sedgwick Claims Service, Travelers Insurance and Westfield Insurance—this is a stationary surveillance method by which a private investigator documents and records a claimant’s activities.  The hallmark feature of a stake out is that the private investigator does not move or follow the disabled claimant.  In a typical stake out operation the private investigator may station in front of your home or office and record you as you come and go.  The goal of the stake out is to produce evidence that will enable the insurance company to deny your disability insurance claim.  An ABC News story shows how an insurance company successfully denied a doctor’s disability claim with evidence produced during a stake out.

Disability Pretexting – the Federal Trade Commission (FTC) defines pretexting as “the practice of getting your personal information under false pretenses.”  Private investigators are engaging in illegal conduct when they use pretexting to obtain your personal information from a financial institution.  See 15 U.S.C. § 6801, et seq.

Here’s an example of how this works: someone pretends to be you and calls your bank.  The person claims to have forgotten your checkbook, account number, social security number or other sensitive information.  He then tries to get this information from the bank.  Such conduct constitutes pretexting and violates federal law.  Id.

Although private investigators claim to use only “appropriate” pretexting methods, methods which are not illegal per se, these are the same techniques which are used to facilitate identity theft and consumer fraud.  Check out the FTC website for more information about pretexting and how you can protect yourself.

Disability Tracking Devices and GPS – this area of the law is still evolving.  In a recent Supreme Court case, United States v. Jones, the Court held that attaching a GPS device to a vehicle constitutes a “search” under the Fourth Amendment; therefore, law enforcement officials need a warrant before installing the device.  132 S. Ct. 945, 949 (2012).  Although the Court did not address the attachment of GPS devices in the private investigation context, its decision largely turned on the physical trespass involved in attaching a GPS device to another person’s vehicle.  Id.  The Court stated:

It is important to be clear about what occurred in this case: The Government physically occupied private property for the purpose of obtaining information. We have no doubt that such a physical intrusion would have been considered a “search” within the meaning of the Fourth Amendment when it was adopted.

Id.  Therefore, this ruling may be used to argue against private investigator installations of GPS devices since such installation would also constitute a physical trespass.  Private investigation companies, such as Shannon Detective Services, Inc. (SDS), are now looking how to bypass the physical trespass issue altogether through implementation of other technologies that do not require physical attachment.  Here are two examples of other technologies cited from the SDS website:

  • Disability stingrays (a device that can triangulate a cell phone signal to locate a user) will become popular in the future as a way to skirt around the new GPS laws for law enforcement.
  • Disability ping of cell phones (by accessing a user’s cell phone GPS chip) will also fill the gap created by GPS legislation since the FCC has mandated GPS chips to  be installed in all new cell phones by 2018.

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

  1. Audit your billing records and tax returns
  2. Review your medical files
  3. Use a private investigator to conduct photographic and video surveillance
  4. Look at your public Facebook profile and photos
  5. Follow your tweets on Twitter
  6. Order an Independent Medical Exam
  7. Have their doctor opine about your disability
  8. Ask for a Functional Capacity Evaluation
  9. Contact your treating physician
  10. Schedule in-person interviews with you
  11. Interview your friends, family, co-workers and employees
  12. Demand precise quantifications of how you spent your time in every professional activity pre- and post-disability
  13. Pay your claim under a reservation of rights

What the disability insurance company cannot do

  1. Impose requirements on you that are not contained in your insurance policy
  2. Attempt to influence the opinions of independent medical examiners
  3. Misrepresent policy provisions
  4. Conduct abusive interviews
  5. Unfairly delay a decision on your claim
  6. Fail to conduct a timely, adequate investigation of your disability claim
  7. Destroy key documents
  8. Lie about actions taken on a claim
  9. Place their financial interests ahead of your contractual rights
  10. 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.

 

Unum Plays Semantic Games in Denying Benefits for a “Heart Attack”

We have previously blogged that even Unum’s U.K. CEO agrees that Unum’s policies contain confusing language.   Recently, Unum took advantage of its unclear disability policy language — in this case, a policy containing the layman’s term “heart attack” — to deny benefits to the widower of a policyholder who had died, in medical terms, of “atheroscopic coronary artery disease.”

Annette Frie’s disability insurance policy from Unum stated that a $30,000.00 benefit would be paid to her spouse if she were to die from a “heart attack.”  However, because “heart attack” is not a medical term likely to be used on a death certificate, her husband Jim Frie suspects Unum deliberately used that term on its policy in order to deny claims by splitting semantic hairs.

When Mr. Frie submitted his claim, Unum sent him a letter offering its condolences but denying the claim on the basis that it “didn’t meet the definition of the specified illness covered by the policy.”  The medical examiner who had signed Mrs. Frie’s death certificate then sent two letters to Unum explaining that Mrs. Frie’s coronary artery disease had caused the heart attack.  In response, Unum denied the claim two more times.

The Minnesota State Commerce Department subsequently opened an investigation, but when Mr. Frie became impatient with the pace of the state’s investigation, he contacted FOX-9 investigators.  Within 24 hours of being contacted by the news station about their investigation to expose this “fist-pounding outrage,” Unum called Mr. Frie with the news that the decision had been made to pay the claim.

Even commonly-used words and phrases can take on unexpected meanings within the context of a disability insurance policy, so it is important to consult an experienced disability insurance attorney to interpret the policy language when filing a claim.

 

Get it in Writing: Why Verbal Communications with
Your Disability Insurance Company Can Be Dangerous

We often advise doctors and dentists facing a disability insurance claim to handle communications with their insurance company via mail rather than on the telephone. There are several reasons why written letters are better than verbal communication. For example:

•  Claims handlers are trained to ask loaded questions. While the questions they ask may seem routine or mundane to the policyholder, the answers they elicit can have serious consequences that can help the insurance company deny a legitimate disability claim. For example, a claims administrator might call and ask what you have been doing that day. If you answer that you went out to pick up a prescription, the claims administrator can misconstrue your response as proof that you are not disabled from your occupation. No matter how short or how unavoidable your errand may have been, the insurance company can argue that if you are able to leave the house and perform limited activities, you can still perform your job. If the same question is posed in a letter, you can take the time to carefully consider the question and its consequences, preferably having a disability insurance lawyer help you to answer in a way that won’t be misconstrued.

•  Telephone conversations may not be documented accurately. When a claims handler calls a policyholder to discuss his or her disability benefits, the handler will normally write a memo of what was said during the call for the claim file. These memos are used as evidence for disability benefit determinations, and potentially for later litigation. The primary problem is that the memos are written by the claims handler for the benefit of the insurance company, so whether intentionally or not, they are one-sided and biased towards the company’s interests. Another problem occurs when the claims handler doesn’t write a call memo at all; important conversations can be lost entirely. On the other hand, if a policyholder exchanges letters with the insurance company (and keeps copies), the insured can document his or her side of the story without worrying that something will be lost or misreported.

•  Insurance companies use jargon that can be hard to understand. As Unum’s UK CEO has admitted, insurance companies use language that is indecipherable to most policyholders. If a claims handler calls you to talk about an elimination period, reservation of rights, ERISA, or the own-occupation definition of disability, you may not be able to completely process what he or she is telling you on the spot. This can cause you to miss important details or inadvertently waive important rights. If the same information comes to you in writing, however, you have time to research the terms and/or get advice from a disability insurance attorney.

For these reasons and more, it is crucial to get communications with your disability insurance company in writing. At the very least, a person filing for disability insurance benefits should take detailed notes of every conversation with an insurance company representative.

Questions to Ask When Choosing
a Disability Insurance Attorney

For those looking for help with their disability insurance claims, choosing an attorney is an important step. However, it can often be difficult to determine whether a particular disability insurance lawyer is the right one for you to work with. Here are some general questions to ask to help you evaluate a potential lawyer or law firm.

1. How many cases does the attorney take on each year?

2. What percentage of the attorney’s practice is devoted to disability insurance claims?

3. Does the attorney exclusively work with individual policy claimants, or does he/she handle ERISA and Social Security cases?

4. Has the attorney published any articles or been interviewed about disability insurance topics?

5. What insurance companies has the attorney dealt with?

6. Does the attorney offer comprehensive representation or short term assistance?

7. Does the attorney’s fee structure work for you?

8. What does the attorney expect to accomplish with your claim?

Selecting the right disability insurance attorney to help with your claim is a decision not to take lightly. You should never be afraid to ask questions, and the attorney will be glad to answer them.