In our previous post, we looked at how important it is for residents to have a plan to protect themselves financially in the unfortunate event they become disabled. In this post we will address some critical terms to look for when comparing potential disability policies.
Perhaps the most important provision in your disability insurance policy is the definition of “Total Disability.” For physicians, dentists, and other highly specialized professionals who have invested both years and hundreds of thousands of dollars in their careers, a policy that defines “Total Disability” in terms of your inability to perform the specific duties of your “own occupation” (as opposed to “any occupation”) is critical. If your policy defines “Total Disability” as being unable to work in “any occupation,” it will be much more difficult to establish that you are entitled to benefits, in the event you suffer from a disabling condition.
In addition to knowing and understanding your policy’s definition of “total disability,” it is also crucial to know how working in another profession is treated by your disability insurance policy. For instance, if you happened to be an oral surgeon with an essential tremor, you may no longer be able to operate safely on patients, but you may still be able (and want) to teach. Alternatively, if you happened to be a physician who did not take steps to increase your disability coverage to match your increases in earnings, working in another capacity may be the only way to maintain your lifestyle in the event of disability. Consequently, it is also important to know if your policy will allow you to work in another capacity and still collect disability benefits. Along those lines, here are a few other provisions you will want to watch out for:
No Work Provisions
These provisions mandate that you cannot work in another field and still receive disability benefits. This can be problematic if you do not have sufficient disability coverage to meet all of your financial needs.
These types of provisions require you to work in another occupation. This, of course, can make it impossible to collect on your disability benefits if your disability prevents you from working.
In our next post we will look at how you can select a plan that grows with you over time, as both your financial obligations and income change.
In a previous post, we discussed the importance of how your disability insurance policy defines the key term “total disability,” and provides several examples of “total disability” definitions. The definition of “total disability” in your policy can be good, bad, or somewhere in-between when it comes to collecting your disability benefits.
Disability insurance policies with “true own occupation” provisions are ideal. Here’s an example of a “true own occupation” provision:
Total disability means that, because of your injury or sickness, you are unable to perform one or more of the material and substantial duties of your Own Occupation.
Under this type of provision, you are “totally disabled” if you can’t work in your occupation (for example, you can no longer perform dentistry). This means that you can still work in a different field and receive your disability benefits under this type of disability insurance policy.
Insurance companies often try to make other disability insurance policies look like true own occupation policies, and include phrases like “own occupation” or “your occupation,” but then tack on additional qualifiers to create more restrictive policies.
One common example of a restriction you should watch out for is a “no work” provision. Although these provisions can contain the phrase “your occupation” they only pay total disability benefits if you are not working in any occupation. Here’s an example from an actual policy:
Total disability means solely due to injury or sickness,
- You are unable to perform the substantial and material duties of your occupation; and
- You are not working.
As you can see, under this type of provision, you cannot work in another field and still receive disability benefits. This can be problematic if you do not have sufficient disability coverage to meet all of your monthly expenses, as you’re not able to work to supplement your income.
A “no work” provision is something that is relatively easy to recognize and catch, if you read your policy carefully. Recently, we have come across a definition of “total disability” that is not so easy to spot, but can dramatically impact you ability to collect benefits. Here’s an example, taken from a 2015 MassMutual policy:
OWN OCCUPATION RIDER
Modification to the Definitions Section of the Policy
Solely for the Monthly Benefits available under this Rider, the definition of TOTAL DISABILITY is:
TOTAL DISABILITY – The occurrence of a condition caused by a Sickness or Injury in which the Insured:
- cannot perform the main duties of his/her Occupation;
- is working in another occupation;
- must be under a Doctor’s Care and
- the Disability must begin while this Rider is In Force.
At first glance, this looks like a standard “own-occupation” provision—in fact, it is entitled “Own Occupation Rider.” But if you take the time to read it more closely, you’ll notice that the second bullet point requires you to be working in another occupation in order to receive “total disability” benefits.
Obviously, this is not a disability insurance policy you want. If you have a severely disabling condition, it may prevent you from working in any occupation, placing you in the unfortunate position of being unable to collect your disability benefits, even though you are clearly disabled and unable to work in any capacity. Additionally, many professionals have limited training or work history outside their profession, so it can be difficult for them to find alternative employment or transition into another field—particularly later in life.
These “work” provisions appear to be a relatively new phenomenon, and are becoming increasingly more common in the newer disability insurance policies being issued by insurance companies. It is crucial that you watch out for these “work” provisions and make sure to read both the policies definition of “own-occupation” and “total disability.” While many plans contain the phrase “own-occupation”, including this example, they often aren’t true own-occupation policies and you shouldn’t rely on an insurance agent to disclose this information. Oftentimes, your agent may not even realize all of the ramifications of the language and definitions in the disability insurance policy that they are selling to you.
Lastly, you’ll also note that this particular provision was not included in the standard “definitions” section of the disability insurance policy, but was instead attached to the policy as a “rider,” making it even harder to spot. It’s important to remember that many definitions and provisions that limit disability coverage are contained in riders, which typically appear at the end of your policy. Remember, you should read any disability insurance policy from start to finish before purchasing.
Standard is another disability insurer we will look at that specifically markets its policies to physicians and dentists.
StanCorp Financial Group (“StanCorp”) was founded in 1906 and uses the marketing name “The Standard” to refer to its primary subsidiaries, which include the Standard Insurance Company and the Standard Life Insurance Company of New York. In 2013, StanCorp received $351.7 million in pre-tax income, and $272.4 million (approximately 77%) of that income was attributable to profits from StanCorp’s insurance services. StanCorp is particularly proud of its consistent long term growth and—given the fact that 77% of StanCorp’s profits come from its insurance services—StanCorp has an obvious incentive to deny high paying disability claims submitted by physicians and dentists.
Company: StanCorp Financial Group, Inc.
Location: Portland, Oregon.
Associated Entities: Standard Insurance Company; The Standard Life Insurance Company of New York; StanCorp Investment Advisers, Inc.; Standard Retirement Services, Inc.; StanCorp Mortgage Investors, LLC.
Assets: $22.73 billion in 2014.
Notable Policy Features: If you are considering a Standard disability insurance policy, you should pay particular attention to whether the policy allows for total disability benefits if you are working in another occupation. Oftentimes, Standard policies will pay nothing more than residual disability benefits if you are able to secure other part-time employment. For example, if you can no longer practice dentistry, but you are able to teach classes at a dental college, Standard may refuse to pay you total disability benefits. If you are eligible for residual benefits, Standard will require you to submit proof of your income every single month.
Claims Management Approach: Standard tends to demand strict compliance with its claims procedures, and Standard will generally not be very accommodating if you make a mistake. This can be problematic, because, for many policyholders, the disability claims process is unfamiliar and daunting. If you are dealing with Standard, be sure to ask for a detailed explanation of what is required of you. You should pay close attention to deadlines, as they will likely not be flexible. You should also make sure that you use Standard’s forms when providing attending physician statements or other documentation of your disability, because Standard will not accept other insurers’ forms.
These profiles are based on our opinions and experience. Additional source(s): “Quick Facts About the Standard” and “About the Standard,” available at www.standard.com; StanCorp 2014 KBW Conference Presentation, available at investor.stancorpfinancial.com.
A large part of our practice consists of helping physicians and dentists whose disability insurance claims have been denied or terminated. When our clients come to us, we carefully analyze their medical records, the claim file, and the law to craft a specific strategy for getting the disability insurer to reverse its adverse determination. Unfortunately, we sometimes find that in between receiving notice that their claim has been denied or terminated and getting in touch with our firm, doctors will inadvertently take actions that prejudice their disability claims. With that in mind, it’s important to review what to do and what not to do in the first few days after your claim is denied or terminated.
- In all likelihood, you will first find out that your insurer is denying or ending your disability benefits via a telephone call from the claims consultant who analyzed your claim. As we’ve explained before, the consultant will be taking detailed notes about anything you say during that call. Therefore, even if you are justifiably upset or angry, be very mindful of what you say. Anything you tell the consultant will certainly be written down and saved in your file.
- During the call with your consultant, make your own notes. You don’t have to ask a lot of questions at this stage, but you do want to make sure to record whatever information the consultant gives you.
- Following the phone call, you should receive a letter from the insurance company stating that it has denied your disability claim or discontinued your disability benefit payments. According to most state and federal law, the letter should have a detailed explanation of the evidence the company reviewed and why the insurer thinks that evidence shows you aren’t entitled to disability benefits. When you receive the letter, read through it carefully. Make notes on a separate document about any inaccuracies you identify.
- Make sure you keep a copy of the denial or termination letter as well as the envelope it came in. You should also make a note of the date on which you received the letter. The date the letter was actually mailed and received could be important to your legal rights in the future. Then, the best thing to do is to scan the documents electronically or make a photocopy for your file, just in case the original denial letter gets lost or damaged.
- Once you find out that your disability claim has been denied or terminated, you should contact a disability insurance attorney. Some doctors and dentists attempt to handle an appeal of their claim on their own, but we strongly suggest at least consulting with a law firm. Every insurance company has its own team of highly-trained claims analysts, in-house doctors, and specialized insurance lawyers to help it support the denial of your claim. Having your own counsel can level the playing field by making sure you know your rights under your policy and what leverage the applicable law provides you, and help you avoid the common traps that insurance companies lay for claimants on appeal.
- The lawyer you consult can be in your area, or it can be a firm with a national practice that’s physically located in another state. You may want to review these questions to ask potential attorneys before you decide who you would like to represent you.
- Whatever attorney you choose to contact, make sure you do so as soon as possible. In many circumstances, you will only have a limited amount of time to appeal the insurance company’s decision. Particularly in claims governed by the federal law ERISA, the clock starts ticking as soon as you find out your disability claim has been denied or terminated.
- It’s usually best to contact a disability insurance attorney before you respond to the denial letter, to avoid saying anything that could prejudice your appeal. For instance, if you have a disability insurance policy that is governed by ERISA, and you submit some additional information, the insurance company may not allow you to submit any additional information after your initial response.
- Before you meet with potential disability insurance lawyers, gather whatever documents you can to help them evaluate what’s going on with your claim. Our firm will always want to review the insurance policy or policies. (Here’s information on how to get a copy of your policy). We typically also like to see your relevant medical records and any correspondence between you and your insurance company. If you aren’t able to locate this information, it could cause delays in starting the appeal process.
- If you are a physician or dentist that is totally disabled, you should not try to go back to work just because your insurance company thinks you don’t qualify for disability benefits. Trying to practice when you aren’t in a physical or mental condition to do so could cause you to re-injure yourself or accidentally harm your patients. Of course, trying to work on patients after you’ve claimed that you are totally disabled can expose you to professional liability as well. Further, trying to return to work could impair your ability to collect your disability benefits upon appeal.
The recent 9th Circuit case Stephan v. Unum Life Insurance provides new guidance on when an insurance company’s internal documents may be discoverable.
Mark Stephan, a resident of California, suffered a bicycle accident that injured his spinal cord, rendering him quadriplegic. He filed for total disability benefits under his employer-sponsored Unum disability insurance policy, which was part of a plan governed by ERISA.
Mr. Stephan’s policy required Unum to pay him a benefit equal to a percentage of his pre-disability earnings. When Unum calculated how much Mr. Stephan was earning, it included his monthly salary, but not his annual bonus. This allowed Unum to calculate a much lower earnings rate—and thus a much lower amount that Unum had to pay in disability benefits.
Mr. Stephan sued Unum, seeking to overturn its benefit determination. After the trial court found in Unum’s favor, Mr. Stephan appealed, and the 9th Circuit Court of Appeals examined his case. Continue reading “When Are Internal Insurer Memos Discoverable?”
In 2007, the Georgia Court of Appeals had to address this question in Pomerance v. Berkshire Life Insurance Company of America. 654 S.E.2d. 638 (2007). Alan Pomerance was an obstetrician/gynecologist with four disability insurance policies from Berkshire. These policies provided own-occupation coverage, meaning that “total disability” was defined as “your inability to perform the material and substantial duties of your occupation.”
Dr. Pomerance’s occupational duties included delivering babies, surgeries, C-sections, office visits, making hospital rounds, and being on call. After being diagnosed with a degenerative knee condition, Dr. Pomerance filed a total disability claim with Berkshire, explaining that he could no longer stand for long period of time, so he couldn’t perform deliveries and hospital surgeries, be on call, or assist in the emergency room. Because of his disability, Dr. Pomerance was forced to restrict his practice solely to wellness office visits, which included patient exams, counseling, nonsurgical care, and minor biopsies, but none of his other former duties.
Berkshire declined to pay Dr. Pomerance total disability benefits, arguing that he was only partially disabled because he could still perform one of his “substantial” duties, i.e., office visits. Dr. Pomerance contacted Berkshire and objected to its determination, but Berkshire still refused him total disability benefits. Dr. Pomerance filed suit against Berkshire, claiming breach of contract and bad faith refusal to pay the amounts owed. Continue reading “Case Study: What Does “Material and Substantial” Mean?”
Northwestern Mutual Offers Insight Into How Disability Insurers Interpret and Apply “Own Occupation Coverage”
Northwestern Mutual Life Insurance—a major provider of disability income insurance for physicians and dentists—has just launched a new website, the “Disability Income Insurance Knowledge Center,” which it claims will help policyholders understand the terms of their “own occupation” disability insurance coverage.
“Own occupation” policies are often marketed by disability insurers as allowing physicians and dentists to receive their full disability insurance benefit, while at the same time working in another occupation, as long as they can no longer practice medicine or dentistry. Some disability insurance policies further specify that the insured’s specialty will be considered his “occupation” for purposes of “own occupation” coverage. Under these disability policies, as they are frequently marketed, an insured could receive his full benefit, even if he is still working as a physician or dentist, as long as he is disabled from his former specialty.
As an example, a neurosurgeon who develops a hand tremor may still be a capable doctor, but he can no longer perform surgery. Since he can no longer perform the principal medical duty of neurosurgery (i.e., surgery), it would be logical to conclude that he would be disabled from his occupation as a neurosurgeon. However, Northwestern’s new website has an interactive “Fact or Fiction” quiz in which it offers its interpretation as to how these “own occupation” provisions should be interpreted. Northwestern’s conclusions are gross oversimplifications that fail to consider the nuances of a disability claim, and ignore differences in policy language and the manner in which the policies have been interpreted under Arizona law. These oversimplifications appear designed to dissuade individuals with legitimate disability claims from pursuing their remedies. Nevertheless, they offer a glimpse into how disability insurers often view an insured’s occupational duties. Some samples from the “quiz” include the following statements:
Statement: If I could not perform my principal medical duty, the one that’s my “bread and butter,” I’d be considered totally disabled under an “own occ” policy.
Northwestern Mutual: FICTION. “To be totally disabled under traditional ‘own occ’ disability income insurance definitions, you would have to be unable to do ALL of your principal duties.”
Depending on the terms of his “own occupation” policy, an Arizona physician or dentist may be totally disabled if he cannot perform any substantial part of his ordinary duties in his usual and customary manner. In one major case, an invasive cardiologist was no longer able to perform invasive procedures—a substantial part of her original duties—but continued work in non-invasive cardiology and geriatrics. The jury found her totally disabled under her “own occupation” policy and held that her insurer had denied her disability insurance claim in bad faith. It then awarded her $84.5 million.
This statement also reflects an important issue in interpreting these policies – while countless words and phrases are defined, the phrase “principal duties” is generally not defined. Taking advantage of this fact, insurers often attempt to transmute incidental duties, such as staff oversight or pre- and post-operative patient consultation, into principal duties, without any justification for doing so. If insurers were permitted to do this, as Northwestern suggests, it would render “own occupation” coverage illusory since, absent a catastrophic injury, the insurer would always be able to find that the insured could perform some duty of his prior occupation. Fortunately, Arizona courts do not permit insurers to classify all duties as “principal duties.” As one Arizona court noted “[f]ew specialty occupations could survive such piecemeal scrutiny. If separated into an hour-by-hour analysis, only asking the question whether these tasks are also performed in a more general setting, specialists who choose to continue to work in a more general practice after becoming disabled from their specialty could never qualify for total disability benefits, although the policy specifically allows for this.” Continue reading “Northwestern Mutual Offers Insight Into How Disability Insurers Interpret and Apply “Own Occupation Coverage””