An Inside Look at Insurer Surveillance

Insurers often spy on insureds in an attempt to “catch” them appearing non-disabled. Traditionally, insurers have hired private investigators to videotape insureds in their daily routines. More recently, disability insurers have begun to use Facebook and other social media as a one-way mirror for electronically peeping into an insured’s private life. Old-fashioned stakeouts and video surveillance are alive and well, however. Because it is so easy to misconstrue even a few seconds of video footage, all insureds need to be aware of the possibility for surveillance.

A recent article written by the insurance industry and aimed at insurers exposes the way insurers regard surveillance. Though the article cites a private investigator as saying that surveillance is the “unbiased documentation of a person’s activities,” the reality is anything but. Disability insurers will hire PIs to watch a claimant for days, and then purport that a single fifteen-second clip of the insured watering his outdoor plants, for example, is evidence of a fraudulent claim. They fail to understand the reality: Disability means unable to perform occupational duties, not absolute and perpetual helplessness. What does the insurer do with this video evidence? In their own words, “[impeach] the claimant, ultimately minimizing the value of his claim.”

Even if your insurer has obtained video surveillance, an experienced disability insurance attorney can place the video in its proper context—not just the five second clip that the insurer wants to show. Surveillance is another reason why it is important to consult with an attorney should you need to file a disability insurance claim.

How Specific is Your “Own Occupation”?

We have discussed many times the importance of an “own occupation” disability insurance policy. Such policies provide benefits if the insured is unable to perform the substantial and material duties of his own occupation, rather than requiring that the insured be unable to perform any occupation anywhere. But how specific is your own occupation?

John Simon, an environmental trial lawyer with a national practice, became disabled after an automobile accident. Pain in his legs made sitting, standing, and driving difficult. He had hand tremors, and pain medication caused a cognitive decline. He was diagnosed with regional pain syndrome and post-traumatic stress disorder. Yet Prudential Insurance only paid benefits for a year before terminating Simon, claiming that law was a sedentary profession and that there was no proof that he was incapable of performing his “occupation.”

As the District Court found in its decision, Simon “was no ordinary lawyer.” He was able to establish that his national environmental law practice required extensive travel by air and automobile, including carrying heavy files. Simon spent most of his time outside of the office developing a client base, litigating, lecturing on environmental law, and serving on a government commission.

Most of Simon’s practice was originating clients for the firm rather than performing extensive legal work on each case. During his disability period, his bonuses from the firm actually increased—from his fee sharing for bringing in new clients. Thus his bonuses reflected past rather than present efforts. Though the insurer pointed to Simon’s increasing compensation as evidence of his ability to practice law, it failed to investigate the nature of that compensation.

The court found that Prudential failed to consider the functional requirements of Simon’s particular work activities. It held that all of the factors weighed in favor of concluding that Prudential’s termination of benefits was arbitrary and capricious. John Simon had his disability benefits reinstated.

This case is an excellent example of how important it is to ensure that a disability claim is properly presented to the insurance company. All too often, disability insurers attempt to misclassify insureds’ occupations as to scope or type of duties. It may be necessary, as it was in this case, to litigate to force the insurer to recognize its obligations under the disability insurance policy. Thus, if you are filing a disability insurance claim, it is important to consult with an experienced disability insurance attorney.

Unum: Celebrating More than a Century of Claim Denials

Looking back at old disability insurance cases can be just as fascinating as reading old newspapers. Unum, the largest disability insurer in the U.S., is the product of numerous mergers. Unum’s corporate history (available on its website) proudly traces its lineage, which includes the Masonic Protective Association, later acquired by Paul Revere, which was subsequently acquired by Unum. Under a heading of “The company with a heart,” Unum notes that “The Masonic Protective Association, which later became Paul Revere, traded on its reputation of paying claims quickly and without fuss to become a powerhouse in providing accident insurance to members of the Brotherhood.”

For an example of Unum’s predecessor “paying claims quickly and without fuss,” examine the 1901 case of Scales v. Masonic Protective Association, 48 A. 1084 (N.H. 1901). The insured’s disability policy required that “disability, to constitute a claim for sickness, shall require absolute, necessary, continuous confinement to the house.” The insured became sick and incapacitated for 67 days. He spent the first five days entirely inside his house. As his physician had suggested fresh air to assist his recovery, he spent a portion of each subsequent day in his yard, either sitting in a chair or lying in a hammock.

Though the insurer admitted that the insured had been sick, it denied the insured’s claim for disability benefits on the grounds that the insured was not “confined to the house” under the terms of the policy. The Supreme Court of New Hampshire held that it was unreasonable to suppose that the insured could not sit in his yard for the purpose of recovery. It noted that the insurer’s interpretation of the policy would lead to the inference “that the [insurer] intended to deceive the insured.”

In what seems woefully naïve in light of what we know today regarding Unum’s claims practices, the court went on to state: “It cannot be presumed that an association of the character of the defendant association would be capable of such intent.” The court then applied a strict interpretation of the policy language and, finding “to a house” different in meaning from “in a house,” held that the insured had been confined to his house within the terms of the policy, and awarded him benefits.

What can we learn from a 110 year old case? Some things never change. Though the victorious attorney who represented the insured against Masonic Protective Association is long gone, today’s insureds should still consult an experienced disability insurance lawyer when considering filing a claim.

 

A Case Study in Benefit Denial

We frequently emphasize how important it is to consult with a disability insurance law firm before filing a claim. But what about at the moment when you realize that you’re too sick to work? It is vitally important to consult with a disability insurance attorney specializing in disability law as soon as possible. A recent case in which the insured was denied disability benefits illustrates the importance of consulting with an attorney from the very beginning of your illness. There are often clauses in your disability policy which require up-front strategic planning to preserve your claim. In the below case study in benefit denial, the insured found himself possibly covered by two plans but ultimately unable to collect from either.

Paul McKay was employed beginning in 1999 as an attorney at U.S. Xpress, which provided a long-term disability plan to its employees. Prior to January 1, 2004, this plan was provided by Unum. On that date, U.S. Xpress switched disability insurance providers to Reliance. Insurance coverage was supposed to be uninterrupted with employees retaining continuous disability insurance, and in fact it was. But McKay fell between the cracks due to disparate language in the policies.

During his employment, McKay developed significant cervical spine problems, and he eventually underwent surgery in June 2003. Unfortunately between September through December 2003, his condition continued to worsen. At that point he had severe cervical and lumbar disc disease, was frequently absent, and his medication made mental concentration more difficult. His last day of work at the office was December 19, 2003. He intended to work from home during January 2004, but there was no evidence that he was able to do so. U.S. Xpress continued paying McKay his usual salary until January 16 and then fired him on January 19, 2004.

McKay filed a disability claim with Unum (the insurer prior to January 1, 2004) for disability benefits, contending that he was disabled under the policy. Unum denied the claim. The court affirmed the denial. The problem for McKay was that his Unum policy contained a clause requiring a 20% loss in monthly earnings as a qualifying condition for disability benefits. Unum successfully argued that through December 31, 2003, McKay had not had any loss of earnings as U.S. Xpress had in fact paid him his full salary into January 2004. McKay argued that he may have received his salary but he was incapable of earning it. The court followed the plain language of the policy and regardless of whether McKay earned his keep in December, found no loss and ruled that he was ineligible for benefits.

Reasonably enough, McKay rationalized that if Unum wouldn’t cover him, then he must be covered by Reliance (who took over on January 1). He filed a claim with Reliance, only to discover that Reliance’s policy had two important but often-overlooked requirements: To be eligible for insurance without the usual 60-day waiting period (which would have started coverage on March 1), McKay had to be “actively at work” as of January 1 and his disability had to begin on or after January 1. Reliance denied the claim, asserting that McKay wasn’t “actively at work” because he was not working full-time (at least 33 hours per week) as of January 1. Recall that McKay had attempted to establish his eligibility under Unum by arguing that he had suffered a loss in earnings in December because after December 19 he wasn’t actually earning—just receiving—his salary. McKay’s statements, which had been made in support of his Unum claim, were outrageously used by Reliance to deny him benefits under Reliance’s plan.

The injustice gets worse. As a second reason for denying the claim, Reliance argued that since McKay had asserted a December disability date to Unum, had left the office after December 19, and had since received Social Security disability benefits based on a December 2003 disability date, McKay’s disability began before January 1. Thus, he was ineligible for benefits under Reliance’s plan. The court agreed with Reliance’s reasoning.

On appeal, the Circuit Court affirmed the lower court’s rulings. The Court noted that “McKay argues that because U.S. Xpress maintained uninterrupted LTD insurance coverage during the time period in which he sustained his disability, he must be covered by one of the two policies. McKay’s argument, while somewhat logical, is incorrect. Whether he is covered by either Unum or Reliance, or both, turns on the terms of each policy.” (emphasis added). And so it ends. Paul McKay, who was always “covered” by long-term disability insurance, turned out to not be covered at all. He receives no benefits from either policy, thanks to a coincidence of timing. Each insurer used his statements to the other to deny coverage, leaving him in a no-win scenario.

What can be done differently? Paul McKay should have immediately consulted a disability insurance attorney as soon as he suspected that he might become too ill to work. The attorney could have examined the policies and the upcoming switch in coverage and worked with Paul to develop a strategy to preserve his claim, such as resigning in December and immediately applying for benefits. This case underscores the importance of coordinated planning with an experienced disability insurance attorney.

Even Athletes Need Disability Insurance

Many physicians have long been aware of the need to buy disability insurance to protect their income from a disabling injury, but physicians are not the only group needing high-dollar insurance policies. Everyone is at risk of a disabling injury. According to statistics, one-third of all Americans between ages 35 and 65 will become disabled for more than ninety days. Athletes are no exception to the norm, though we usually don’t think of Tiger Woods or Alex Rodriguez as owning disability insurance. For the wealthiest athletes, who can earn a living off of endorsements or other business ventures, disability insurance is probably unnecessary. But for most, it is an often-overlooked yet vitally important safety net.

Consider the June 2003 motorcycle crash of Jay Williams, a promising 2002 NBA draftee who suddenly found himself with a mangled leg, hundreds of thousands of dollars in medical expenses, and, because of a certain motorcycle-riding clause in his contract, suddenly out of a salary. The Chicago Bulls charitably bought out Williams for $3 million, but eight years later, he remains unable to return to the game.

Professional athletes all too commonly fail to realize that disability insurance protects their income as much as it protects the income of a doctor or attorney. It’s no surprise that a recent article suggested disability insurance as one of the first things a new professional athlete should buy. Some prepare even before they turn pro: Shaquille O’Neal played at Louisiana State University while covered under a $2.7 million dollar policy. In fact, one of the NCAA’s lesser known programs is its group disability insurance through which exceptional student-athletes can purchase protection against disabling injuries or sickness. Each year, about 75 top athletes buy insurance through the NCAA program.

There are more similarities than differences between the NCAA’s disability insurance policy and physicians’ disability insurance policies. The NCAA caps its benefits at a maximum of $5 million for first-round NFL draft picks and men’s basketball players, a figure roughly equivalent to the lifetime earnings of many physicians (though the NCAA pays the entire benefit over a fixed 30-month period). And like physicians’ policies, the key question is what constitutes a disability? Continue reading “Even Athletes Need Disability Insurance”

What Happens If Your Plan Description Doesn’t Match Your Policy’s Terms?

Many people aren’t used to reading insurance policies. With their legal clauses, insurer-defined terms, and dry content, understanding them can be a challenge for insureds. For these reasons, disability insurers provide plain English summaries of their disability policies, both for marketing purposes and as a guide to benefits. But what happens if you rely upon the plan description in filing a disability claim only to be told that the actual policy language precludes your claim? Your insurer wouldn’t be alone in exploiting a situation where your plan description doesn’t match your policy’s terms.

In the recent case of Weitzenkamp v. Unum Life Insurance Company, the Seventh Circuit Court of Appeals addressed such a discrepancy in a disability insurance policy and plan description. Susie Weitzenkamp was diagnosed with fibromyalgia, chronic pain, anxiety, and depression—all self-reported symptoms. Her summary plan description listed a twenty-four month restriction on disabilities due to mental illness and substance abuse. What the summary failed to mention, however, was that the policy also had a twenty-four month cap on benefits for disabilities primarily based on self-reported symptoms. Ms. Weitzenkamp suddenly found her benefits abruptly terminated.

On appeal, the Circuit Court noted that a summary plan description is intended to be a “capsule guide [to the plan] in simple language.” The relevant law required that the summary include “the plan’s requirements respecting eligibility for participation and benefits” and “circumstances which may result in disqualification, ineligibility, or denial or loss of benefits.” Because the summary failed to mention this important policy provision denying benefits for self-reported symptoms, it violated federal law. The court prohibited Unum from relying upon the policy provision in denying Ms. Weitzenkamp’s claim, reinstating her past benefits though still leaving her to prove her ongoing eligibility under the merits of the policy.

This case illustrates but a portion of the complexity in disability insurance cases. What can physicians do to protect themselves? It is important to thoroughly understand both your actual policy and the insurer’s marketing literature. Physicians should retain all insurer-provided materials from both before and after the purchase of their policy, and consult with an experienced disability insurance attorney should they need to file a claim.

How Can You Play by the Rules if You Don’t Know Them?

When filing a disability insurance claim, it’s critical that you consult with an experienced disability insurance attorney. While we have previously discussed the importance of understanding the specific definitions assigned to terms in a disability policy, the interpretation of a policy depends upon more than its internal definitions. State law may assign particular definitions or restrictions to ambiguous terms, or may invalidate certain types of clauses as against the state’s public policy. Insureds are often unaware of this substantive body of case law that shapes the interpretation of their policy—and ultimately determines their claim’s outcome. This means that a disability insurance policy’s benefits vary from state to state. An experienced disability insurance attorney is familiar with the laws of your state and how courts will interpret the language of your policy.

Two unrelated physician disability cases, one occurring in California and the other in Georgia, serve as an excellent example of how state laws vary. Both contained virtually identical facts as to the physician’s disability and the language of the insurance policies, yet the courts arrived at opposite outcomes. In each case, the physician indisputably suffers from carpal tunnel syndrome (CTS) that leaves him unable to practice medicine, with all parties agreeing that the CTS had developed over a career of repetitive hand motions.1 Each physician’s disability insurance policy provides for benefits lasting until age sixty-five for disability due to sickness, and lifetime benefits for disability due to injury.2 The question in both cases was: Is carpal tunnel syndrome a sickness or an injury? Both physicians’ policies defined “injury” as “accidental bodily injury occurring while this policy is in force.”3 However, the courts diverged as to whether carpal tunnel syndrome that had developed over a number of years was an “accidental bodily injury.”

The California court found that the physician had not suffered an “injury” under the policy because his carpal tunnel syndrome was not an “accidental bodily injury.”4 California case law has stated that an accidental bodily injury requires a sudden event causing an identifiable injury. In other words, California places the focus of “accidental” on the cause or means of the result, not on the result itself. Because the long development of the carpal tunnel syndrome did not manifest identifiable harm as it occurred, the U.S. District Court for the Central District of California, relying upon prior California court decisions, concluded that the physician had not experienced an accidental bodily injury under the policy. Therefore, the injury provision of the policy did not apply, and the California physician was entitled to his benefits under the sickness provision only until age sixty-five.

In Georgia, on the other hand, the Georgia Supreme Court decided that “accidental bodily injury” meant a bodily injury that was unexpected, but could have arisen from a voluntary act.5 Following prior Georgia court decisions, the court thus placed the focus of “accidental” on the result itself, not on its cause or means of the result6—the opposite of the California approach. It held that “an unexpected physical injury that disables the insured is covered as an ‘injury’ under this policy.”7 The court noted that, as here, a person could suffer a series of small traumas over an extended period that ultimately resulted in a bodily injury that was disabling, and such injuries were “accidental bodily injuries.”8 Applying this standard, the court held that the physician’s carpal tunnel syndrome was an accidental bodily injury under the policy. Therefore, the physician had experienced an “injury” within the policy’s terms, and the Georgia physician was entitled to his benefits under the injury provision for his lifetime.

The antipodal outcomes of these two cases illustrate the complexities and subtleties that occur when interpreting a disability insurance policy. Do you know how your state interprets your policy’s provisions? Insureds who are considering filing a claim on their policy should not attempt to navigate the insurer’s claims process, policy definitions, and the law on their own. An experienced attorney specializing in disability insurance law can ensure that insureds have an equal footing with their insurer should there be any legal disputes regarding a policy.

Our attorneys provide legal representation to protect the disability benefits of medical and dental professionals nationwide and throughout metropolitan Phoenix, Scottsdale, Tucson, Flagstaff, Sedona, Lake Havasu City, Prescott, and Yuma. We provide disability income claim advice, assistance with filing disability claims, including completion of disability claim forms and representation in disability insurance litigation.

1 Bilezikjian v. Unum Life Ins. Co. of Am., 692 F. Supp. 2d 1203, 1208 (C.D. Cal. 2010); Provident Life & Accident Ins. Co. v. Hallum, 576 S.E.2d 849, 850 (Ga. 2003)
2 Bilezikjian, 692 F. Supp. 2d at 1206; Provident, 576 S.E.2d at 850.
3 692 F. Supp. 2d at 1205; 576 S.E.2d at 850.
4 Bilezikjian, 692 F. Supp. 2d at 1223.
5 Provident, 576 S.E.2d at 851.
6 Id.
7 Id.
8 Id.

Are Disability Insurance Benefits Marital Property in Arizona?

Imagine that you become disabled from your own occupation and the insurer is paying your disability claim. You are entitled to disability benefits until you turn 65, die, or are no longer disabled (according to most policies). What happens to your monthly benefit if your spouse should now leave you?

A recent Minnesota Court of Appeals case addressed the question of whether disability insurance benefits are considered marital property and as such, to be divided among the spouses. During most of Brent and Lori Luginbill’s 23-year-marriage, Brent was employed as a chiropractor. When he became disabled from practicing chiropractic, he applied for and received disability benefits under his employer-provided, own-occupation disability insurance policy. Lori Luginbill petitioned for divorce in August 2007. The question for the court was whether the disability insurance policy and its payments were marital property or income. As marital property, it would be subject to division with the wife receiving a share. As income, it would remain the husband’s income and would not be divided between him and his wife.

The husband argued that because the policy was intended to compensate him for his inability to earn income, the policy’s payments ought to be treated as income. However, because the policy was purchased during the marriage with marital property, the husband became injured during the marriage, and he received the disability insurance funds substituted for earned income during the marriage, the court upheld the classification of the policy’s benefits as marital property.

The court ordered 35% of the benefits to be paid to the wife, with the other 65% remaining the husband’s property. In setting these percentages, the court reasoned that the husband would no longer receive payments if he secured economically beneficial employment, which he had been so far unable to do. The wife, on the other hand, was free to pursue gainful employment without concern for any reduction or discontinuation of the benefits.

What about the dentist or physician who lives in Phoenix, Tucson, or other cities in Arizona? As Arizona is a community property state, the legal analysis differs. The question of whether disability insurance benefits are considered community property was addressed in the case of Hatcher v. Hatcher, a case involving a lump-sum payment received prior to the dissolution of marriage. The Arizona Court of Appeals held that the portion of the payment which represented compensation for the husband’s loss of earning ability was community property, while the portion of the payment which represented compensation for future, post-dissolution lost earning capacity remained the husband’s separate property. Although the facts of each case are different and should be reviewed by an attorney, had the Luginbills lived in Arizona, it is likely that the husband would have retained a complete share of his future disability insurance benefits.

Every claim is unique and the discussion above is only a limited summary of the courts’ rulings in these cases. If you have questions regarding about insurance benefits and dissolution, an experienced Arizona disability insurance attorney can help you assess your claim and determine what action, if any, needs to be taken.

 

Search Our Site

Disability Claims by Diagnosis

According to a survey conducted by the Council for Disability Awareness (“CDA”), a non-profit organization that attempts to educate the American public about disability and its financial impact, the most common causes of new long-term disability claims in 2010 are musculoskeletal/connective tissue injuries and cancer and neoplasms. The most common causes of existing long-term disability claims are musculoskeletal/connective tissue injuries, problems with the nervous system, and cardiovascular/circulatory disorders.

The Importance of Your Treating Physician’s Notes

Physicians filing a disability insurance claim often underestimate the complexity of the process. Unlike health insurance, which pays one-time reimbursements for services provided, disability insurance claims are ongoing and expensive. The disability insurer heavily scrutinizes each claim for disability benefits it receives, including looking at the records of treating physicians.

Insurers carefully examine every claim form and your treating physician’s notes for any information that can be used to deny the disability claim. It is important that these records are complete and descriptive in the insured’s diagnosis, symptoms, and functional limitations. Unfortunately the pressures of a modern medical practice mean that physicians spend less time treating patients and more time filling out paperwork. What should be detailed evaluations of a patient’s history and limitations often become abbreviated notes cobbled together from several doctors. As an article in the New York Times noted, “A doctor’s note turns into a cut-and-paste collage instead of an accurate and personalized narrative of illness; and documentation becomes an electronic and potentially dangerous version of the game ‘Telephone.’”

Insureds thus cannot rely upon merely being treated by their physician; they must take an active role in ensuring that their physician adequately documents their disability, its nature, and most importantly, the resulting functional limitations. Treating physicians’ notes often lack sufficient description of what the insured can and cannot do—and the insurer will be happy to fill in the missing information in its favor. Treating physicians need to use language such as “incapable of performing his occupation” as part of detailed narrative statements describing the insured’s condition. Insureds must work with their disability insurance attorney and treating physician to properly present their claim, and the foundation begins with a detailed treatment narrative.

May is Disability Insurance Awareness Month — A Good Time To Ask Yourself If You Can Collect on Your Disability Insurance Policy

May is Disability Insurance Awareness Month.  While the insurance industry likes to increase awareness of purchasing disability insurance, medical professionals who long ago purchased disability insurance and have been paying premiums on disability policies for many years may opt to instead raise their awareness of the obstacles they are likely to encounter should they ever need to make a claim on their disability insurance policy.  The article below by disability insurance attorney Edward O. Comitz provides some food for thought.

DISABILITY INSURANCE: CAN YOU COLLECT UNDER YOUR POLICY?

By: Edward O. Comitz, Esq.

You have practiced medicine for your entire career. Your spouse and children rely on you, and you have numerous financial obligations. The stress and trauma of a disability can cause you significant problems. To protect yourself in case of total or partial disability, you have purchased disability insurance.

Unfortunately, you suffer an injury or become so ill that you cannot continue your practice, and you then file a claim with your insurance agent. Of course, you expect it to be honored. Instead, shortly thereafter, you are contacted by an insurance adjuster, not your agent. Unlike your agent, the insurance adjuster is hostile; the questions he asks imply that you are malingering. You try to be cooperative, providing the insurance adjuster with the additional information he requests, but again your claim is denied. Adding insult to injury, you learn from the adjuster that the insurance company has secretly videotaped your activities and, based on the tapes, believes that you are not disabled at all. Dumbfounded by the insurance company’s response, you ask yourself if there is anything that you can do to make the insurance company pay the benefits it promised. The answer is yes.

Typically, the type of policy that medical and dental professionals purchase is what is known as an “own occupation policy.” Such policies provide compensation following a disability that prevents the insured (the person who purchased the policy) from performing the particular duties of his or her profession. Thus, the insured may be entitled to benefits even if he or she could in fact perform work of a different nature. For example, if a surgeon purchases an “own occupation policy” and severely injures his hand, but could nevertheless perform some or all of the duties of a general practitioner, the surgeon is considered disabled under an “own occupation policy” and entitled to benefits.

Disability provisions greatly vary in the language used, and coverage is often circumscribed and restricted by qualifying words and phrases. Accordingly, each policy of insurance must be individually reviewed to determine whether a particular claim is covered. What may appear to be an “own occupation policy” could in fact be an “occupational policy” if “total disability” is defined to include the insured’s inability to perform “all” duties or “every” duty pertaining to the insured’s occupation. In such a case, the insured may not be entitled to benefits if he or she can perform comparable employment for which the person is suited by education, experience and physical condition. Continue reading “May is Disability Insurance Awareness Month — A Good Time To Ask Yourself If You Can Collect on Your Disability Insurance Policy”

Dental Hygienist Awarded $4.2 Million in Disability Insurance Lawsuit Against Unum

A jury in the Los Angeles Superior Court has awarded dental hygienist Laura Kieffer $4.2 million in damages against Unum Group for wrongfully terminating her disability benefits.   Ms. Kieffer purchased her individual disability insurance policy from Paul Revere in 1988.  In 1996, she developed disabling conditions, including carpal tunnel syndrome and severe cervical pain.  By 1999, she had to stop working.  After paying her disability benefits for nearly ten years, Unum terminated her claim despite recommendations from Ms. Kieffer’s treating physician.

Ms. Kieffer sued for breach of contract, insurance bad faith, and for punitive damages.  The $4.2 million jury verdict included compensatory and punitive damages.

Update (April 18, 2011):  The Los Angeles Superior Court upheld the 4.2 million verdict and denied Unum’s motion for a new trial.

Disability Insurer Unum Group Said to Have Been in Talks with Sun Life Financial

Bloomberg Businessweek reports that the nation’s largest disability insurance company, Unum Group, was in private talks earlier this year about a potential takeover by Sun Life Financial, Inc.  Sun Life, Canada’s third-largest insurer, said in November 2009 that it wanted to expand its presence in the U.S. significantly with an acquisition.

A source for the Wall Street Journal said that the talks broke down in January, but Unum may still be open to approaches.  The source also reported that Unum and Sun Life officials couldn’t agree on deal terms and governance.

Following the breakdown in the talks, Unum announced a $1 billion buyback of stock over 18 months.

Texas Insurance Commissioner Forbids Insurers’ Provisions that Allowed Them to Interpret Policies

The Texas Department of Insurance has adopted new rules that prohibit the inclusion of discretionary clauses in health, life, and disability insurance policies delivered in Texas.  Discretionary clauses are contract provisions that provide insurers with sole discretion in deciding what, when, and if benefits are due under an insurance policy.  The Office of Public Insurance asserted that these provisions alter the way courts review insurers’ decisions on appeal and make meaningful review of an insurer’s decision virtually impossible.

In prohibiting discretionary clauses, Texas Commissioner of Insurance Mike Geeslin wrote:

[d]iscretionary clauses are unjust, encourage misrepresentation, and are deceptive because they mislead consumers regarding the terms of coverage.

Discretionary clauses are present in nearly all employer-provided disability policies because they are allowed by The Employee Retirement Income Security Act of 1974 (“ERISA”).

Twenty-three states and the National Association of Insurance Commissioners have now adopted statutes, rules or policies prohibiting discretionary clauses.  The new rules in Texas will take effect February 1, 2011 for some types of disability insurance and June 1, 2011 for all other forms of health, life, and disability insurance policies issued in Texas.

Patrick T. Stanley: Newest Member

We are delighted to announce that Patrick T. Stanley has been elected a Member.

Mr. Stanley is an experienced trial lawyer with a substantial background in state and federal courts, as well as arbitration proceedings. He has extensive experience in motion practice, appellate practice, jury and bench trial, arbitration and injunctive relief. He is particularly experienced in litigating first-party insurance bad faith, including disability insurance and professional liability coverage, and healthcare litigation.

In addition to his litigation background, Mr. Stanley also assists with the practice management needs of healthcare professionals. He provides consultation and representation in regulatory compliance matters, non-compete and anti-solicitation agreements, disability claim advice, employment contracts, personnel and human resources issues, employee disciplinary actions, independent contractor and managed care agreements, state licensure issues and collections.

Mr. Stanley is ranked “Excellent” by Avvo, which rates and profiles over 90% of licensed attorneys in the U.S. based on research, client reviews, lawyer disciplinary histories and peer endorsements.  Mr. Stanley has been named a “Top Attorney” by Arizona Business Magazine(Healthcare) and Ranking Arizona (Commercial Litigation).

Mr. Stanley is admitted to practice in state court in Arizona and Florida, as well as the United States Court of Appeals for the Ninth Circuit and the United States District Court for the Districts of Arizona and the Southern and Northern Districts of Florida. He has also been admitted pro hac vice in United States District Courts in California and Alaska.

Mr. Stanley received his B.A. in History from the University of Kansas and earned his law degree, cum laude, from the University of Arizona. Since then, in addition to his busy practice, Mr. Stanley has authored or co-authored articles on a number of topics relating to both disability insurance and transportation law.

Are Non-Competition Agreements Enforceable or Not?

Disability attorney Ed Comitz recently had his article “Are Non-Competition Agreements Enforceable or Not?” published in the Winter 2010 edition of AzMedicine, the publication of the Arizona Medical Association for healthcare professionals.

Senate Finance Committee Hearing Held to Discuss Abuses in Long-Term Disability Insurance Industry

On September 28, 2010, the United States Senate Finance Committee held a full committee hearing titled, “Do Private Long-Term Disability Policies Provide the Protection They Promise?”  At the hearing, the Finance Committee and expert witnesses discussed the sometimes abusive practices of insurance companies when handling  legitimate long-term disability claims.

Senate Finance Committee Chairman Max Baucus, D-Mont., said LTD insurers use doctors with conflicts of interest to review claims.  “Many of these doctors are employed either by the insurance company or by companies that do a lot of business with the insurance company,” Baucus said.  “These arrangements make it far too easy for the doctors to deny claims, terminate claims, or reject appeals.”

It’s time for long-term disability insurance companies to clean up their act and treat people fairly.  They have acted with impropriety for too long.  We need to evaluate the laws that we have on the books and make sure that they are true to their original purpose – to protect people from abuse, and to guarantee that they can get the insurance funds to which they are entitled.  Hard-working Americans with long-term disability insurance should not have to deal with corporate abuses if they suffer an injury that keeps them out of work.  They are entitled to insurance payments.  They should not face roadblock after roadblock to see that money, nor should they face unfair rescissions or payment terminations.

Baucus convened the hearing in response to recent media reports of unfair claim denials and terminations that threaten the livelihoods of those beneficiaries who are unable to work.  Both Baucus and the expert witnesses cited instances of long procedural delays and the use of in-house doctors to avoid making claim payments.

Ronald Leebove, a rehabilitation counselor who appeared for the American Board of Forensic Counselors, Springfield, Mo., said private group long-term disability policies fail to provide the protection insurers promise.  “There are many tricks and tactics used by the insurance companies to deny claims,” Leebove said.

Baucus stated his desire to work in conjunction with the Senate Commitee on Health, Education, Labor and Pensions to move toward a solution that gives beneficiaries the fair process and justice they deserve.

Video of the hearing and transcripts of testimony are available at:  http://finance.senate.gov/hearings/hearing/?id=1c1bd578-5056-a032-5237-4dd9283e52ed

Senate Committee Concerned Over
Disability Insurers’ Unfair Practices

The Senate Finance Committee recently met to discuss laws surrounding private disability insurance.  Members of the Committee expressed concern over current federal law, which gives private disability insurers substantial flexibility to engage in questionable practices.  The Committee Chairman, for example, commented about the conflict of interests that hired physicians face when an performing “independent” medical examination (IME) on claimants:

Many of these doctors are employed either by the insurance company or by companies that do a lot of business with the insurance company.  These arrangements make it far too easy for the doctors to deny claims, terminate claims, or reject appeals.

Committee members were also concerned about discretionary clauses that private disability insurance companies include in their disability insurance plans.  These clauses give the disability insurance company discretion to review disability benefits determinations.  They also enable disability insurance companies to avoid certain challenges to disability benefits decisions.

Disability insurance companies have financial incentive to deny disability insurance claims.  As the discussion from the Committee meeting demonstrates, current holes in the law may actually provide insurance companies with means to engage in unfair practices for their benefit.  Before filing a disability benefits claim, consider consulting with an attorney first.  It is important to know your rights and to have an experienced professional guide you through this process.

To read more about the Senate Finance Committee Meeting, click here.

Regulate Yourself: Physicians Underreport Impaired Colleagues

A study by the Journal of the American Medical Association suggests that patients must increasingly rely on their doctor’s honest assessment of his own health, rather than the supervision of his colleagues.  Physicians are simply not reporting colleagues whose disability endangers patients.

Traditionally, the medical profession has relied on internal mechanisms to guarantee that patients’ needs are met.  A number of ethical codes require a physician to report a colleague who is suffering any disability or impairment that leaves him unable to safely care for his patients.  As Matthew K. Wynia, MD, Director of the AMA Institute for Ethics, noted in an interview with American Medical News, “[r]eporting incompetent or impaired colleagues is a clear-cut professional obligation.”

Unfortunately, physicians are not following through on that obligation, even when the disability causes an unquestionable risk to patients.

The most common explanation given for failing to report a colleague was the belief that “someone else was taking care of the problem.”  Physicians may conclude that their colleague is already aware of the effect his disability could have on patients, and that he would take time off if he felt his condition merited it.  They may even assume that he is already taking steps to file a disability claim.  They may also be reluctant to intrude on a personal crisis, preferring to leave their colleague to his own social and financial safety nets, such as close friends, family, or disability insurance.

Perhaps more revealing is the fact that 8% of respondents “believed it could easily happen to them.”  The thought of being deprived of one’s own occupation, livelihood, and income by the sudden onset of an impairment or disability is certainly troubling at best.  Physicians may feel that, if they were disabled and could not safely continue working, their colleagues might doubt their personal fitness for the medical profession.  Moreover, they may fear a loss of income or the intense scrutiny imposed by disability insurers and claims representatives.  They cannot bring themselves to put a colleague—and perhaps a friend—in that position.

One solution is increased reliance on the physician’s own evaluation of his disability—he must remain cognizant of his own health, and recognize when it is appropriate to take disability leave.  Combined with an ongoing reporting obligation, the result would be a higher standard of care and safety for patients.

While the medical profession has always been self-regulating, the regulation of self—the honest evaluation of one’s own disability and capacity for fulfilling the obligations of his own occupation—may become an invaluable means for guaranteeing patient safety.  As Dr. Wynia points out, “It’s not just a matter of doctors peeping over each others shoulders.”