Why Are Professionals’ Claims Targeted for Denial?

When disability companies first started marketing to doctors and other professionals, there was a high degree of competition in the market. The companies viewed physicians, dentists, attorneys, executives and other professionals as a group of high-income earners who could (and would) pay high premiums but would not file disability claims. Their theory was that doctors, lawyers and executives would instead choose to work through limiting conditions because they make so much money (even working part-time), invest so much time and money into their degrees, and hold titles and positions that are a large part of their identity.

This competition initially resulted in policies that had lower premium rates and favorable provisions for professionals, like true “own occupation” policies that allowed you to collect benefits and work in a different occupation if you became disabled. However, in their zeal to sign up as many professionals as they could, many companies relaxed their underwriting and oversold coverage.

For a time, the business appeared profitable, but as professionals started filing claims it soon became apparent that the companies had substantially underestimated how may professionals would file legitimate claims, especially in uncertain economies where their incomes were being significantly reduced by changes in medical/dental reimbursements, HMO’s and capitation plans.  And since the companies’ payouts on these claims frequently exceeded a million dollars per claim over time, the carriers started to hemorrhage money.

In order to keep afloat, some insurance companies abandoned their professional policies and sold this block of business to larger companies at a discount. This in turn created conflicts of interest. Your policy had one company’s name on it, but was being administered by a different company that may not even sell professional policies, and that company only made money if premiums dollars came in and benefits were not paid out. Accordingly, professional disability insurance claims started to become aggressively administered and targeted for denial.

Bad Faith Tactics

The larger companies that stayed in the market also began engaging in bad faith practices to save money, many of which we have uncovered through investigations and discovery in litigation. Some of these practices have also been uncovered through investigative reporting, including segments on Dateline and 60 Minutes. These bad-faith practices include:

    • Holding “roundtable” meetings of analysts, lawyers and doctors to manufacture reasons to deny each claim;
    • Hiring biased medical examiners to sign off on inaccurate reports skewed in the insurance company’s favor;
    • Creating internal awards and bonuses for the analysts who denied the most claims, or came up with new strategies for terminating existing claims;
    • Engaging in “peer-to-peer” calls, where their in-house doctors call your treating doctor and then prepare inaccurate summaries of what was said in the call;
    • Sending these inaccurate medical summaries/reports crafted by their own doctors to your busy doctor with cover letters saying “please sign if you agree with this summary . . . if we do not hear from you in 10 days, we will take that to mean that you agree with everything in this report”;
    • Denying claims based on non-responses from your treating doctors, without notifying you that they were contacting your doctor or verifying that your doctor actually received and reviewed what they sent;
    • Asking your doctor to tell them if you are “totally disabled” without explaining that you have a professional “own occupation” policy (and letting them assume “totally disabled” means that you are helpless or can never work in any occupation);
    • Aggressively questioning your sympathetic and cooperative doctor’s treatment recommendations in an effort to scare him/her and put a wedge between you and your doctor so that he/she will no longer cooperate with you on the claim or compete necessary paperwork;
    • Hiring former FBI and law enforcement to conduct aggressive surveillance, including following you and videotaping you;
    • Editing surveillance footage into 5-10 minute clips or obtaining photos of you from social media to hyper-focus on the times you are feeling your best, while ignoring the times that you are feeling your worst;
    • Imposing requirements on you that are not in your policy and/or misrepresenting how your policy works;
    • Conducting abusive interviews and/or using the claim investigation as a basis for interviewing and harassing your friends/neighbors/coworkers/partners;
    • Destroying key documents;
    • Demanding that you undertake the financial burden and health risks of a surgery because it might make you better and might save them money;
    • Failing to reach a claims decision in a timely manner;
    • Failing to keep accurate records of your phone conversations with the company and/or misrepresenting what you said in a phone conversation in order to manufacture inconsistencies; and
    • Denying your claim to make you financially vulnerable, in the hopes that you will accept an unreasonably low settlement/buyout of your claim.

Eventually, whistleblowers in the companies brought these sorts of practices to the attention of insurance commissioners, and they in turn conducted massive market conduct exams of major companies such as Unum, Guardian, Metlife, and others. They sanctioned some companies to the tune of tens of millions of dollars, and required others to change their practices or reevaluate improperly denied claims.

As a result of this scrutiny, many companies that had initially stayed in the market determined that they needed to cut their losses. Companies like Unum and Metlife stopped selling individual disability policies, and closed that block of business. At the same time, other companies, like Disability Management Services, used this as an opportunity to market themselves as third-party administrators that would come in and aggressively “manage” unprofitable blocks of business and take over claims management for insurers who wanted to distance themselves from the claims process while still keeping some of the financial benefit from the policies they had sold. Other companies, like Great-West (which owns the American Dental Association group plan), have taken a middle path, selling off some of their policies while entering into arrangements with other companies to administer claims under the policies that they want to keep.

Policy Traps and Pitfalls

Other companies took a different approach. They proceeded to revamp their policies and give themselves more investigative tools and broader discretion, while adding additional exclusion and limitation provisions and crafting pitfalls designed to target professionals. Policies that used to be only a few pages long transformed into 50 to 60 page documents as the companies added language intended to make it much harder to collect, such as:

    • Providing various levels of purported “own occupation” insurance, even though the policies do not actually provide true own occupation coverage and are simply meant to look as if they do;
    • Complex and compound policy applications combined with provisions that allow them to void coverage if there are any misrepresentations in the application, even if they were innocent or irrelevant to your actual sickness/injury;
    • Requirements that your physician create a “written” treatment plan that must be approved by the company and designed to “return you to work” or reach “maximum medical improvement”;
    • Provisions requiring you to demonstrate that there are no “work-site modifications” that would allow you to work;
    • Provisions that allow them to deem you capable of working, even if you are not, and terminate or reduce your benefits if they do not believe you are working to maximum capacity;
    • Provisions that terminate your coverage if you start working part-time and do not satisfy minimum work-hour requirements;
    • Provisions that terminate your total disability benefits if you start working in another profession, or offset your benefit amount if you go back to work in a different capacity;
    • Requirements that you produce your taxes and other financial information for audit whenever they deem necessary;
    • Provisions requiring you to produce “objective evidence” of your claim and/or placing limitations on, or excluding, mental health conditions and/or conditions that have subjective symptoms;
    • Language designed to shield themselves from liability if your insurance agent sold you the wrong policy or didn’t properly explain how your policy works; and
    • Language that authorizes them to talk to your other insurance companies, if you have multiple policies, and requires you to inform them if any of your other disability claims are denied.

The end result is that medical and legal professionals filing a disability claim face a war on two fronts. They must be wary of the financially-motivated bad faith tactics that insurance companies use to wrongfully deny claims, while at the same time avoiding policy traps and technical violations of their policy that might give their insurer a basis to terminate or reduce their benefits.

Securing Your Benefits