Even Unum CEO Admits Their Insurance Policy Language Is Confusing
As we have blogged many times, even seemingly straightforward terms like “total disability” or “appropriate medical treatment” in your disability insurance policy may have different meanings in the context of a disability insurance claim than they do in everyday English. In a video posted on YouTube, Jack McGarry, CEO, Unum UK, is surprisingly candid in addressing how their insurance policy language is confusing.
Insurance is so confusing, in large part because we’ve made it that way, the insurance companies. We use acronyms instead of words, we use lingo instead of language. We’ve made it easy for us to communicate with each other, but we’ve made it very, very difficult for consumers to understand what we’re saying, and we need to change that.
[Consumers] are confused by our products, they don’t understand the choices, they don’t understand the coverage, and one of the reasons they don’t understand it is because the language we use to describe it, they find it confusing, and a little scary, so we’re partnering with Plain English to help simplify the language we use to describe what we do so everybody can understand it.
While Unum is apparently taking steps to clarify the language in its policies in the United Kingdom, it is of little help to American insureds who purchased policies written in language that is, in the words of Unum’s UK CEO, ”very, very difficult for consumers to understand.” The help of an experienced disability insurance attorney to interpret the language of your policy can be critical in ensuring you receive the benefits to which you are entitled.
Will New Demands on Healthcare Professionals Lead to More Disabled Doctors?
A recent article by health insurance writer Allison Bell explains, from an insurance industry perspective, why the new administrative demands on health care professionals might lead to an increase in doctors facing disability:
[I]t seems reasonable to ask whether, for example, the new pressure to convert to electronic health records will lead to some physicians at small or understaffed practices to develop carpal tunnel syndrome and blurry vision from trying to enter, or at least, check, many of the records themselves. Will sleep deprivation related to an increase in workload cause or aggravate objective conditions, such as lack of exercise, obesity and high blood pressure, that will, in turn, lead to an increase in the number of doctors with disability insurance who suffer heart attacks. strokes and disabling car accidents?
Healthcare professionals: Do you think the push for electronic health records and the Patient Protection and Affordable Care Act will lead to an increase in disabled doctors?
Timing Is Everything: When to Discuss Your Potential Claim with a Physician
When it comes to disability insurance, your treating physician’s support can be critical to getting your legitimate disability claim approved. If your doctor can’t provide adequate documentation of your condition or is reluctant to get involved, there is a much higher chance that your claim will be denied. However, fully discussing your condition with a professional, compassionate treating physician will help ensure supportive medical records. When you are involved in a disability insurance claim, it is important to understand how to approach your treating doctor so that he or she can help you.
When to discuss your potential claim with a physician is an important timing issue. Instead of trying to enlist your doctor’s help at the very first visit, you should wait to talk to your treating physician until after he or she knows you and your condition well enough to opine accurately as to your ability to work. It is vital that you develop a relationship of trust and confidence with your doctor before inviting him or her to assist you in your claim. Physicians are often reluctant to support claims for disability insurance benefits if they question the motivations behind the claims. A physician who has treated, without success, the policyholder making a legitimate disability claim will be more willing to cooperate with the extensive process.
AzMedicine publishes “Can Your Disability Insurer Dictate the Terms of Your Care?” article by Ed Comitz and Michael Vincent
Disability insurance attorney Edward O. Comitz and Michael Vincent had their article Can Your Disability Insurer Dictate the Terms of Your Care? published in the Winter edition of AzMedicine, the publication of the Arizona Medical Association. The article is excerpted below.
Can Your Disability Insurer Dictate the Terms of Your Care?
By Edward O. Comitz, Esq. and Michael Vincent
Imagine that you are a surgeon who has submitted a disability insurance claim after failed cataract surgery left you with halos, starbursts, and even temporary blindness under bright lighting. While you are dedicated to your profession, you realize that continuing to operate on patients puts them in danger. Your disability insurance company, however, will not pay your claim. It insists that you can keep performing surgeries, alleviating any occupational hazards by wearing sunglasses and using matte-finish instruments in the operating room. This scenario may sound absurd, but it is an actual example of some of the difficulties faced by many doctors seeking legitimate policy benefits. Fortunately, the surgeon in question had the common sense to cease performing surgeries rather than follow her insurer’s suggestions. Her decision did affect her financially, as benefits were denied for almost two years, and only paid after litigation ensued.
Insurance company treatment mandates are commonplace and based on their interpretation of the terms of your policy. In some cases, the insurance company goes so far as to demand surgery, invading your privacy and leaving you with the choice of either undergoing an operation involuntarily, bearing all of the medical risks and financial costs yourself, or waiving your right to collect disability insurance benefits. The decision can be difficult, but understanding your rights and obligations beforehand can help alleviate much of the worry.
Whether or not insurers can legally condition payment of your disability insurance benefits upon you following their suggested treatments depends on the specific terms in your policy. The various policy types fall into three general categories: “regular care” policies, “appropriate care” policies, and “most appropriate care” policies.
The oldest policies typically contain provisions conditioning benefits on being “under the regular care and attendance of a physician.” These “regular care” policies provide the most protection for insureds, as courts have repeatedly found that these provisions only create a duty for the insured to undergo regular monitoring by a physician to determine if the disability persists. Even if a proposed surgery is usually successful and very low risk, an insurance company cannot force it upon you. Under a policy requiring only regular care, courts will not enforce any particular course of treatment, no matter how vehemently an insurance company objects. Continue reading “AzMedicine publishes “Can Your Disability Insurer Dictate the Terms of Your Care?” article by Ed Comitz and Michael Vincent”
How to Get a Copy of Your Disability Insurance Policy
Many of the questions surrounding a disability insurance claim depend on the language in your policy. Thus, the first step to a successful disability claim is getting a copy of that policy. Though it is always important to keep a copy of your disability insurance policy and any related documents, sometimes policyholders forget to do so, they lose the document, or the papers become accidentally damaged.
The simplest way to get a copy of your policy is to call or send a letter to your insurance company directly. You can search for your disability insurer’s phone number and address on the Arizona Department of Insurance website. The insurer may require you to pay a minor fee, but they will send you a copy.
Once you receive your copy, check to make sure it is actually yours and that no pages are missing or damaged. If you have questions about the provisions in the disability insurance policy or filing a claim for benefits, you can bring your copy to a disability insurance attorney who can help interpret it and guide you through the disability claims process.
Working with Disability Claim Managers
– Know Your Rights and Be Vigilant
Even though disability insurance companies have a duty under Arizona law to give your interests equal consideration to their own, insurers rarely act for the policyholder’s benefit. Claims benefit managers are frequently taught how to approach disability claimants to get a desired result, usually a denial or termination of disability benefits. From our years of experience with the disability insurance industry, we have learned some of the tactics claims personnel use. The following is a list of strategies to beware of. Though not every disability claim manager engages in these practices, it is always a good idea for claimants to be vigilant in order to protect their rights under their policy.
- Treating claims like a unit of production. Disability insurance companies often don’t care to know how being disabled and filing for benefits affects you personally. Don’t expect that they will understand or be sympathetic to the personal toll the entire process takes on a claimant, especially a doctor or dentist who has spent years in study and practice to achieve professional success. To disability insurers, each claim is a unit of production being channeled towards an end goal.
- Misinterpreting policy provisions. Disability insurance claims managers are not lawyers, and just like most people, often have trouble properly interpreting complicated insurance policies. For example, claims personnel might inform an insured that her claim is an “any occupation” policy when in fact it is an “own occupation” policy.
- Claiming rights that don’t exist under the policy. Claims managers will also frequently indicate that the disability insurance company can make claimants do certain things or provide certain information that is not actually required under the individual policy. For instance, an insurer might tell a claimant he needs to complete a detailed daily activity report, when there is actually no such requirement to do so in his policy. Make sure you know what your policy does and does not actually allow.
- Acting like your friend. Employees of disability insurance companies often try to act like your friend or partner in the process, when they are actually channeling your disability claim towards denial or termination of benefits. Often, claims managers will call an insured for a friendly chat, all the while peppering the insured with seemingly innocuous questions meant to provide evidence for claim denial. Policyholders should understand the questions being asked, and not get distracted by the congeniality of the caller.
- Sending “field investigators” to talk about your claim. Another common practice in the disability insurance industry is to schedule an in-person interview in the claimant’s home with a “field investigator.” These interviewers will spend hours asking about your symptoms and activities in excruciating detail, taking copious notes and even asking to photograph you. What they may not make clear is that the field investigator has no authority over the disposition of your claim. Rather, he or she is a private investigator hired by your insurance company to gather evidence against your claim and provide a starting point for surveillance.
The best way to make sure that these claims management practices aren’t used to take advantage of you when making a claim for disability benefits is to enlist a disability insurance attorney who knows the tactics used and how to guard against them. Nevertheless, every insured should understand their insurance company’s approach to claims management and be cautious in their interactions with claims management personnel.
Surveillance of Disability Claimants: When Are Private Investigators Watching?
As we have discussed in the past, surveillance is a tool commonly used by disability insurance companies to analyze – and often deny – legitimate disability claims. When surveillance is taken out of context or misconstrued, it can lead to unfair disability denials.
All too often, disability insurance companies expect people with disabilities to stay at home, in bed. What they fail to realize is that most doctors actually encourage disabled claimants to try some activities of daily living, light physical therapy, or social interaction. Just because a disabled person can eat chips at a restaurant with family doesn’t mean he can perform all of the duties of his former occupation. Nevertheless, disability insurers often try to get any physical activity on camera and use it as proof that the claimant is not disabled.
Many people filing for private disability wonder when private investigators are watching them. After years of dealing with disability insurance detectives, we have recognized the five most popular times for surveillance of policyholders:
- During holidays. This is when policyholders are likely to be out of the house enjoying time with family and friends.
- On the claimant’s birthday. Just as on holidays, a disabled claimant is likely to push themselves to get out and enjoy the day.
- Over weekends. During weekends, insureds or more likely to attempt minor errands or go outside with family.
- Any time they have a chance of catching a claimant engaged in physical activity, based on information provided by the claimant on activity logs and in interviews. For example, if the claimant wrote on an activity log that he takes his dogs out in the morning, the private investigator will be there with a camera to document the insured walking in the yard.
- Near the end of fiscal quarters, when the insurance company is under pressure to save money by denying or terminating claims.
Disability Insurance Bad Faith: Different States – Part 7 (Washington)
A disability insurance company may be subject to a lawsuit for bad faith when it wrongly denies a claim. There are differences from state to state in what constitutes insurer bad faith. In previous posts in this series, we outlined the standards of Arizona, California, Colorado, Nevada, New Mexico, and Texas. In today’s post, we outline the bad faith law of Washington.
Insurance companies who use unfair claim settlement practices can be found to have committed bad faith under Washington’s tort law or under the Washington Consumer Protection Act. According to Washington law, an insurance company’s violation of the consumer protection statute constitutes an automatic unfair trade practice violation, and also a breach of the duty of good faith and fair dealing. If a policyholder brings a claim under the Consumer Protection Act, he or she will have to show economic (monetary) damages, but if he or she brings a tort bad faith claim, the injury need not be economic and can include emotional distress or other personal injuries.
The Statutes: R.C.W. 48.01.030 and Wash. Admin. Code § 284-30-330
The Rules: Washington regulations define the following as unfair or deceptive practices for settlement of insurance claims:
- Misrepresenting pertinent facts or policy provisions.
- Failing to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies.
- Refusing to pay claims without conducting a reasonable investigation.
- Failing to affirm or deny coverage within a reasonable time after fully completed proof of loss documentation has been submitted.
- Not attempting in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear.
- Compelling an individual disability claimant to initiate or submit to litigation, arbitration, or appraisal to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in such actions or proceedings.
- Attempting to settle a claim for less than the amount to which a reasonable person would have believed he or she was entitled by reference to written or printed advertising material accompanying or made part of an application.
- Asserting to a disability insurance claimant that the company has a policy of appealing arbitration awards in favor of insureds for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration.
- Delaying the investigation or payment of claims by requiring a first party claimant or his or her physician to submit a preliminary claim report and then requiring subsequent submissions which contain substantially the same information.
- Failing to promptly settle claims, where liability has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage.
- Failing to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement.
- Failing to expeditiously honor drafts given in settlement of claims.
- Failing to adopt and implement reasonable standards for the processing and payment of claims after the obligation to pay has been established—normally within 15 business days after receipt by the insurer or its attorney of properly executed releases or other settlement documents.
- Negotiating or settling a claim directly with any claimant known to be represented by an attorney without the attorney’s knowledge and consent.
The Tort Law Standard: An insurance company’s actions can be considered bad faith if its breach of the insurance contract was unreasonable, frivolous, or unfounded.
Disability Insurance Bad Faith: Different States – Part 6 (Texas)
The latest installment in our series of blog posts outlines the insurer bad faith law of Texas. Previous posts covered similar laws in Arizona, California, Colorado, Nevada, and New Mexico.
The Texas statutes and bad faith tort law are closely related. An insurance company’s bad faith gives rise to a violation of the Deceptive Trade Practices-Consumer Protection Act and Texas Insurance Code. If an insurance company has not acted in bad faith, it cannot be liable under the statutes. Ultimately, a private individual whose disability insurance claim was unfairly denied can bring an action against the insurance company under either the statute or the state tort law.
The Statute: Tex. Ins. Code Sec. 541.060
The Rules: It is considered by law to be an unfair or deceptive act or practice for an insurance company to engage in the following unfair settlement practices:
- Misrepresenting a material fact or policy provision to the person making the claim.
- Failing to bring about a fair, prompt, equitable settlement when the disability insurer’s responsibility to pay has become reasonably clear.
- Failing to provide a claimant with a prompt and reasonable basis, grounded in the policy or the applicable law, or the denial of the claim or a settlement offer.
- Failing to affirm or deny coverage or submit a reservation of rights.
- Refusing a settlement offer on the basis that other coverage may be available, except as specifically provided in the claimant’s policy.
- Refusing to pay a disability insurance claim without conducting a reasonable investigation.
- Undertaking to enforce a full and final release of a claim from a policyholder when only a partial payment has been made, unless the payment is a compromise settlement of a doubtful or disputed claim.
The Standard: A disability insurance company is liable for bad faith if it knew or should have known that it was reasonably clear that the claim was covered. An insurance company cannot escape bad faith liability merely by failing to investigate a claim so that it can contend that its obligation to pay was never reasonably clear.
Disability Insurance Bad Faith: Different States – Part 5 (New Mexico)
Over the past several days, we have been outlining the different standards that apply from state to state in determining whether a disability insurance company has acted in bad faith in wrongly denying a claim. Previous posts have outlined the standards for Arizona, California, Colorado, and Nevada. Today we look at the bad faith law of New Mexico.
New Mexico created a statute governing insurance company practices, called the Trade Practices and Frauds Act, in order to promote ethical settlement practices within the insurance industry. Anyone who has suffered damages as a result of a violation of that statute by a disability insurance company can bring an action to recover his or her damages. A policyholder can also bring a suit based on the same wrongful conduct under New Mexico’s tort law.
The Statute: N.M. Stat. § 59A-16-20
The Rules: Any and all of the following practices by an insurance company are defined as unfair and deceptive practices and are prohibited:
- Falsely representing pertinent facts or policy provisions relating to coverages at issue to insured.
- Failing to acknowledge and act reasonably promptly upon communications with policyholders.
- Failing to have reasonable standards in place for prompt disability claim processing and investigation.
- Failing to affirm or deny coverage of claims of insureds within a reasonable time after proof of loss requirements under the policy have been completed and submitted.
- Not attempting in good faith to come to prompt, fair and equitable settlements of claims in which the disability insurance company’s liability has become reasonably clear.
- Compelling insureds to institute a lawsuit to recover amounts due under their policy by offering substantially lower amounts than those ultimately recovered when the insureds have made claims for amounts reasonably close to the amounts they ultimately recover at trial.
- Attempting to settle a disability claim for less than the amount to which a reasonable person would have believed he was entitled by reference to written or printed ads accompanying or made part of a disability insurance application.
- Trying to settle claims on the basis of an application that was altered without the policyholder’s knowledge or consent.
- Delaying the investigation or payment of claims by requiring unnecessary, duplicative information.
- Failing to promptly provide an insured a reasonable explanation of the basis the insurance company relied on to deny a disability claim.
In our next blog post about Insurance Bad Faith, we will outline the standards that apply in the State of Texas.
Disability Insurance Bad Faith: Different States – Part 4 (Nevada)
Having outlined the tort law and statutes covering an insurers wrongful claim denial in the states of Arizona, California, and Colorado, we now take a look at the bad faith law of Nevada.
In Nevada, a disability insurance policyholder can bring a lawsuit for bad faith under tort law, or may bring a claim based on the Unfair Claim Practices statute, which was enacted as part of a comprehensive plan to regulate insurance practice in Nevada.
A policyholder can only sue for bad faith under tort law if his or her claim has been denied, but can bring suit under the Unfair Claim Practices statute whether or not the disability insurance claim is denied.
The Statute: Nev. Rev. Stat. § 686A.310
The Rules: Engaging in any of the following activities is considered to be an unfair practice for disability insurers:
- Misrepresenting to insureds or claimants pertinent facts or insurance policy provisions relating to any coverage at issue.
- Failing to acknowledge and act reasonably promptly upon communications with respect to disability claims.
- Failing to adopt and implement reasonable standards for the prompt investigation and processing of disability insurance claims.
- Failing to affirm or deny coverage of claims within a reasonable time after proof of loss requirements have been completed and submitted by the policyholder.
- Failing to effectuate prompt, fair and equitable settlements of claims in which liability of the insurer has become reasonably clear.
- Compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by such insureds, when the insureds have made claims for amounts reasonably similar to the amounts ultimately recovered.
- Attempting to settle a disability claim for less than the amount to which a reasonable person would have believed he or she was entitled by reference to written or printed advertising material accompanying or made part of an application.
- Attempting to settle claims on the basis of an application which was altered without notice to, or knowledge or consent of, the insured, or the representative, agent or broker of the insured.
- Failing, upon payment of a claim, to inform insureds of the coverage under which payment is made.
- Making known to claimants a practice of the insurance company of appealing from arbitration awards in favor of claimants for the purpose of compelling them to accept settlements or compromises less than the amount that was awarded in arbitration.
- Delaying the investigation or payment of claims by requiring a claimant or his or her doctor to submit a preliminary claim report, and then requiring the subsequent submission of formal proof of loss forms, both of which submissions contain substantially the same information.
- Failing to settle claims promptly, where liability has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage.
- Failing to provide a prompt, reasonable explanation of the basis for the denial or settlement offer.
- Advising a claimant not seek a disability insurance attorney.
- Misleading an insured or claimant concerning any applicable statute of limitations.
The Tort Law Standard: An insurer fails to act in good faith and breaches the covenant of good faith and fair dealing when it refuses without proper cause to compensate an insured for a loss covered by the policy.
Spy Cam Placed on Disabled Man’s Neighbor’s Property by Insurance Company
Dana Fredericks, who filed a disability claim at with Accident Fund Insurance Company of America due to his back problems, says that his insurer placed a spy camera on the private property of his neighbor in order to conduct surveillance on him. The outraged neighbor, Ron Guzanek, reports that private investigators pretended to be cable workers and cut a clearing in his hedgerow while installing the sizable camera. Guzanek, who says the camera was placed on his private property on a private road without his consent, notified the Oakland County Sheriff’s Department.
The spy camera—which had short-circuited and was billowing smoke—was removed by the fire department and remains in the custody of the Sheriff’s Department, despite the assertions of Accident Fund Insurance Company of America that the company and its private investigators had complied with all laws. The insurance company is conducting an internal review into the matter.
While not all insurance companies will go to illegal lengths in order to spy on their insureds, this story is a reminder to anyone with a disability claim to be aware that at any time your insurance company may be conducting surveillance upon your activities.
Local television coverage of the Addison Township, Michigan spy cam incident can be viewed here.
Disability Insurance Bad Faith: Different States – Part 3 (Colorado)
In this series of blog posts, we have been outlining the first-party insurance bad faith law of Arizona, California, and other states. Today’s post examines the bad faith law of Colorado.
Although the Colorado statute regarding unfair or deceptive acts or practices provides for state regulation of insurance companies and not for private lawsuits for damages, an insured can still bring a bad faith action against a disability insurer under Colorado tort law. Nevertheless, in determining whether an insurance company’s delay in paying benefits or its denial of disability benefits was reasonable, the court or jury can consider evidence that the insurer’s conduct violated the Unfair Claims Settlement Practices Act statute.
The Statute: Col. Rev. Stat. § 10-3-1104
The Rules: An insurance company must:
- Not misrepresent pertinent facts or policy provisions.
- Acknowledge or act reasonably promptly upon communications.
- Adopt and implement reasonable standards for the prompt investigation of claims.
- Conduct a reasonable investigation based upon all available information before refusing to pay a disability insurance claim.
- Affirm or deny coverage within a reasonable time.
- Attempt in good faith to effectuate prompt, fair, and equitable settlement of claims in which liability has become reasonably clear.
- Not compel insureds to institute litigation to recover amounts due under their policies by offering substantially less than the amounts ultimately recovered in legal actions brought by the insureds.
- Not attempt to settle a claim for less than the amount that a reasonable person would have believed he or she was entitled to based upon the insurer’s advertising or policy application materials.
- Not delay investigation or payment by requiring submission of multiple forms containing substantially the same information.
- Promptly provide a reasonable explanation of the basis in the policy or law for a claim denial or compromise settlement offer.
The Tort Law Standard: Disability insurance companies can be liable for first party bad faith if they act unreasonably and with knowledge of or reckless disregard of their unreasonableness.
In our next post, we will review the insurance bad faith standards for the State of Nevada.
Disability Insurance Bad Faith: Different States – Part 2 (California)
In this series of posts, we are outlining what constitutes insurer bad faith from state to state. Our previous post outlined Arizona’s standards, and today, we look at the bad faith law of California.
In California, the Unfair Trade Practices Act of the Insurance Code statute dealing with unfair claims settlement practices is merely a codification of its bad faith law. A policyholder can bring a suit in California against its disability insurance company under the tort law, but not under the statute itself.
The Statute: Cal. Ins. Code § 790.03(h)
The Rules:
An insurance company’s duties include the following:
- To investigate disability claims thoroughly.
- To not deny coverage based on unduly restrictive policy interpretations.
- To use standards it knows are improper to deny disability claims.
- To not unreasonably delay processing or paying claims.
- To give as much consideration to the insured’s interests as it does to its own.
An insurance company is not allowed to:
- Misrepresent pertinent facts or policy provisions.
- Fail to acknowledge or act reasonably promptly on communications about a disability insurance claim.
- Fail to adopt and implement reasonable standards for prompt claims investigation.
- Fail to make a decision on coverage within a reasonable time after a policyholder has submitted complete proof of loss.
- Tell claimants the company always appeals arbitration awards in favor of claimants to get them to accept lowball settlement offers.
- Not attempt to make prompt, fair, and equitable settlements in which it has become reasonably clear that the disability insurance company must pay a claim.
- Force an insured to litigate to recover under the policy by offering an unreasonable settlement.
- Delay investigation or payment of claims by requiring an insured to submit multiple forms containing the same data.
- Withhold a reasonable explanation of the basis relied on in the insurance policy for the denial of a disability claim or for the offer of a compromise settlement.
- Directly advise a disability claimant not to obtain the services of a lawyer.
- Deceive a claimant as to the statute of limitations that applies.
The Tort Law Standard: A disability insurer can be found to have acted in bad faith if it withholds benefits unreasonably and without proper cause, whether or not the insurance company had a conscious awareness of wrongdoing or intent to harm the policyholder.
Disability Insurance Bad Faith: Different States – Part 1 (Arizona)
When a disability insurance company wrongly denies a disability claim in Arizona, it can be subject to a suit for bad faith. What constitutes insurer bad faith varies from state to state. Over the next several days, we will be outlining the first-party insurance bad faith law of Arizona and nearby states.
In many states, an insurance company can be held liable for its wrongful conduct in two ways: (i) under the tort law of the state or (ii) under a state statute. Though tort law and the statute usually overlap somewhat, they are sometimes meant to create separate and distinct causes of action. The tort law makes the insurance company pay damages to a private policyholder, while a violation of the statutes can often lead to either a suit by a private policyholder or charges brought by the state.
Arizona Insurance Bad Faith Law
The Arizona Unfair Claim Settlement Practices Act was intended to give the state Department of Insurance, headquartered in Phoenix, Arizona, guidelines for determining whether an insurer’s procedures and practices occur with such frequency as to indicate an unacceptable general business practice. This statute does not allow an individual to bring a lawsuit based solely on its provisions.
However, dentists and physicians can bring an action under the state’s tort law. Under Arizona insurance law relating to disability claims, the core of the duty of good faith and fair dealing is that the insurer must act reasonably towards its insured, giving equal consideration in all matters to the insured’s interest.
The Statute: A.R.S. §20-461. Unfair claim settlement practices.
The Rules: An insurance company’s duties include the following:
- To act reasonably in handling the claim.
- To not misrepresent facts of policy provisions to avoid paying benefits.
- To reasonably interpret contract provisions.
- To not take unreasonable legal positions.
- To not impose requirements on the insured that are not contained in the policy.
- To properly investigate the claim.
- To treat the policyholder fairly and honestly at all times.
- To give as much consideration to the insured’s interests as it does to its own.
- To make claims decisions without regard to profitably.
- To not attempt to influence the opinions of independent medical examiners.
- To not destroy or alter documents to conceal evidence of claim handling.
- To not lie about actions taken on a claim.
The Tort Law Standard: An insurer can be liable for bad faith if there is an absence of a reasonable basis for denying benefits of the policy and the disability insurance company had knowledge or a reckless disregard of the lack of a reasonable basis for denying the claim.
If you have concerns that your disability insurance claim has been denied in bad faith, an experienced Arizona disability can help you determine if you have a lawsuit to file against your insurer.
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.
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.
