Quiat on Claims : New York Disability Insurance Lawyer & Attorney : Michael Quiat : Uscher Quiat Uscher & Russo Law Firm : ERISA, Denied Claims

A decision with the impact of an earthquake on ERISA litigation was handed down yesterday (June 29) by the 7th Circuit Court of Appeals in Krolnik v. Prudential, No. 08-2616.

The ruling called the “de novo review” standard set in Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989), a misnomer and suggested that “de novo” be replaced by the word “independent”, with the word “review” replaced by the word “decision”.

In effect, the Court did away with the “kowtow” requirement in ERISA disability income cases which since Firestone v. Bruch seemed to require that the courts must defer to administrative decisions made by plan administrators even where de novo review is appropriate.

In Krolnik, the appeals court ruled that in those cases in which discretion is not granted to the administrator by the ERISA plan, claimants are entitled to a trial on the merits – not just a review of whether the administrator’s decision can be justified based on the record of the administrative hearing below.

Relying on the language in Firestone v. Bruch, the 7th Circuit suggested that litigation by plan participants seeking de novo review of benefit denials under ERISA should be conducted in the same manner as contract litigation, since an ERISA plan and the insurance policy which is to be interpreted are contracts.

The court said, in part, “In a contract suit the judge does not ‘review’ either party’s decision. Instead the court takes evidence (if there is a dispute about a material fact) and makes an independent decision about how the language of the contract applies to those facts”.

This ruling is a blockbuster law changer which should send ERISA claimants and their lawyers scurrying to carefully reread the language of their ERISA policies.

For LTD insurers, it means real litigation in de novo review cases – complete with full discovery, the right to cross-examine witnesses and, perhaps, even some day a jury trial.

The days when ERISA carriers could slide through on the basis of untested, unsubstantiated and unchallengeable medical reports may very well be coming to an end, at least, in de novo review cases.
 

GOOD RIDDANCE!

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If an adjustor or other agent of your disability income insurer wants to talk with you as a claimant, talk. But, there is no way you should invite the agent into your home or office. Meet the agent at your lawyer’s office with your lawyer present.

By the very nature of the insurer-claimant relationship, it is obvious the insurer is not your friend. Therefore, neither is the insurer’s employee, the adjustor.

An adjustor may try to charm you into a “convenient” visit to your home just to get “your view” of your claim. Don’t fall for this line. The adjustor works for the insurance company which is trying its “darndest” to reject your claim or at least find some reason for reducing it.

Why host a meeting at your home or office which will give your adversary a leg up on how you live, what you own and how tough an adversary you are likely to be? Also, acting as a “host” you are less likely to carefully scrutinize the statement that the adjustor is likely to write as you talk and ask you to sign.

If the adjustor wants to talk, your policy requires you to cooperate and talk. But, the time and place of the discussion has to be mutually agreed upon.

The best place for such a meeting is your lawyer’s office with your lawyer acting as host.

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Because a disability income insurance claim requires you and your physician(s) not only to describe the medical (or psychological) nature of your disability but also why the disability makes it impossible for you to perform your occupational duties, any error or uncertainty is guaranteed to be seized upon by the insurer and used to attack your right to benefits.

Why is it of vitally more importance for a claimant to have good, knowledgeable advice about how to file a disability claim before filing a claim, than it is in filing a claim in just about any other field of insurance? An expert should help you understand the details required to file a DI claim in an accurate, responsible manner, with the proper supporting documents in proper form so that the insurance company will have no technical excuse for rejecting the claim or demanding more information from you before reviewing your claim.

This is particularly so if your claim is covered by the ERISA statute. Giving your insurer the least little edge at the time of filing your notice, provides the insurer with a big leg up in resisting benefits payments to you. This is because the ERISA statute provides the insurer with the first opportunity to declare whether, in its opinion, your claim is valid or invalid. More on ERISA.

It’s the same as with anything else. The party starting off with a decision in its favor has the advantage in that the other party -- in this case you -- has the burden of proof to show that the original decision is faulty. Sometimes when trying to do this, you are forced to rely heavily on the papers and reports you supplied in making the claim and if these documents are in error or are incomplete, they can hurt you in trying tomeet this burden of proof.

While on the subject of filing a claim, an important part of this area is the type of medical and occupational reports which are furnished to the insurer on your behalf. Medical experts are very important to presentation of your disability income claim as the entire basis of your position is that your illness or injury prevents you from attending to your occupation or, perhaps, any occupation.

So, the first thing is to be hopefully treated and examined by a doctor who is fully familiar with and experienced in your disability. However, no matter how skilled and knowledgeable a physician is, it does your insurance claim no good if the doctor can’t or won’t properly communicate the details of your true condition and the nature of your restrictions and limitations to the disability insurer.

So, while you are being treated it behooves you to express clearly to your physician that you expect to make a claim under a disability income policy. You may also explain that since you are disabled and can’t work, under the terms of your policy your future depends on the doctor providing the insurer accurate and complete reports on your condition.

Request that the doctor personally attend to any reports required on your behalf and that the reports be as complete and thorough as possible in describing your condition.

Try to impress upon your treating professionals how much your future wellbeing depends on the outcome of your disability claim and how you would appreciate their full and complete attention to your reports.

After all, just as in treating your injury or illness, the doctor’s knowledge and attention to detail in reporting your true condition determines your future.
 

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Federal judges are quickly wising up to the tricks of the trade used by insurance companies to deny disability income claims. The penchant of many insurance company medical examiners to disregard valid first-hand evidence of disability, while themselves relying on medical reports and other “long-distance” diagnoses in making decisions, is receiving less and less support from the courts.
 

One trick the courts seem to really have caught onto is the Social Security Disability “scam”. While flooding Social Security with practically every group long term disability claim on their books, insurers consistently disregard the Social Security findings of disability whenever it suits them.
 

The way it works is that the insurance company will force a disabled group policyholder to file for SSDI benefits with the Social Security Administration by threatening to cut off their disability benefits if they don’t. The insurer will even supply an attorney to handle the claim for its policyholder. Seems like a generous move, eh?
 

Not so. If the SSDI claim is successful, the insurance company gets to deduct the amount of the SSDI payments from the claimant’s insurance company benefit payments, a definite plus for the insurer. But, does this affect how the insurance company looks at the claimant’s benefits claim? In a great many cases, not at all!

In reviewing and deciding disability under the terms of its own policy, companies many times pay little or no attention whatsoever to the SSDI decision (while accepting the benefits of reducing their claims payments). In other words, they are saying, “We’ll accept the SSDI judgment that the claimant is disabled (and take the money), but not when we have to decide if the claimant is disabled under the terms of our policy”.
 

However, since the decision in Metropolitan Life Insurance Company, et al v. Glenn, 128 S. Ct. 2343 (2008), recognizing the inherent conflict of interest when an administrator who makes the decision in a  disability case is the same entity which would have to pay the claim, courts are more and more giving weight to the SSDI decision in determining whether an insurance company refusal of disability benefits was proper.
 

Insurance companies have had their cake and ate it for far too long. It’s time disabled policyholders get their fair share.
 

For recent decisions on this issue:
 

          Barteau v. Prudential Insurance Co.,2009 WL 1505193 (C.D.,Cal.) 

         MacNally v. LINA, 2009 WL 1458275 (D.Minn.)
 

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Taking the first step in filing a claim for disability income benefits is not nearly the same as filing a claim for an auto accident, which is how many of us have our first claims experience with insurance companies. In fact, it is so different that an unintentional mistake in this first step can bring your whole hope of obtaining a benefit to a crashing halt, never to be resurrected.

In filing auto insurance claims, one usually gets the police report to open the claim and then follows with medical reports detailing the injury as a follow up. This procedure is usually enough to have the insurer either deny the claim or start to negotiate a settlement with you.

Not so with disability income insurance claims. With these claims there is an added factor – not only must you show you were you incapacitated to some degree by accident or illness, but you must also show that the incapacity prevented you from performing your work, either your usual occupation or any occupation, depending on the terms of your policy.

What makes this first step so vital is that disability carriers have large staffs of trained, experienced people going over disability income claims with a fine-toothed comb looking for any omission or inconsistency in the claim submission. It may be that your doctor’s report was too general in describing your disabling condition or that your description of your occupational duties omitted a key element or mistakenly described one of its functions. Without experience in filing such claims you would have no way of knowing you were making such an error.

If your disability income claim contains an error or omission, it will haunt you throughout your upcoming battle for proper benefits. At any administrative or judicial hearing, the insurance company will continually bring up the “warts” on your initial claim form to try to impeach your claim, no matter how you amend it to conform to what is required.

At the very least, the insurer will use the inadequacies of the initial claim to delay paying whatever monies may be due you.

The best defense against this insurance company defense tactic is to file a complete, accurate initial claim form.

Save yourself loads of headache – get it right from the get-go.


 

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With financial earnings in the dumps and prospects for an early recovery dim, insurance companies with disability income and other long-term payouts on their books are on the prowl for claimants who need cash NOW!

Disability insurers know that many of their beneficiaries are having trouble making mortgage payments, meeting college tuitions or just plain paying their bills in this severe economic turndown.

With long term disability beneficiaries in a stressed and highly vulnerable mode, having lost a good part of their incomes and retirement packages in the stock market meltdown, what better time to dangle a relatively large lump sum of cash in front of the insured?

Policy and settlement buyouts are complex issues and broad experience in successfully negotiating such deals is critical. Insurers like nothing better than dealing with a novice in buyout negotiations, especially if the novice needs the money and allows personal involvement determine the outcome.

How tempting for a beneficiary to grab a lump sum now and not worry about the long term consequences.

Issues which must be carefully considered for the beneficiary are:
 

* Understanding the true value of the claim.
* Family circumstances and needs.
* Are there other investments or incomes (i.e., annuities? pensions? SSDI?) which will replace the settled-away insurance benefits for the family?
* In view of the nature of the disability, what is the likelihood of the beneficiary living to the end of the benefit term? These benefits usually end at death.
* In view of the nature of the disability, what is the likelihood of the beneficiary recovering the ability to resume work before the end of the benefit period? Ability to resume occupation as described in the policy would terminate DI benefit payments.

To try to answer some of these thorny questions, a knowledgeable, experienced, not-personally-involved, adviser in the beneficiary’s corner is a must.


 

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We recently handled an insurance case which required us to do heavy research on the meaning of the word “accident”.

There are tons of insurance cases out there that hinge on the meaning of “accident” in all types of insurance policies issued by all kinds of insurance companies and in all jurisdictions.

What struck us was the fact that all of the insurance policies involved, which generally try to define every meaningful word in them to the nth degree, never try to define the word “accident” in their policy language. Is this an “accidental” oversight or is this failure to define deliberate so that insurance companies would have an open door to contest any claim based on an accidental happening?

This failure to define is not an insurance industry oversight. Insurance companies wouldn’t leave such a gaping hole in their policy language unless the hole was one which was advantageous to the insurers.

The companies use the nebulous word “accident” to enable themselves to mount and maintain a legal defense in a court of law. This immediately puts the claimant on the defensive. It means that the claimant is looking at much heavier legal fees and costs (if the claimant can even afford them) and a much longer period of time before any benefits are forthcoming.

Add to this the claimant “Docility Factor” (see post April 29, 2009, below) and it is easy to see that failing to define “accident” in policy language leaves a gaping hole which becomes a graveyard for many a claim.

Undefined “accident” is no accident.

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