We have previously written about the serious problems which result when insurance companies hire doctors to perform “paper reviews” of insurance claims without ever meeting or examining the patient, and then use those paper reviews to justify termination of benefits. In an ERISA context, this is particularly difficult because claimants are denied in most cases the opportunity to confront those professional reviewers or to cross examine them to show they are financially biased or otherwise not competent to speak to the issues about which they have given an opinion. Even so, insurance companies in increasing numbers rely on these unnamed, unknown medical sources to justify termination of benefits. On December 14, 2014, 60 Minutes broadcast a piece which speaks in part directly to this issue and points out the fundamental unfairness, indeed the dangers which can result when insurance companies make claim determinations and deprive people of benefits to which they are entitled and which they desperately need.
If you want a prime example of why we hammer at you to read your policy before you accept it, take a look at Nunn, et al. v. Massachusetts Casualty Insurance Company, 2014 WL 684980 (2nd Cir. 2014). Although the plaintiffs, both NBA basketball referees, didn’t read their policies, the court gave them a shot at prevailing because they didn’t get the coverage they were clearly led to believe they were getting.
This opportunity was given them because of the peculiar circumstances under which they had bought their policies. The ordinary insurance policy sales pitch is nothing like the one in this case. Without this peculiar situation, Mr. Nunn and Mr. Vaden would have been out of luck.
The usual insurance policy sale is a confidential matter with the salesman and the prospect dealing one on one. There are typically no witnesses to the sales pitch. In Nunn, the salesman made his pitch at a union meeting of NBA many basketball referees at which he clearly stated several times that the supplemental policy he was selling changed the “own occupation” limit on benefits from “10 years” to “age 65”. This meant that so long as the policyholder was unable to perform the duties of an NBA referee (commonly called “own occupation” coverage) within the time frame, benefits would continue..
The actual policy delivered to the insureds clearly stated that after 60 months of “own occupation” benefits payments, benefits would continue only if the insured were unable to perform the material duties of any gainful occupation for which he is suited (commonly called “any occupation” coverage). Since both plaintiffs were then employed, the insurance company refused further benefits.
It took an experienced disability insurance attorney to even recognize that the almost infallible rule about the policy language being the law of the case had a chink in its armor.
Because of the irrefutable statements of the salesperson (a lot of people heard him) that benefit payments would continue until age 65, the Court held that under Pennsylvania law, Nunn and Vader had “reasonable expectations” that payments would continue and ordered further proceedings.
Would the salesperson’s pitch have been irrefutable if the pitch had been made one on one? If there was the slightest doubt raised about this issue, Nunn and Vader wouldn’t have stood a chance. The policy language would be the law of the case and the plaintiffs would have been tossed out of court.
Protect yourself. Read and understand your policy before you buy it.
Don’t give your insurance company a chance to “bad-bounce” your benefits.
There are still plenty of people who don’t believe mental health victims require the same level of treatment as do physical illness victims. Among those in the first row of these skeptics are many insurance companies. After all, if insurance companies can fashion anything that looks like an excuse not to pay benefits, they will do it and use it.
A recent settlement reported between Cigna Corporation and the Attorney-General of New York State made this clear. New York has a law which requires insurance companies to provide mental health benefits on a par with other medical benefits.
A 14-year-old girl found that Cigna ignored that law when she asked for payment of nutritional counseling fees she incurred for treatment of anorexia nervosa, an eating disorder in which the patient slowly wastes away to nothing because she has a mental disorder causing her to refuse to eat sufficient food to maintain anything like a normal weight.
Cigna denied payment for all but three of her treatments because its policy contained a 3-visit-per-year limit on behavioral health treatments. There was no such limit in the policy on visits for similar nutritional counseling for ailments outside the boundary of behavioral health, such as heart attacks or diabetes.
Cigna could offer no particular reason for why the policy limited behavioral health visits to 3 per year. In the case from which the settlement evolved, the treating doctor was of the opinion that nutritional counseling would be a key factor in her recovery. In addition, the American Psychiatric Association Guidelines calls nutritional counseling a useful part of the treatment of eating disorders such as anorexia.
Yet, Cigna stood by its 3-visits-a-year limit. As a result of its investigation in this case, New York found that Cigna had enforced its 3-visit limit in about 50 cases, forcing those policyholders to pay more than $30,000 in fees which were to be reimbursed. As part of the settlement, Cigna has agreed to review those claims and pay them.
Why doesn’t the public, including insurance companies, take mental disorders as seriously as physical disorders? For those who are stricken, the anguish, mental torment and heartbreak is very real. The economic cost of trying for a cure is the same or may be even greater than for an illness whicht can be seen on an X-ray.
Why do these types of illnesses generally get second-class status from insurers?
Insurance companies almost always try to close the barn door after the horse is long gone. They seem to have a habit of waking up late when they contest a policy’s terms. But, that doesn't stop them from denying benefits.
A good example of this “sleepy” conduct was illustrated in Patterson v. Reliance Standard, 2013 WL 6328832, C.D. Cal.) , when Reliance was called upon to pay a life insurance death benefit. For four years the insured paid the required premiums and they were accepted by Reliance without demur.
Only when the insured had the temerity to die did Reliance shift into high gear, take a hard look at the policy and find that she had failed to provide a health form required before the policy could be issued. Reliance refused to pay the death benefit.
However, as in most cases, there was an incontestability clause in her policy which clearly stated that Reliance could not contest the policy after it had been in force for two years. So, a Federal District Court held that the clause prohibited the denial of benefit and found for the policyholder.
This case highlights a longstanding ploy of insurance companies: Take the premiums and worry about the details later (“later” meaning at the time you are called on to pay benefits). Up until that time, the money is going all one way – to the insurer. Only when the insured has to be paid does the insurance company get serious about the details.
An insurance policy is a solemn obligation to pay and should be treated as such. If an insurer is serious about the information it requires of an insured, it should verify that information at the time the policy is issued, not when a benefit is claimed. If the company knows that the policy becomes incontestable after a certain period of time it should protect itself by checking the necessary facts before that time period expires.
The reason insurers don’t thoroughly check policy applications is that it costs them money to do so. Why waste money checking when they can let the matter slide and collect premiums all the while. Insurers think they can always look into the details of the claim when a benefit becomes due.
This is most unfair to policyholders who may pay premiums for years believing they have coverage, only to have the company strongly contest at the time benefits are triggered. If the insurance company wins, the insured has no coverage even after paying premiums for years, believing there was coverage.
Insurance companies save a lot of money by ignoring the details on applications until a claim is made. This type of “post-claim underwriting” should not be permitted. The time for the insurers to do its “due diligence” is before it agrees to issue a policy, not after premiums have been collected for years.
By the time a claim is made, the best witness to the validity of the application (the insured) may be dead or disabled. That’s why insurers should not be able to raise application issues more than 2 years after a policy goes into effect.
If companies contest and lose, they generally have to pay only the same benefits the policy called for, so why not contest?
If an insurance company chooses not to spend the money or the time verifying the details of an application within a reasonable time, then so be it.
“Incontestable” should mean incontestable. Insureds must be able to rely 100% on its meaning.
“Disgorgement”, what a wonderful word.
If you are wondering at the sudden loud wailing in your ears, rest easy. It is only disability insurance companies and the ERISA defense bar waxing frenetic over a Sixth Circuit Court of Appeals decision which actually made a defendant insurance company pay for its obstinate, wrongful denial of an LTD claim. Rochow v. Life Ins. Co. of North America, 2013 WL 6333440 (6th Cir. (Mich.)).
Daniel Rochow was president of his company when he began suffering short term memory losses, and intermittent chills and sweats in 2001. In July of that year he was demoted to Sales Executive because he could no longer perform the duties of president. His medical difficulties continued, ultimately causing him to be terminated from his position at the company on January 2, 2002, because he was unable to perform his job duties.
In February, 2002, he suffered periods of amnesia, was hospitalized, and his condition was diagnosed as HSV-Encephalitis, a debilitating brain infection. Mr. Rochow applied for long term disability benefits under his former employer’s ERISA disability policy. LINA denied his application because he was no longer employed by his employer.
This case raises several interesting issues:
• Why do insurance companies shoot themselves in the foot by trying to penalize claimants who try to work through their problems before applying for disability?
• This case points up the inordinate amount of money insurance companies make in their daily operations
• Insurance companies want to maintain the status quo. They want to hold onto benefit monies for as long as they can because there is no downside to them for doing so.
• Meanwhile, by withholding benefits, insurers put major pressure on claimants. By definition, claimants can’t work so they earn nothing. At the same time they and their families have to eat, need a place to live and frequently have ongoing medical expenses.
Insurers and their lawyers are screaming about “disgorgement” because it is the only downside for insurers for wrongfully withholding benefits from claimants.
The doctrine of “disgorgement” changes this picture. If the insurer acts wrongfully in the matter of paying a claim, the claimant may be entitled to disgorgement. Instead of paying interest on the benefits wrongfully withheld, a court may require the insurer to pay the claimant the amount the insurer earned on the withheld benefit plus the benefit itself.
The longer the period of time the insurer wrongfully withholds the benefit, the more the benefit monies may earn.
If, as in Rochow, the insurer earned a large amount of money, the claimant is entitled to receive its proportionate share of these earnings. This amount could be quite an amount larger than the actual benefit plus interest.
Although $3,797,867.92 is a large amount of money, it should be recalled that Mr. Rochow applied for LTD benefits in 2002 and the Rochow ruling was made in December, 2013, so that this amount accrued over a period of about 11 years.
Mr. Rochow died in 2010. During his lifetime neither he nor his family received any benefits from LINA. The only thing they received from LINA was interminable obfuscation and mounting legal bills. Hopefully the Rochows had assets upon which they could draw to live.
But, what if they hadn’t?
Working in the disability insurance field on behalf of policyholders who get the short end of the stick day in and day out, it gave us a big boost when Cigna got hoisted on its own petard. Cigna found itself in the position of being the insured,who was denied benefits on a claim it brought against another company which insured it.
How does it feel, Cigna?
It all began when Cigna changed its pension plan and sent its employees a fraudulent notice which did not properly inform them of how they would be affected by the change. There were two opinions. The first, Amara v. Cigna Corp., 534 F. Supp. 2d 288 (D. Conn. 2008), in which the District Court found that Cigna affirmatively misled its employees about the differences between the old and new plans so that employees were misled about their retirement benefits. The second, Amara v. Cigna Corp., 559 F. Supp. 2d 192 (D. Conn. 2008), in which the Court discussed the availability of the remedy of reformation.
While on this long litigation trail, the Amara case made it to the U. S. Supreme Court, which issued an important decision about equitable rights, Cigna v, Amara, 131 S. Ct. 1866 (2011).
The Federal District Court which had originally tried the matter found that Cigna had performed deliberately fraudulent acts in advising its employees of what the change in retirement plan would mean to them.
Cigna itself had insurance with an excess insurance carrier for its liability in the class action brought against it in Amara. But that policy contained a specific coverage exclusion: Cigna’s insurer would not be liable to pay any claim brought about or contributed to by “…any deliberately fraudulent or criminal act or omission…” by an insured. Despite this clear exclusion, Cigna tried to get its insurer to pay its loss. The Pennsylvania court in which Cigna brought suit on its claim found for the insurer. Cigna was out of luck, Cigna v. Executive Risk Indemnity, Inc., et al, 2013 Phla. Ct.Comm Pl LEXIS 357.
Cigna has a long history of fiercely battling ERISA disability claimants who seek benefits under their policies. The company reacts the same as just about every carrier. It uses every inference and excuse it can dream up to deny benefits to claiming policyholders.
Hopefully, the experience of having its own claim denied will make Cigna more understanding when it has to deal with claims under the terms of its own policies.
Don’t bet on it!
Congress is about to declare war on entitlements to cut government help for those in need so as to save money for those at the top of the income pyramid. After all, with rising costs and no replacement for old tax cuts, revenue has to come from somewhere.
It doesn’t help that “60 Minutes” a well watched and generally well regarded television news journal recently aired a misleading, one-sided view of Social Security benefits and those who receive them.
In handling ERISA claims we are so used to fighting insurance companies, that we take their one-sided tactics as a matter of course. Those in the Social Security field may not be accustomed to the way the other side is going to fight to cut benefits to those in need.
The difference lies in the nature of the different practices. In Social Security, claims are tried before impartial SSA judges who are selected for their ability to make unprejudiced judgments about disabilities. They have no axe to grind and are paid by the Government, not a private business interested in making profits.
On the other hand, ERISA plans are usually administered by people closely affiliated with insurance companies. Many times their livelihood depends on these same insurance companies who are definitely interested in making profits. So, plan administrators pay out as few benefit dollars as possible. Every dollar saved goes right to the insurer’s bottom line.
ERISA lawyers are accustomed to plan administrator’s leaning heavily in favor of employers (and their insurance companies) in making benefits decisions. So, you learn to fight their tactics as hard as you can to give clients a chance at success. Social Security advocates, used to much more impartial judges, may have difficulty in doing this.
Be sure, this fight is going to be “down and dirty”. There are elements in Congress that won’t believe people truly get sick or get hurt, some so badly that they legitimately can’t work anymore. They look at each recipient as a “moocher”, freeloading at the public trough.
These elements ignore the fact that studies have shown that fraud rates are low and that benefits are far from generous. “60 Minutes” helped paint SSDI unfairly as wasteful and loaded with abuse.
These are some of the facts “60 Minutes” omitted from its report:
- SSDI fraud is less than 1% in its disability program.
- Application rates have risen, but award rates have declined.
- Retirement age has risen from 65 to 67 meaning that those on SSDI remain on it longer before being eligible to switch to retirement benefits.
- One in five male and one in six female SSDI recipients die within 5 years of first receiving benefits. (Does this sound like “fakery)?
- The average SSDI benefit is just above $1,130 a month, about $35 a day. Try living on that for a while.
In 1994, the Disability Insurance Trust Fund was predicted to face the problem it faces in 2016. Historically, Congress has 10 times reallocated funds between retirement and disability accounts because of demographic changes, without a problem. It could now do so again, insuring that both funds would remain solvent until 2033.
But, will this Congress do it? Not very likely.
This Congress is more likely to vilify and blame the people relying on $35 a day to live, than it is to fix a problem which an easily be fixed.
What has happened to America?
We have all heard of nitpicking arguments to try to deny a proposition, but have you ever heard of note-picking arguments used to try to do the same?
In Chambers v. Reliance Standard, 2013 WL 3712415 (S.D.Ohio) the insurance company did just that in an attempt to cut a claimant off from LTD benefits. While the claimant’s doctors found him to be unable to work because of HIV, peripheral neuropathy and the effects of the medication he was required to take, Reliance found themselves a doctor who read the medical reports and based his opinion on side notes the claimant’s doctors wrote, while ignoring the important main notes they wrote about his condition.
Mr. Chambers’s treating doctor had written in his notes that he was “…doing OK with methadone…still has some trouble feeling sleepy.” And another, “pain control is good, but tired and some constipation. Has painful area on right foot. Otherwise no complaints.”
In coming to a decision in favor of Mr. Chambers, the Court agreed with him that Reliance and its doctor “cherry-picked” the medical records to come up with the few notes that seemed to back denial while completely ignoring the meat of his doctor’s reports which substantially supported Mr. Chambers’s claim for benefits.
Reliance also totally ignored the finding by SSA that claimant was totally disabled in coming to its decision to halt claimant’s benefits.
On appeal to the insurance company, claimant submitted a letter from his treating doctor, a specialist in HIV/AIDS, stating that his patient might be able to do a sedentary job for 10-20 hours a week, but that he was not able to work full time in any occupation because chronic fatigue prevented him from performing adequately in any physical capacity for more than 4 hours a day. The doctor further noted that persistent pain would impair his ability to concentrate and that the medications he was taking caused fatigue and lethargy.
Although giving deference to the denial decision of the plan administrator, the Court found that the decision to terminate benefits was arbitrary and capricious and reinstated the plaintiff’s benefits.
In this case, Reliance proved something we have said many times before. Insurance companies have no shame in their quest to keep as much money in their pockets as they can. We were flabbergasted by Reliance accusing claimant’s treating doctor as acting “more as an advocate then a doctor rendering objective opinions”, indicating the physician changed positions to help the patient obtain benefits.
This in the face of insurance company conduct in case after case where they make it a practice to hire only doctors who make their living by being blind to claimant disabilities.
Talk about the pot...
Labor Day is an appropriate time to think about the nation’s working people and what ERISA disability plans mean to them.
There are about 140,000,000 of you covered by some sort of ERISA plan. ERISA was conceived to help a worker have some protection if he or she became sick or injured and couldn’t work. It was passed by Congress in 1974 when the Congress was a functioning body that took its obligations seriously.
Even though it affects some 140,000,000 in a basic way, legislation similar to ERISA wouldn’t get a “look-see” in the legislature in Washington today.
The system is simple. When employers need workers, they offer employees benefits to try to lure them and to keep them. One of these benefits is usually disability insurance to cover part of the loss of income if a worker is hurt and can’t do the job. ERISA disability insurance is a system beneficial for both the employer and the employee at the time an employee is hired.
After that, though, it becomes a contest. On the one hand you have the employer offering disability benefits and on the other you have the employer wanting to pay as little as possible for those benefits so as to retain as much money as possible for profit.
It is difficult to reconcile these positions without strife. Add an insurance company to the mix and the strife becomes war. Not only does the employer want to spend as little as possible for employee benefits, but the insurance company is also looking for profits for itself.
The nature of such a relationship is conflict pure and simple. There is no way around it.
People have differing views of how and when they become disabled. Some can take more pain than others. Some have differing views of their obligation to their employer. Some are out-and-out fakers looking for benefits. So claimants run the gamut of entitlement to benefits.
Insurance companies on the other hand have only one goal - they want to make profits. They have shareholders, executives and employees, all of whom want to make as much as they can. The only way for them to operate is how to think of more and better ways to deny claims.
We understand their point of view, but we weigh it against the hardships caused employees when wrongfully denied benefits they and their families need to stay alive. Taking all of this into consideration, we think equity comes down on the side of the employee.
When you are unfortunate enough to have a disability income claim, you are facing a Goliath with armies of lawyers, adjusters and others experienced in fighting disability claims. These denial experts are backed up by a stable of doctors who never saw a claim they couldn’t belittle or ignore. Employers can take care of themselves or have monster insurance companies do it for them.
Employees have no one unless they find a veteran ERISA attorney, experienced in the disability wars. Insurance companies have all the help they need. We go for the underdog.
So, on this Labor Day, we salute all who work for a living. Without you, there is no gross domestic product. In fact, there is no product at all.
Enjoy Labor Day. You have earned it.
It would be very helpful and save much time if there were a court rule requiring a doctor examining a claimant for an insurance company to submit a simple form setting forth the doctor's testimonial history and relationship with the insurance company along with any medical report filed in the case.
To be fair, a claimant's doctor should be required to file the same form so that if the claimant's doctor is a ''testifier" for plaintiffs, the court should also be made aware of that.
A recent case in New York Supreme Court, Bermejo v. Amsterdam & 76th Associates, New York Supreme Court (Queens County, Index No. 23985/09), brought to a head the pervasive and unfair buying of medical testimony by insurance companies when fighting disability claims. It is a practice which has become almost institutionalized by most disability carriers.
Although the Queens case was not an ERISA dispute, it clearly illustrates what ERISA lawyers see every day in their practice. Doctors beholden to insurance companies for their living, “fairly” evaluating an insured’s claim medical condition without ever seeing the claimant!
Some smart businesspeople have formed supposedly “independent” medical services to provide insurers with medical reports in their ongoing war with policyholders in disability, life and long term care disputes. These services hire a stable of physicians to work for them so the doctors can deny any direct relationship with the insurance company.
But, doctors know that if their medical reports don’t favor the insurance company, their employing medical service wouldn't last long with the carrier and the doctor would soon be out of a job and an income.
The first defense of a claim by an insurer is to deny, deny, deny in the hope that the claimant will be frustrated and disgusted and just go away.
Their very next major defense is a network of doctors or medical services who appear preprogrammed to reject of minimize all but the most obvious debilitating medical conditions. This is especially true in ERISA cases where a court, is required by law to give deference to the finding of the plan administrator, usually an insurance company, when there is a dispute.
So, why shouldn't a physician offering evidence in an insurance company claim set out their relationships with parties in the case by telling the court their testimonial history right upfront? This is particularly true in ERISA cases where there is ordinarily no live testimony either by deposition or before the court (therefore, no cross-examination), all evidence being on the record of documents submitted to the ERISA plan administrator.
If a trier of fact knows that a doctor earns all or most of his or her income from writing reports for insurers or claimants, the court could legitimately take that fact into account while weighing the value of each side’s medical reports, which should result in more accurate, truthful, just results.
Isn’t this what courts are supposed to be striving to attain? There must be some other method of evaluating credibility and independence of medical testimony where no cross-examination of medical witnesses is allowed.
Since, MetLife v. Glenn, 128 S. Ct.2343 (2008), courts have spent a lot of time and effort on arguments over discovery in ERISA cases, particularly concerning the relationship between the insurance company and the physicians providing evidence in support of claim denials.
Wouldn’t it be more equitable to all parties to have each provide the relationship information with the medical reports, thus saving time, effort and legal fees for all while providing background information important to a court in deciding the validity of medical reports?
Anybody have any better ideas?
It’s funny how things created decades ago jump to the forefront when something comes up to trigger the memory.
Recently the “chutzpah” of LINA in opposing subpoenas issued to four of its “independent” doctors brought back with a rush the memory of W.C. Fields in “My Little Chickadee” a comedy he starred in with Mae West in 1940. No, we are not that old, we enjoyed a rerun not too long ago.
In the film, Fields, a complete scoundrel, plays high card draw with an opponent who draws a king from the deck and shows it to Fields before placing the card back in the deck. Fields draws a deuce, slides it up his shirtfront so he’s the only one who sees it, then places it back in the deck while proclaiming “Ace”.
When the opponent protests that he wasn’t shown the card, Fields says: “Gentleman’s game, gentleman’s game”. In other words, “trust me”.
LINA tried to pull the same type of trick in defending an ERISA disability claim in Illinois, when it tried to block claimant’s effort to obtain the testimony of the four physicians who had rejected the claimant’s disability claim. See, Gavin v. Life Ins. Co. of North America, Slip Copy, 2013 WL 2242230 (N.D. Ill).
LINA tried to play a “gentleman’s game” when it opposed subpoenas for doctors partly on the grounds that the doctors had signed sworn “certifications” which denied any financial relationship with the LINA or the health benefits plan.
LINA must think that ERISA claims lawyers are ignorant of the fairly recent bad history compiled by insurance companies. Did they think the Court was going to allow LINA to slide that “certification” card up its shirt front and declare “Ace”? ERISA attorneys and courts are aware of the stables of supposedly “independent” doctors who live off insurance company referrals for so-called “independent” medical exams.
In rejecting LINA’s position and enforcing the subpoenas against the doctors, the Court pointed out that LINA had failed to provide any exhibits or evidence to support its allegation that there was no financial relationship between the doctors and the insurer.
The Court found the “certifications” self-serving and ruled that claimant was entitled to independently confirm that the medical opinions were not unduly influenced by the doctors’ financial relationship with the insurer or the agency that provided them to LINA.
Nice try, LINA. But, you’re not going to “gentleman’s game” your way out of this one.
If you ever want to read a case that illustrates the difficulty of working in the ERISA and insurance claims field, take a look at Johnson v. American United, 2013 WL 2284875 C.A. 4 (N.C.) 2013 .
The question involved whether the insurer was required to pay the life insurance benefits under an accidental death and dismemberment clause in a life insurance policy covering Mr. Johnson, the deceased. The issue was whether the deceased with a blood alcohol level of 0.289 (legal limit in North Carolina was 0.08) had died in an “accident”, which would trigger payment of the life insurance benefits.
The insurance company took the position that Mr. Johnson should have foreseen that drinking excessive amounts of alcohol may result in death or bodily harm, therefore his death was not caused by an accident. No place in the policy did the language specifically address drunk driving except in a seat belt bonus clause, which added a bonus to the benefit if the policyholder was wearing a seat belt when a fatal accident occurred. In that policy clause payment of the seat belt bonus was specifically denied when the driver was legally intoxicated under state law.
No such exclusion was delineated in the main AD&D policy language, so the Court was left to interpret the policy without policy language to guide it, forcing the Court into the jungle of conflicting “accidental death” decisions and nitpicking legal language which causes an ordinary reader’s eyes to cross.
The upshot was that the Court determined that the policy contained no clear language covering the issue of what an “accident” is. Therefore, the Court had to invoke a rule of interpretation which is one of the very few which favors claimants: If the policy language is ambiguous on any point, the language should be construed strictly in favor of the insured.
The Court went on to conduct a very searching review of the difficulty involved when a policy fails to define what an “accident” is. It is hard to believe, but there are loads of cases in which courts agonize over the meaning of the word. Generally, if the policy language does not clearly exclude payment to a drunk driver, most courts will construe the language against the insurance company which wrote the policy.
This, of course, will send insurers and their attorneys back to the drawing board so as to modify “accident” language for life insurance policies with AD&D clauses. Most clauses will make sure to exclude drunk driving from being considered an “accident”.
The one lesson claimants should take away from this case is that ambiguous language does not favor the insurance company, it favors the claimant. If policy language leaves room for argument on an issue, don’t take the company’s word for it. Insurers are in the business of denying claims.
If you believe you have a claim, you should make it your business to get an unbiased knowledgeable opinion on how valid it is. That’s the only way you can be sure your claim isn’t covered.
Many people don’t realize that you actually don’t have to be flat on your back to get financial help from a disability insurance policy. Many policies provide for partial disability which can provide substantial disability benefits even after your medical crisis or injury have improved.
This fact was pointed out in a recent Wall Street Journal article by financial planner Michael Relvas, Rockville, Md., who noted that it is sometimes very hard to know about this benefit because many times you need a code breaker to decipher disability insurance contract language. However, it is definitely worth the time and effort to find out if you have this benefit.
From an actuarial perspective it has been shown repeatedly that the risk of suffering a partial disability is substantially greater than the risk of suffering total disability. Yet, many disability policies do not provide benefits for only partial disability.
Residual benefits are the key words in determining if you have such coverage in your disability policy. If you are fortunate enough to have it, then you may receive benefits even if you are able to return to work, provided, in most cases, that your income is at least 20% less than you were making before your disability struck.
You may be entitled to residual benefits which will bring your post-disability income up to 80% of your pre-disability income.
Mr. Relvan also points out that residual clauses in older policies may be more valuable. Many older policies will pay benefits till age 65. Newer policies typically pay residual benefits for only 2 years.
Not all disability income policies have residual benefit coverage. Particularly if you are the owner of a small business or in a profession, such as medicine or accounting, this type of coverage can be vital in the event of a disability.
As we have said before, it is vital to read your insurance policy before a triggering event rather that after one. Before, you can do something about a gap in your coverage. After, you are out of luck.
When it comes to protecting income, you have to be thoughtful. Medical disabilities often come with longer, drawn out recoveries which may permit a return to an occupation, but at a less remunerative level.
You have to decide:
Do I need insurance coverage for this eventuality?
An insurance law professor recently pointed out that “Insurance is the one product where you can’t find out what you’re buying until you’ve bought it.”
He came up with the suggestion that all state insurance regulators follow an initiative of the Nevada Department of Insurance, according to a recent article in the Newark Star Ledger.
Rutgers University professor Jay Feinman pointed out that you can choose coverages and deductibles, but you can’t read the fine print in your insurance policy until after you have bought it.
Those who have been exposed to insurance law (and readers of this blog) know full well that, with insurance policies, the “the devil is in the details”.
Why not put policy forms online so that people can read them and understand what they are going to get before they buy a policy?
The professor suggests that a Nevada initiative should be adopted by all states to give people better understanding of their coverage.
According to him, the state of Nevada began publishing online the policy forms of 10 of the state’s largest home and auto insurance carriers. These carriers do about 80% of the home and auto business in Nevada.
We agree with Professor Feinman that making this material available to the public online is not likely to help too much in educating the public because policyholders are notorious for not reading their policies even after a triggering event occurs.
But, there are many consumer advocacy groups can and will provide consumers with easy-to-understand guides to compare rates and the coverages offered.
Although this present situation covers only auto and home policies, there is no reason why it can’t be expanded to cover ERISA disability, life, health and other types of insurance which are based upon standard types of insurance policy forms.
As well as helping employees to understand what insurance protection they have, the employer could also benefit by having an easy-to-understand comparative guide covering both benefits and cost.
These guides can be formulated by large employer associations as a service to their members.
Greater transparency – What a concept!
As if people with mental problems didn’t have enough headaches, a recent change in psychotherapy treatment codes has dumped a whole new layer of complexity on the plates of those needing treatment.
According to a recent story in the Wall Street Journal, mental health professionals providing treatment are not being paid since the change because insurance companies claim that the changes are bigger and more complicated than was expected and companies are having difficulty setting up their systems to accommodate the code changes .
And all of this is happening when there is a growing public demand for better mental health intervention.
Millions of mentally ill people are facing diminished care because their mental health providers are not being paid for their services.
The American Medical Association updates the codes annually. Only 30 codes out of 8,000 or 9,000 were changed this time. But those 30 changes, which had to do with mental health services and hadn’t been modified since1998, threw a monkey wrench into the system.
Worst of all, many of those who are hurt can ill-afford the stress and uncertainty of having their treatment affected.
With about 11.5 million Americans suffering from serious mental conditions, according to the WSJ article, and public demand growing for more and better interventions with the mentally ill since the recent spate of shooting massacres, these coding problems could not have come at a worse time.
The biggest worry of mental disability providers is that this coding chaos will affect care for their vulnerable patients. With many insurance companies being unable to estimate when the coding problems will be fixed, it is anybody’s guess when some order will be restored to the mental health system.
In a field of treatment where one missed appointment may undo months of intense work, it is hard to foresee how far this glitch will set things back.
With a so much hanging in the balance, we urge everyone involved to get the lead out and get the mental health system working again.
Would you believe that insurance companies withheld $1 billion in death benefits from beneficiaries of life insurance policies? If your answer is “No”, think again, according to an advanced story in TODAY about a Consumer Reports article to be published this month.
This finding of insurance company cheating doesn’t surprise us, but the amount is staggering.
Life insurance companies had their own version of “Don’t Ask, Don’t Tell” when it came to informing beneficiaries of policy benefits when an insured died. If a beneficiary didn’t know about the policy or about the insured’s death, the insurance company wouldn’t tell.
More than that, some companies, even knowing that their insured had died, not only didn’t inform the policy beneficiaries, they continued to charge the policy with premiums they knew couldn’t be paid until the policy ‘s cash reserves were drawn down before canceling the policy.
Now that practice has stopped in those states that called the insurance companies on it. Not only did the companies have to pay a fine, they also had to install systems which would be likely to see to it that beneficiaries were informed and paid when an insured died.
It’s not that insurance companies did not have a resource for learning when a policyholder died. The Master Death List of the Social Security Administration is open to them and they used it willingly to locate annuitants that had died so that they coukld stop paying annuities. But, they didn’t use the same information to notify beneficiaries of policyholder’s death. SHAME ON THEM!
To avoid any of these insurance industry shenanigans, everyone who takes out a life insurance policy should let the beneficiaries know about it. It is not necessary to know the amount, but beneficiaries should know there is a policy, the name of the insurance company and how to reach the company in the event of death.
If you can do it tactfully enough, you might want to mention this life insurance dirty trick to an older friend or relative who might have a policy. This will suggest that they give the necessary policy information to their beneficiaries if they haven’t already done so.
Insurance companies fight tooth and nail to keep from paying benefits.
Let’s not make it easier for them.
One little-known benefit for the public in Obamacare has nothing to do with treatment or medication. In plain English, it’s plain English.
Thanks to the policyholder’s friend, Wendell Potter, who used to work for an insurance company, we now know that it’s the law that insurance policies will have to be written in words that the average person can understand.
Whoa! You mean somebody buying a policy doesn’t have to rely on the insurance company’s statements anymore? An ordinary person can read for him or herself and understand what he or she is buying? What a breakthrough!
Not only will you understand what the insurance company is required to do for you, you will also have a very good idea what monies you will be required to pay for various medical and hospital services. Just as importantly, insurance companies will have to deliver these plain English summaries in a standard format. This will make it easier for those needing insurance to compare the benefits of competing companies.
During earlier hearings before the U.S. Senate on the Affordable Care Act, Professor Karen Pollitz of Georgetown University testified that the average American reads at an 8th grade level but that insurance policies are generally written at a first year college level. It’s no wonder we find in our disability income insurance practice that very few policyholders even try to read their policy until they become disabled. Unfortunately, by then, it may be too late for them.
The standard format summary to be provided by the insurer requires an estimate of the respective costs to the policyholder and insurance company of delivering a baby or treating a disease such as diabetes. This feature also makes it simpler for those seeking policies to evaluate the offerings of various companies so as to choose the best deal.
This year (2013) the estimate of cost will be based on a “best estimate” formula provided by the government since there is no history. After this year, the estimates in the summary will have to be based on the actual experience of the individual insurance company based upon its actual claim experience.
And, if any of our readers are feeling sorry for insurance attorneys because Obamacare will make it easier for claimants to understand their rights – DON’T!
Insurance companies, based on their history, will enhance their old ways and find new ways to try to duck their benefit obligations. With the complexity of disability insurance law and insurers’ ability to frustrate claimants who are fighting not only an illness or injury, but also complete lack of income, there should be plenty of work for claimant’s attorneys.
The policy language may become friendlier under Obamacare, but collecting benefits from an insurance company will be as tough or tougher than ever.
The above holiday card message from a client reminded us of what our disability insurance practice is all about – “little people”. “Little people” is not a reflection of a claimant’s standing in the world. It describes a claimant’s position when fighting a mammoth insurance company for policy benefits.
No matter how wealthy or well connected you may be, your wealth and power pales in comparison to the resources of an insurance company. They not only have the “bucks”, they have armies of claims adjusters and experienced insurance attorneys and plenty of ways to throw a monkey wrench into a claims procedure.
Luckily there are legal procedures which level the playing field somewhat so long as you know how to use those procedures properly. Those who practice this type of law do know and help to bring an insurance company down to a size which is manageable by a claimant. We have been doing this for more than 30 years and never once worked on the insurance company’s side of the street!
Being able to bring hope to those insurance claimants who are overwhelmed by the thought of what they are up against is an added bonus to the way we make our living as attorneys. It helps us to keep going when things get rough.
The client who wrote the holiday card was fearful of going ahead with her LTD claim when she first came to see us. We encouraged her to move ahead with her claim after reviewing her circumstances. She had a perfectly valid claim under her policy.
There should have been no question that her carpal tunnel condition kept this accountant from working as she couldn’t operate a computer or an adding machine without severe pain and numbness. For an accountant to be unable to operate a computer or an adding machine is almost the same as a carpenter being unable to use a hammer.
But, did this obvious fact dissuade her insurance company from terminating her disability claim? Hardly. One of the biggest moneymakers for insurers is discouraging their policyholders from pursuing valid ERISA and private disability claims. After all, when a policyholder drops a valid claim, the benefits payments go from “Debit” to “Profit” for the insurer.
Although she was discouraged and doubtful about whether to challenge her insurance company’s denial of her claim, this client was resilient enough (See “Wimp”) to be able to take on the challenge after we spoke and take the fight to her insurance company. She recognized the insurance company denials and tactics for what they were: A ploy to make her drop her claim.
With help from us, the insurer reconsidered on appeal and now pays her disability benefits.
What makes this claim stand out is that a claimant was brought back from the abyss of giving up a rightful claim which would have made her life a greater struggle because of her finances. She still can’t work but has the security of the disability insurance benefit to which she is entitled to under the terms of her disability policy.
Her card said, “…thanks for watching out for the little people and keep being defender of the faith!”.
Watching out for “little people” is what we have been doing for more than 30 years, particularly when ordinary folks are matched against insurance Goliaths and their “denial machines”.
We intend to keep doing this until we can be of no further use to “little people”.
Every great once in a while, the interests of an insurance company and a policyholder coincide and we all say, “Hallelujah!”
Much of the general public isn’t aware that such a coincidence of interests is a possibility. More and more Baby Boomers are wondering how to protect themselves against the vagaries of old age. The good news is that we are living longer, sometimes healthier lives. The bad news is that the cost of caring for older people is fast expanding. Solutions are hard to come by.
Add to this that long term care insurance, as we knew it just a few years ago, is a thing of the past. The cost of such insurance has exploded and many companies are just not writing it any more. What to do?
One solution receiving an upsurge in interest is a new, modified method of paying for long term care protection – using life insurance benefits to help pay the high cost of living in a senior residence or a nursing home.
Generally the way it works is that the policyholder uses a part of a life insurance death benefit now to help pay his or her assisted living or nursing home costs. It is a trade-off between the life insurance benefit and the burden of present living costs.
So, what the insurance company pays for the policyholder to live in a nursing home today is subtracted from what the policyholder’s beneficiary would get tomorrow on the policyholder’s death. Of course, there is a reduction in the total benefit to sweeten the pot so the insurer will have an interest in making the deal.
By means of this method, cash-strapped senior policyholders are able to meet their heightened living costs by deducting them from their eventual life insurance payout. Such a system can be tough on beneficiaries but it certainly eases the sometimes harsh burdens of later years for their benefactors.
The arithmetic of such a deal is complicated with the parties having to weigh the relative values of present circumstances, i.e., age, health, payment amounts and payment schedule, among other items before coming to a decision. The closer death seems, the more likely the insurance company will be to cooperate to get a reduction from the policy death benefit.
As people grow older, they should consider such a program with their life insurance carriers, so as to stretch their resources to make them last as long as possible.
But, it is not recommended that the ordinary policyholder go into a negotiation with an insurance company without some independent expert help who has no ax to grind.
Your insurance agent or broker may not be your best bet because of commission or relationship issues.
Get help from some one knowledgeable who has nothing to gain or lose because of the advice.
People forced by circumstances to seek income disability benefits should keep one mantra in mind at all times:
I am in a war with my insurer and I should always act accordingly.
A little understanding of the mechanics of the disability insurance business will make the above statement abundantly clear:
• An insurance company earns its income from premiums and interest on investments.
• The company has some control over premium income.
• The company has no control over the interest markets.
Interest markets have tanked in the last few years meaning substantially less income for the insurance company. Therefore:
• The company pays out overhead expenses, salaries, and benefits from income.
• What is left over is profit.
So, if overhead and salaries remain the same, the company must reduce benefits to maintain profits. Therefore, it will use every method and excuse it has to discourage and minimize disability benefit claims:
• First and foremost, deny, deny, deny claims to discourage policyholders.
• If that fails, make the filing of a claim difficult with forms that encourage errors.
• If that fails, lose claim material and delay responding to claimants.
• If that fails, use a stable of captive doctors to denigrate and minimize the disability claim even without the doctors examining or even seeing the claimant.
• If that fails, try to video the claimant in a moment which will throw the claim in doubt.
• If that fails, cull the Social Media for a post or two that can be offered as proof that the policyholder is faking the claim.
This list could go on and on. Insurance companies have always been in the business of fighting claims and they have thousands of claims adjusters and attorneys whose job it is to defend against and discourage claimants.
Down through the decades, these minions have come up with endless ways to slow or defeat disability claims. Insurers have an arsenal of ways to say “NO!”
If your disability claim happens to fall under ERISA, the situation becomes worse. In a 1989 case, Firestone v. Bruch, 489 US 101 (1989), the U.S. Supreme Court made the situation more dire by decreeing that courts had to give deference to the ERISA plan administrator. Since the administrator is usually the insurance company which would have to pay the benefit, it is not hard to guess how these decisions go.
This is why a disability claim is likely to become a declaration of war. Insurance companies which fight the war everyday are aware of it and treat it as such. Inexperienced claimants are many times the unwitting victims of this war.
To win this war (and many times they do), claimants must understand what is happening and why it is happening. Above all, they must persevere.
If you have a valid claim, “giving up” is not an option. It is exactly what the insurance company is hoping for.
It is amazing to us how blithely some Washington politicians suggest that turning the health care market over to “for profit” insurance companies is the best answer to the nation’s health care problems. If they spent a few days in the “denied claims trenches” with us, they might develop a different viewpoint.
“For profit” insurance companies are in the business of making profits for their shareholders. Policyholder “protection” is just the way they make those profits.
We see it every day when disability income insurance companies deny perfectly valid claims with perfectly unsustainable excuses. Insurance companies’ first line of defense is to deny, deny, deny. Many times this tactic is enough to discourage a policyholder with a perfectly valid claim. (See “wimp”). Result: The insurance company bottom line gets the benefit of not paying the claim.
After that first line of defense, we see, delay and obfuscation with paperwork, requiring proofs that are impossible to get and are not required by the policy, interpreting language to suit the insurer’s needs and, finally, the so-called Independent Medical Examination (IME).
While the reported cases in ERISA and disability income insurance have favored the insurer because of the fear that a claimant’s doctor may have a slanted view, insurance companies actually have developed stables of servile doctors with slanted views who never seem to find a disability that they can’t find a way to overlook.
While the law as it stands still gives no more weight to a treating doctor’s diagnosis, Federal judges are realizing more and more that an IME should be scrutinized carefully. Courts have come to realize that an Independent Medical Exam may be “independent” in name only.
Add to this the recent $40 million state settlement with MetLife where the company scrupulously searched for info to stop making benefit payments it was already making but didn’t review the same records to discover when it should start making payments to beneficiaries who were unaware of their entitlement. Not only that, MetLife didn’t make the required escheat payments to the states on these unclaimed benefits.
Also, hark back not too many years and you come up to the Unum settlement with the states in 2004 in which Unum’s totally unsavory system of dealing with disability claims was revealed for all to see.
Why, oh why would anyone, even a Washington politician, have any desire to turn the welfare of sick and elderly Medicare beneficiaries over to private insurers?
Medicare is designed to make older people’s lives a little easier when they become sick or disabled. Private insurance companies are designed to make profits for shareholders.
And, never the twain shall meet.
Claimants and some attorneys handling ERISA and private disability income insurance claims may be unaware of some of the idiosyncrasies of ERISA and disability income insurance law. They should not be lulled into a false sense of security
Because ERISA is a Federal statute with its own strict time constraints, no jury trials, and court deference to an insurance company’s judgment, there is additional special knowledge every claimant and lawyer should know in pursuing ERISA claims.
But, getting back to the idiosyncrasies which affect both ERISA and private disability claims:
* If the claimant is scheduled for an IME (Independent Medical Exam), it’s a photo op for the insurance company and they are almost certain to have a surveillance camera on the claimant on the day of the IME to try to cast doubt on the insured’s disability claim. (more on this)
* A claimant’s Facebook, etc., posts are meat for the insurance company’s grinder. These posts are public and insurance companies go hunting through them to try to catch one picture or statement which might suggest (accurately or not) that a claimant is not as disabled as he or she claims. (more on this)
* Not all psych material is discoverable by the insurance company. HIPPA clearly exempts psychiatric notes from discovery without the client’s permission, but this doesn’t keep the insurance companies from pressing claimants, their lawyers and mental health providers for them. Insurers just love to know a mentally impaired claimant’s darkest secrets, because they know this may disturb a psychiatric claimant’s mental equilibrium just at the time when they are most vulnerable. More importantly, it may provide fodder for the defense argument that the insured is not really impaired at all, but hates his boss or the guy he works next to. Even some practitioners in the mental health field are not aware of the danger they may put themselves in by disclosing such information without the patient’s permission. (more on this)
* Claim denials are a very common reaction of insurance companies to any LTD (Long Term Disability) claim. These claims can turn out to be quite expensive. Insurers make every effort to try to discourage them. (more on this)
* If a claimant has any psychological problems in addition to physical problems, most carriers will do whatever they can to make it seem that the psychiatric problem is the cause of the disability, rather than the other way around. This is because most ERISA and many private disability income insurance policies severely limit the payment of benefits for psychiatric disabilities to no more than 2 years. Non-psychiatric disability benefits may be payable to age 65, or even longer, depending on the policy terms. (more on this)
These are some of the more basic “ins” and “outs” we’ve picked up in practicing ERISA and private disability income law for more than 30 years. They should not be kept a secret, because failure to be aware of some of these things can really hurt an insurance claimant.
The last thing any claimant or their lawyer should want is to see the insurance company knock out a claim for want of insurance claims knowledge or experience.
In the normal course of our lives, most of us learn to give people the benefit of the doubt, at least sometimes. Insurance companies never do. The reason – money.
Why this is so devastating to many people is that they learn this fact after they have been stricken with a disease or disability which seriously affects their lives. For all of their existence they have been told that insurance is meant to protect them and make them feel more comfortable should a disaster strike. Then disaster strikes and they learn the awful truth – the insurer won’t pay!
It really is simple arithmetic – every dollar the insurer keeps in unpaid claims is a dollar that goes to insurer profits. And, PROFIT, only PROFIT is the name of the of business today.
Owning an insurance policy used to give a policyholder some sense of comfort knowing that if the worst happened, an insurance company would be standing at their side and lending a hand according to the terms of their policy. Not so in today’s totally profit-centered world.
A perfect case in point is that of John Bray who had the gross misfortune to develop a brain tumor while employed as a division head for a travel company. As happens in many such cases, he didn’t consciously know there was anything wrong with him, but his conduct and behavior began to change on the job, leading to his ultimate dismissal.
Being unaware of his tumor, Mr. Bray tried to work as a consultant, but his behavior continued to deteriorate.
When he was finally diagnosed with a large malignant tumor in the brain, he had been dismissed from his employment for about 8 months. The overwhelming medical evidence was that he had suffered from the tumor which affected his behavior for a long period prior to the time he was dismissed.
Mr. Bray then filed for long term disability benefits under the group LTD policy which covered him as an employee f the travel company. But the insurer denied Mr. Bray’s claim, saying he was no longer covered by the policy once his employment terminated.
Did the insurer offer any medical evidence to refute the claimant’s medical findings? Of course, not. The insurer knew the truth of the matter so it didn’t even ask for a medical exam. Did that stop the insurance company from continuing to deny John Bray’s claim? Of course, not.
The insurer continued to insist that Mr. Bray had left his employment before becoming disabled, despite a clear showing by all examining experts in the field that he was stricken with his ultimately fatal illness before he left his covered employment and therefore was entitled to benefits.
The evidence was that John Bray was an outstanding employee prior to the time he was stricken with the brain tumor which enlarged relatively quickly. The tumor caused his employment behavior to change radically and, as a result, his employment was terminated.
Clinging to the fact that Mr. Bray’s brain tumor was not discovered for several months after he left his employment, the insurance company said he was no longer an employee and therefore not entitled to coverage. Not only that, Mr. Bray’s employer had also afforded him a life insurance policy as part of his employee package of benefits and the company refused to pay on the life policy because it claimed he had left his employment before he died.
The court, on the basis of the clear evidence before it, ordered the company to pay Bray’s estate the disability income benefits and the life insurance benefit.
Two things you can glean from the policyholder’s trials and tribulations in this case:
* If you become afflicted with a disabling disease which stays hidden until after you have terminated your employment, you probably face a long uphill fight with your insurer.
* If you should happen to be so unlucky, don’t give up. Fight for your rights.
“Wimping” out is not an option for you or your family.
“That’s a great picture of you on Facebook, dancing on the table. We really got a kick out of it. Oh, and by the way, your disability insurance benefits are terminated as of last Friday.”
This is the reality of social media in today’s disability insurance claim wars. Photographs and information that you post online can be seen not only by your friends and family, but by everyone, including insurance claim defense attorneys and adjusters.
Anyone with an adversary out in the great beyond has to be aware that when they go online their life becomes an open book, particularly when they post on social media, because this is when they put on a “happy face” for friends and family.
Beware, insurance companies and their minions are on the prowl for anything posted by or about a claimant which may in any way throw a disability claim into question. Once an insurance company sees such a post, you may be sure it will try to use it to torpedo a claim.
Insurance companies are not behind the times. They turn to social-networking sites and social-media data to find out all they can about their policyholders’ behavior and activities. They are looking for any excuse to deny claims.
Fun is fun and everyone enjoys a good laugh. But, it’s not a hoot when an insurer takes a 30-second video clip and tries to turn it into a lifetime of no benefits for you. A truly disabled person may be able to perform certain functions normally for a minute or even longer, but can they perform that function 8 hours a day, 5 days a week? Insurance companies just need a 30-second video clip to ignore that question and go for the jugular of your claim.
Getting benefits from insurers is difficult enough without adding that 30-second video to the mix. Be aware that what you or your friends make public, is public forever and insurance companies are constantly on the prowl for anything that will make a claim look bad.
If you wouldn’t want to tell or show an insurance claims adjuster something, don’t post it on Facebook, Twitter or any of the other social networks.
There is a very good chance that it will wind up in your insurance claim file.
So, think before you post. The claim you save may be your own.
Doctors have more problems with disability income insurance claims than most other occupations, because:
* They never read their disability policy until they have to make a claim. * Policy benefits are usually higher because they make more money.
* They are too busy to change coverage when their situation changes.
* Their duties as physicians are more likely to change because of specialization or increase in skills.
* The terms of their policy are so complex that they don't truly understand them.
This medical profession problem was succinctly pointed out by T Keith Mangrum of Medical Group Insurance Services, Inc., click here, when she pointed out 10 things a doctor doesn't want to hear when making a claim, in an article in MD Preferred,click here, an online publication for physicians. While the article dealt well with the front end of the MD disability claims process, it did not deal with the back end, i.e., what does a doctor do when faced with a denial of a legitimate disability benefits claim?
As we have said many times before, disability insurance companies have a litany of "reasons" why they should not pay benefits. Some of these reasons have a foundation in law and some do not. Since the policy is the contract which governs the insurance relationship, it is the law of the claim and dictates the rights of the doctor to receive benefits and the insurance company to refuse to pay.
So, the first thing every doctor should do is READ THE DISABILITY INCOME POLICY NOW!!! Doctors, of all people, are aware that illness or injury can strike without warning, at any time of the day or night. No one is immune to catastrophe. After reading the policy, if the full meaning isn't clear, get someone who knows, like a knowledgeable lawyer, to help you understand.
Once disaster strikes, the doctor is stuck with the terms of the policy and can't change them. If the policy doesn't afford enough coverage there's nothing to be done about it. Reading and understanding the policy before the doctor has to make a claim should help take care of the front end. What about the back end - if there is a denial?
As we have pointed out here so many times, insurance companies are adept and motivated to throw roadblocks in the path of benefits seekers even when their reasons for denying a claim sometimes border on the ridiculous. Insurers do so because they know a certain percentage of claimants will give up and allow the insurer to drop what they should have paid in benefits to the company's bottom line.
The stakes in a physician's disability income insurance policy are usually high and give the insurance company more reason to contest the claim. Before a doctor gives up on such a claim it must be absolutely clear that the claim denial is legitimate .
This goes double when the claim is covered by a group policy, purchased by an employer, of which the physician has no firsthand knowledge. To have the policy explained to the doctor by a Human Resources manager who works for the employer and who has no legal understanding of arcane ERISA insurance law and the sometimes questionable tactics of insurance companies, may not be the best thing for the policyholder. So, what is the best thing?
First, read and completely understand the disability income policy. Does the protection it affords them and their family do the job? If not, they should make the desired changes before disaster strikes. And, if they ever should be so unfortunate as to have to make a claim for disability benefits, they definitely should not take an insurer's claim denial as gospel. It is in insurance company genes to almost automatically reply to a claim with a denial, hoping the claimant will "wimp" out and go away.
Doctors know medicine, but they are not experts in insurance law and claims. Don't stand alone. Get a veteran, knowledgeable disability claims lawyer to review your situation and give you an opinion on the validity of the denial.
Only then can the doctor make an intelligent diagnosis of a disability income benefits claim.
A recent case we read which has nothing to do with disability income insurance reminded us once again that all policyholders, particularly disability income policyholders, must read and understand the terms of their policies carefully to make certain they have the protection they want.
The case we are referring to is American Automobile Insurance Company v. Murray, et als, 2011 WL 3966114 (C.A.3 Pa.))). The case basically concerned technical judicial procedural matters, but the underlying gist was that an insurance broker failed to provide a policyholder with proper coverage advice, thereby causing the policyholder loss.
The insurance broker failed to advise a beer distributor to include an alcoholic beverage clause in its comprehensive liability policy coverage. And, of course there was an alcohol-induced accident fatal to a third party.
Whether this basic error was caused by lack of knowledge, inattention, or simply a desire to close the policy sale and make a commission, the policyholder was left with no insurance to defend or pay a judgment. Cases such as this clearly support our continuing mantra – “Read and understand your insurance policy”.
What’s the point of having and paying for a policy which you were told covers you, but doesn’t? Insurance agents are human and have human frailties. Most won’t admit lack of knowledge or uncertainty; inexperience; inattention; failure to understand your needs and desires and, perhaps, an overwhelming need for money in their personal lives which affects their business judgment. Under such circumstances, mistakes are often made and policyholders may suffer.
Disability income insurance policies have a greater potential for such errors because of the wide variety of technical requirements which must be met before benefits are paid. And, because of the very lucrative commission structure attached to these policies, brokers are highly motivated to sell them.
When a person buys such a policy they do so with certain goals in mind, i.e:
* Obtaining replacement income when a disability strikes the family breadwinner.
* Coverage for the length of time the breadwinner can’t work.
* Benefits that come as close as possible to replacing the breadwinner’s usual income.
* Protection against a rising cost of living if the disability is long term.
* In high income situations, protecting the insured’s “own occupation” and securing adequate amounts of coverage in the event of disability.
Most of us who have personal policies purchased them from an agent or broker whom we assumed knew his or her stuff and did his or her homework before trying to sell us a policy. And, “sell” is the operative word. The agent or broker is interested in making a commission on the sale. That’s how they earn money to support their families. And, the commissions on disability insurance can be substantial – up to 50% of the premiums.
Do we know how scrupulous, knowledgeable or smart our particular broker or agent is about disability income insurance? Unless we are certain of the answer to this question, we have to ask a lot of questions and make sure we see the answers in our policy.
The policy is the contract which sets forth the terms of the deal between you and the insurer. If what you think is in there is not, then your coverage is incomplete and you and your family can be badly hurt in the event you become disabled.
If the policy is the contract, you must read it and satisfy yourself that it says what you think it does. The time to do this is obviously before you make a claim. After you claim, you can be certain that the insurance company will fight hammer and tongs against a claim which is not clearly covered in the policy. And, the chances are that under these circumstances the insurer will win, even in court.
When you buy a policy you are not looking to buy the right to sue the broker or agent for a mistake or oversight. You are looking for a contractual right to benefits from a solid financial entity – the insurance company.
To assure yourself, read your policy before it’s too late. If the language is not fully understandable to you, get somebody who knows insurance language to help.
Asking for help is not a sin. Depriving your family of a future because you were too proud to ask, is.
Many times the first thing a caller will ask us is, “Do I really need a lawyer to help me with this disability income insurance claim?” One reason it is difficult for us to answer is that we may profit from telling the truth: “Yes, in the vast majority of cases you really do need a lawyer who knows disability income practice inside and out”.
Pursuing disability income claims is the way we make our living. But, there are much more cogent reasons for having a knowledgeable insurance practitioner in your corner. Your attorney works for you and knows all of the tricks and traps of filing and successfully prosecuting a disability income claim.
One of the most damaging things a claimant can do is get off on the wrong foot when filing the original claim. Filing a disability income notice of claim, where one requests the appropriate claim application forms is not the same as filing a notice of claim in an auto accident. Don’t be lulled into a casual notice of claim in disability income insurance.
Your first notice, even though it only requests forms, is most important because whatever you say to or file with the insurer will be retained throughout the life of the claim. Omit an important fact or describe it hazily and it will haunt your claim forever, being cited again and again by the insurance company at every point in the proceedings.
Before you file your claim, two issues must be resolved:
* You must make certain your treating physician agrees that your medical condition supports your claim for disability insurance.
* Your policy must be carefully read and understood to determine if your claim is covered and the required procedure for making a claim. The policy is your contract with the carrier and you can bet your bottom dollar that if your application can be deemed deficient under the policy terms, it will be.
Your claim should contain a clear statement of why you think you are entitled to disability income benefits and supply the evidence to support your claim. Just telling the carrier you are filing a claim is not enough. Details are necessary to move the claim forward. And, those details had better be correct and apropos because any omission or mistake will undermine your claim so long as it shall live.
The claim should include:
* Full details on the policy you are claiming under.
* Full details on the illness or injury which is the basis of your claim.
* Full details on your employer, your occupation and the duties of your occupation which you claim you can no longer perform.
* Copies of all medical reports and hospital records which substantiate your illness or injury.
* All occupational or vocational testing records you intend to use to support your claim that you cannot perform the duties of your occupation.
* All pay and income records to support your claim for benefits.
As you may imagine, all of these documents will be thoroughly examined by the carrier as to their pedigree and accuracy. Misstatements and omissions will be carefully catalogued and be used against you throughout the proceedings, no matter how many times you correct the misstatement or provide the omitted material.
Errors committed in your first submissions create a situation in which you not only have to prove your case, but also have to “unprove” the error or omission you made under oath.
Getting a disability income insurance carrier to pay on a properly submitted claim is tough enough. Getting the company to pay after defective or omitted claim documents is darn near impossible.
Why take the chance?
There are a lot of reasons for the high cost of medical care in the U.S., many of them having to do with the cost of evolving cures for formerly incurable illnesses, miraculous drug treatments and the fact that people are living longer these days.
We don’t want to suggest potential cures for these kinds of seemingly insoluble problems, but we do have some basic, common sense thoughts which could still save a lot of money while streamlining the medical system.
The idea came to us while we were reading a study by the Weill Cornell Medical College, the University of Toronto and the Medical Group Management Association, which concluded that U.S. physicians and their staffs spend almost four times more time dealing with health insurers and health payers, than do doctors in Canada. This additional administrative time is figured in the fees charged to patients and their insurers.
The study calculated that if U.S. doctors had administrative costs similar to their brethren in Canada, the savings in health dollars to the U.S. would about $27 billion. This might seem like a pittance when compared to the overall health costs in the U.S., but we have to start somewhere and this is an area which does not touch on the quality of treatment. It just makes sense.
Canada has a single payer health system. If we don’t want to have such a system in the U.S., there certainly should be no objection to uniform forms which document services and medical necessity and provide treatment summaries to minimize the administrative burden on the doctor’s office staff. Rather than having to “recreate the wheel” every time an insurer asks for information, the use of standardized formats by all carriers will make it easier for the doctor’s office to comply with the request and to comply in a timely, cost effective manner. Like anything else, when you repeat the same procedures over and over again, you become familiar with them and it becomes easier for you to fill in the information on a familiar form.
Insurance companies should be expected to jointly design a series of reporting forms for U.S. doctors which sets forth the information the insurers need while providing doctors and their staffs with a user-friendly, standard record to complete.
Such standardized forms, devised by the insurance companies themselves, should be used by every health insurer so that once doctors and their staffs become familiar with them, it will take less time and effort to complete them, and to do so correctly the first time.
Why is this important? Because the study found that doctor’s nurses and medical assistants spent more than 20 hours a week per doctor on tasks related to health insurance plans, more than 10 times that spent by the same staff in Canada.
Evaluation of the time spent by senior office administrators and clerical staff told the same story – substantially more time spent in U.S. offices than in Canada. If time is money, and it is, then it is easy to see that administrative waste is eating up a much larger chunk of the medical pie here than it is in Canada.
If health insurers, whose profits are soaring these days, would cooperate and spend the time and effort required to devise standardized reports, it would cut down on the heavy administrative costs doctors pay their staffs (and charge patients for), while streamlining the medical reimbursement system.
Such a move should save appreciable money and maybe a few bucks would fall off the table for patients. What a concept!
Whenevcr we think about writing a blog on life, health or long term care insurance, we think about how many policies may be lapsing at that very moment because the policyholder has the beginnings of some cognitive disorder which affects the ability to remember to pay premiums.
One would think that an insurance company which deals with older persons would be aware of the fact that advancing age sometimes brings on Alzheimers or some other functional disorder that affects a person’s ability to take care of their business. If the insurer were a friend, or even neutral, one would expect that the insurer would make inquiry about the failure to pay premiums before canceling a long term care or life policy.
However, the insurer is anything but a neutral, vis-à-vis the policyholder, and is plainly and simply, an adversary. So, when it comes time to pay premiums on the policy, the insurance company gains nothing by spending a lot of time and money trying to ascertain why the insured has stopped paying the premium after many years of payment. After all, if the company cancels the policy for nonpayment of premium it has the best of both worlds – it keeps the premiums it has and sheds the obligation of ever paying money out. What could be better?
That’s why every state should have a law requiring the insurance company to follow a specified procedure to try to make certain that the policyholder hasn’t defaulted because of cognitive failure. This procedure might involve absolutely requiring a check of Social Security’s
Master List of Deaths to see if the person has died. If the person has not, further inquiry requirements should be set forth before the policy could be legally canceled.
As an example of making a start on the problem, New Jersey has a statute, N.J.S.A. 17:29C-1-2, requiring that every senior citizen (a person over 62) be permitted to designate a third party who shall receive notices of cancellation, nonrenewal or conditional renewal before those policy changes can be effective. Although this statute doesn’t shut the door on cognitive policy loss, it should help to cut these losses.
But, let’s be real. No matter what the requirements of the law, insurance companies will do the minimum required to meet the law and that may not be enough. There will be nobody at the company working on the insured’s behalf when it decides to cancel the policy.
Every policyholder should protect against losing his or her insurance coverage because of a lapse caused by cognitive dysfunction, by making certain immediately that their policy requires at least a 30-day notice, not only to the owner, but to a close relative or friend, of the insurer’s right to cancel or substantially alter the terms of the policy.
In this way, a policyholder will have someone in his or her corner when the company decides to cancel because of nonpayment of premium or some other reason related to a cognitive failure.
If you are such a policyholder, and while you are thinking of it, just notify the company of the names and addresses of those besides yourself to whom you want notice of cancellation sent, so you will know you are protected if things start to go downhill mentally for you.
After all, when things start to go downhill for you after years of paying premiums, that’s the worst time for you to lose your coverage.
From the insurance company’s point of view, it’s the very best time.
Just when you thought insurance companies had reached the ultimate in stacking the deck against insureds, they come up with a new ace in the hole. Now they are buying up groups of treating doctors, which they will own, lock stock and barrel
In other words, a doctor who is treating you for an illness or injury which may be the basis of a disability insurance claim and who has to file medical reports on your behalf, may be filing the reports with his or her boss – the insurance company.
Talk about a conflict of interest!
The reasoning put forth by the companies is that they will be able to control costs better if they control how the medical practice is managed. Sounds good, but if experience is any indication as to how it will actually work, hold onto your wallet.
Those who represent disability insurance claimants know that insurance companies usually have a contested claimant’s medical evidence “fine-tooth combed” by a doctor who is employed by a medical services company, retained by the insurance company. In most cases, the medical services company has few sources of income other than the insurer. Likewise, many doctors employed by the medical service company have few, if any, sources of income, other than their work for the medical services company.
It doesn’t take a genius to figure out that if the services company and its doctor employees know what’s good for them, they will tailor their medical findings to favor the medical service company’s customer, the insurance company. If they don’t, a substantial source of their income is likely to dry up and blow away.
Lawyers fighting for claimants in the disability income field learn that IMEs (so-called Independent Medical Exams) performed by a doctor employed by such a medical expert vendor, almost invariably result in a claim denial by an insurance company.
If this is the rule when the doctor’s agency employer is hired by the insurer, what is it going to be like when the insurer is actually the doctor’s “boss”? Is such a tighter relationship likely to make a doctor less favorably inclined toward the insurer?
Going a step further, the treating doctor recommends treatments and medication for the patient. If the doctor knows the insurer-employer pays for this wouldn’t there be an incentive to hold back, so as to make the treatment protocol less expensive? Isn’t that a clear conflict between the interests of the treating doctor, the insurance company for whom the treating doctor works, and the interests of the patient?
It seems clear that despite the growing trend of insurance companies buying medical groups, it should not be happening. Doctors are the people who actually define health claims, which in turn define the extent of financial liability of the insurance companies. The conflict of interest is too great if the insurer is actually the employer of a doctor defining the value of the claim against it
It’s bad enough that a whole medical service industry has grown up on the false premise that doctors who earn a large part of their living examining claimants for insurance companies can be neutral in their findings.
As a practitioner on behalf of claimants in the disability income insurance field for 30 years, we can attest that medical service IME doctors are anything but “independent”. If the doctors were direct employees of the insurance company, the odds of fair medical judgment would be laughable.
It is obvious that a patient wants a doctor to have only the patient’s interests in mind. A potential conflict of interest would have a devastating effect on the relationship. An actual conflict is terrifying.
On the basis of past insurance industry history, would anyone take bets that the insurance companies will not take the advantage that employing treating doctors affords?
When insurance companies look to do what is right, they look though a 1-way mirror. This comes as no surprise to those of us who have to fight with insurance companies every day to get them to do what is right for our clients.
What brings on this observation is the ongoing investigation by 35 states of “unclaimed” life insurance policy death benefits which seem to disappear into company books, never to reappear again.
The “right” part of the statement has to do with annuities, which the companies have contracted to pay their customers (in return for good money, of course). Most of these annuity contracts call for the annuity payments to end when the annuitant dies. Many times, the annuitant dies and the insurer receives no notice, thereby increasing the danger that the company will continue to send annuity checks to a deceased.
But, never fear. There is a Master List of Deaths maintained by the Social Security system which is also very interested in learning when one of its benefit recipients dies. The data in this list is kept current and is available to anyone interested for a fee.
We have no argument with the insurance companies protecting themselves by following the Master Death list closely and updating their annuity files so as not to pay benefits to those who have expired.
The problem is that these same insurance companies don’t use the Death Master List to notify life insurance beneficiaries of policyholders who have died leaving paid policies for relatives and others who are unaware of the policies.
The result of this failure is that the life insurance benefit may never be paid if the beneficiaries didn’t know they were named in the policy. Further, most states have an escheat law which commands that in any situation where life insurance proceeds are unclaimed for a certain period of time, they escheat to the state.
If the insurer doesn’t know that the policyholder died and the policyholder is ill or so incapacitated that he or she can’t take care of business, the company can send out premium notices and then cancel the policy for nonpayment, thereby writing the potential liability off its books relatively quickly.
We have a feeling that the insurance companies under investigation will wind up paying hefty fines in a settlement to the investigating states, just as Unum did in 2004. See Unum. But, in actuality, they will be paying a lot more. It will be another instance of insurance companies playing fast and loose with their policyholders and making every effort to add dollars to their bottom line.
This is why we shudder when we hear legislators trying to tell people that Social Security should be shifted to a private insurance system. The record of the private insurance industry in dealing with their policyholders does not give us much confidence that such an adversarial system, with profit as the main underlying motive, will deliver for Americans the social network they have come to expect from Social Security since 1934.
We know that the system needs tightening up economically – but, not destruction at the hands of private insurers. There are many ways in which more revenue can be earned while benefits are reduced in a humane way, that will allow the system to continue for decades and decades to come.
With the way that insurance companies fight their policyholders to hold onto every dollar
they can, as most recently demonstrated by the ongoing Master Death List investigation,
the Unum probe and settlement, IME doctors, denial bonuses for their employees, why
would anyone in their right mind entrust the future of Social Security to private
Many people are not aware of it, but addiction to drugs, food or alcohol is a recognized disability under the terms of many disability income policies. If there is a true addiction and it prevents the insured from performing his or her occupational duties, it may be covered by an ERISA or a private policy.
The stigma and guilt usually associated with addiction may lead victims to believe that the addiction is their “fault” and that there is no coverage for this disability. Not so.
Addiction means just what it says – “I can’t help myself”.
Many times the addiction is the result of prescription pain medication given as treatment for injuries or illnesses. They may also be the result of nervous or psychological conditions which are very real to the afflicted person. When these conditions are added to the treatment protocol for the illness or injury the result may be an addiction which will not cure itself.
If the addiction is so bad that the person cannot perform the duties of the job, medical or psychiatric treatment is required, and, if there is coverage, the benefits of a disability income policy may very well be available.
However, it would be a mistake to think that the insurance company will accept an addiction claim without putting up a battle royal. After all, the courts are full of cases where the illness or injury would be clear to any neutral observer, but the insurance company puts up a no-holds-barred fight with its stable of IME doctors to try to discourage the claimant.
We have spoken before about the strategy insurers use to discourage claimants from pressing claims. They know that claimants are usually at a low point, without work and without income. See Docility. So, they turn up the screws to add more pressure by demanding more and more information and turning their pack of doctors loose on the claim.
Insurers make the claimant jump through hoops in an effort to get the claimant to back off. How do insurance companies react to claimants who say they can’t work because of an addiction? They play the stigma and “fault” cards for all they are worth.
If a person is in a position where they can’t stop eating, drinking or drugging to a point where they can’t do their job, they have to seek professional help and they may be entitled to disability benefits under the terms of their disability income policy.
However, when they do decide to make a claim, they should know that the road to income recovery will be a rough one, with the insurance company pulling out all of the stops to avoid paying. They should be certain they get the help they need, both legal and spiritual from an attorney who has successfully handled addiction cases before.
Insurance companies smell blood in the water when they see a case brought by someone whose affliction indicates a lower threshold for pain and suffering. Knowing this, if you decide to go ahead, be prepared to take some punches and travel around some roadblocks.
But, also know this – with an attorney who believes in your case in your corner, you can prevail.
In the business of blogging, we learn to be packrats, hiding away bits of information upon which to base future writings. Many times we forget what we have and are pleasantly surprised when we happen on a tidbit which strikes our fancy.
Contemplating the difficulty of explaining the intricacies of disability insurance law, even to specially educated people such as insurance agents and financial planners, we happened upon “The Illusion of Coverage:”, a comprehensive review of the difficulties of insurance law published by The Access Project www.accessproject.org in 2007.
What we were looking to do was to point out that in today’s world, even when you are in the insurance business, you do not necessarily have your finger on each of the myriad nuances of the various types of insurance coverage because there are so many risks covered in so many ways at so many levels of cost, it seems one would need an encyclopedia just to keep up.
What got us on this topic was a discussion with a financial planner about a particular client and the need for “own occupation” disability coverage because of the nature of the client’s profession and income level. The planner was quick to say that the client had
“own occupation” coverage in his disability income policy.
But, when we asked him, “What kind?” he was at a loss for words.
We then proceeded to list for him the possible limitations and conditions which insurance companies try to place on these policies, such as:
* Limiting the “own occupation” payments to 2 years.
* Precluding the insured from working in any other field as a condition for benefits.
* Capping the amount of benefits to a specific sum over the life of the policy.
* Defining the occupation so as to cover a broad spectrum of employment.
The problem here may be that “own occupation” is frequently used by insurance agents and brokers to describe coverage which is really “modified own occupation”, without understanding or explaining the difference to the policyholder.
The planner and his client may believe that when the insurance agent says the policy has “own occupation” coverage, that such coverage is truly “own occupation” in the classic sense, i.e., if the client can no longer perform the occupation of brain surgery, the insurer will pay the benefit even though the client may be able to do some other type of medical work. Only when the claim is made does the reality of the distinction become clear. By then it is too late.
What the public (and many times their advisers) are not aware of is that insurance, particularly disability income (and long term care) is not nearly one size fits all. Subtle language differences can be critical at the time of claim, but are frequently overlooked or ignored at the time of the policy sale.
So, if one is negotiating such a policy for him or herself, or for a client, to accept a statement that a policy has “own occupation” coverage without plowing through the language of the policy so as to know exactly what one is actually getting, is doing a disservice to yourself and your client.
As with everything else, you get what you pay for. If you want a gold-plated policy which gives exactly the benefit you want for as long as you want, then the premium is going to be high, and if you are willing and able to pay for it – good for you.
If you are not willing or able to pay the required premium, then you have to settle for less protection.
But the important part of this transaction is that both the client and the financial planner know and discuss the details of the policy and make knowing choices based upon a full understanding of the options.
Accepting a generic label for an insurance clause without fully analyzing the actual language leads to a rude awakening if policy payoff time ever comes.
You may miss the true import of a policy clause when you are buying it. But, you can bet your bottom dollar the insurance company won’t miss it when it comes time to pay your claim.
It comes as no surprise to those whose law practice entails getting money for clients from life insurance companies, that with insurers, there is no such thing as a “slam dunk” claim.
Before we started working as adversaries to insurance companies, we always thought a life insurance policy would be the exception to the usual ”let’s find a way around paying rule”, i.e., the policyholder has died, so let’s pay the policy. Boy, were we mistaken.
One would think there is no more definitive condition than death. In that regard you would be right. But, when it comes to an insurance policy, you are overlooking the credo of the insurance industry: Maybe we can find a way around it. And, they are very creative in trying to find ways to avoid paying.
A major reason for a turndown when it comes to paying life benefits is what the insurers call a “material misrepresentation” on the policy application. Because of the inadequate vetting system insurers choose to use when underwriting a life insurance application, many policies are issued which are based upon applications in which the policyholder had a spate of selective and “forgetful” memory.
Being in a hurry to grab premium dollars, many insurance companies rush their applicant screening (if any) and only take screening seriously when a policyholder dies and it comes time to pay the death benefit. Suddenly, a complete and thorough investigation is in order, including dotting every “i” and crossing every “t”. We call this “post-claim underwriting” and it is rampant in the life insurance industry.
Why leave a policyholder feeling secure for years only to deny a death benefit for a purported misrepresentation which the insurer concocted after payment is due? The insurer will tell you it is to maintain the integrity of its risk assessment system so as to be fair about the degree of risk and not to pay illegitimate claims.
But, why can’t the companies assess the risk before issuing the policy? They have access to and can review all medical records of the insured and can decline to issue a policy if there is reason to do so. That would leave them in the position of not issuing a policy they would later find they should not have issued and leave the purchaser free to seek protection elsewhere. However, that would mean no premium dollars to the insurer.
It used to be that all life insurance policies had a 2-year incontestability period, after which the insurer could not deny a claim based upon misrepresentation in the policy application. But, now nearly all states allow an exception for “fraudulent misrepresentation” in policy incontestability clauses, making the 2-year period completely illusory.
With an exception for “fraudulent misrepresentations, there is no time limit to restrict the carrier from contesting payment, even many, many years after the policy was issued. All the insurer has to do is allege “fraudulent misrepresentation” and the death benefit is off to the races on a very muddy track. So much for the peace of mind a life policy is supposed to bring.
Life insurance is a highly competitive business in which companies are willing to take risks for premiums. If you turn down an applicant, your competitor may very well say yes, leaving you out in the cold.
From the company’s point of view, it is better to zip through the vetting of the application, knowing that you can always try to reject the claim after the person dies. This procedure also is less costly to the insurer which does not have to spend serious money taking care to look at the application, before a policy is issued.
Zipping through the app procedure gets the premium dollars rolling in faster. Never mind that the later rejection of the claim may cause the beneficiary a disastrous hardship at the worst possible moment in their life.
This procedure, entrenched at most life companies, is a win-win for them.
And, that’s just the way insurance companies like it.
Wouldn’t you know that the future of long term care insurance as we know it is being seriously called into question this November, the month some marketing genius has labeled “Long Term Care Awareness” month. Ron Lieber of the New York Times recently reported that MetLife would stop underwriting long term care policies for individuals on December 30, while at the same time halting new enrollment of LTC insurance for groups and other plans sponsored by an employer.
According to Mr. Lieber’s article, many other insurance companies, leaders in the LTC insurance filed, are requesting large premium increases or are also seriously contemplating going out of the LTC business. The reason given: Companies were not charging policyholders enough to cover the quickly expanding costs of LTC.
After the blizzard of comment we all have weathered during the recent health care battle in Washington, this should not surprise us. It is obvious that we are living longer (although the affluent seem to be getting a bigger share of longer life than the rest of us). And, although we seem to have made great strides in battling heart, lung, cancer and other killers, we seem not to have made much headway against the major LTC afflictions: Alzheimer’s and dementia, which fill our nursing homes and assisted living facilities.
With demographics (the Baby Boomers) indicating that these afflictions will increase without a major breakthrough, the future looks bleaker and bleaker.
Mr. Lieber’s article points out how far off the mark insurance companies were in pricing these LTC policies. Many factors caused this, the major ones being:
* INTEREST RATES - Everybody knows that rates have hit bottom and are staying there for a while. This hurts insurance company income which relies heavily on invested premiums’ interest income. Low interest income adds to the already heavy load of ever-increasing cost of long term care.
* MORBIDITY – Miscalculating the number of LTC claims the insurer will be carrying on its books and how death and other causes will affect the policy payout.
* PERSISTENCE – This is where more turns out to be less for LTC companies. One would think that having policyholders continue to pay premiums for insurance would be to the benefit of insurers. Not so in LTC where premiums do not cover outlay without normal interest income. In LTC, when a policyholder stops paying the premium, there is no further obligation on the insurer to pay for care, so all monies already paid in, less administrative costs, are pure profit to the company. However, if the policyholder keeps paying premiums until he or she requires LTC benefits, the insurer faces the real prospect of losing money, depending on how long the policyholder draws benefits. So, if a company based its premium on a larger number of policies stopping payment before claim than actually do, the insurer may find its premium schedule too low. Clearly, insurance company underwriters, in their haste to sell product, have grossly miscalculated the risk of this coverage and carriers are now battling to head off future losses.
Is the long term care insurance policy doomed? Will Baby Boomers be left without financial protection when they face the uncertainty of later years? With insurance companies being uncertain about the risks and interest earnings on the bottom, who can tell?
The perfect solution would be for science to unlock the secrets of Alzheimer’s and dementia so they may be done away with, or at least, alleviated to the point where people can function. Without such a breakthrough, the future for this type of insurance looks grim.
Anyone have any ideas?
Health insurance companies have a great system going for them. They make inordinate amounts of money and then use that money to buy legislative influence so that they can make more inordinate amounts of money.
Who wouldn’t want to be a part of a system like that – if you are the one raking in the cash, not the one who pays it out.
A Chicago Tribune report, http://www.chicagotribune.com/business/ct-biz-1004-health-insurance-politics20101004,0,6752608.story, spells out in detail the flood of money being provided by insurance companies to Republican candidates hopefully headed for Washington.
Now that the Democrats have passed a health law which greatly expands the market for health insurance companies, they have switched allegiance to the Republicans in an effort to elect Congressmen and Senators who will severely restrict those parts of the law which insurers don’t like and curb the reach of regulations to be formulated pursuant to the health law.
In 2009, the Tribune found from federal election filings, that donations to the two major political parties from the five largest insurance companies and their Washington-based lobbying arm was almost equally divided. This year, these insurers have given more than three times more in contributions to Republican campaigns than to Democratic ones.
Why the sudden change? In 2009, the legislative branch was locked in an epic struggle over the issue of enlarging health insurance coverage in the nation. A major issue was forcing everybody in the country to buy health insurance. Since there were 45 million people without health insurance, what an expansion of the insurance market for the companies! So, they did everything they could to see that, at least, this part of the expansion became law.
They succeeded and got the increased market. But, then they looked at the entire law and found that there were parts of it that actually favored policyholders and would tend to curb insurance company profits. So, the companies shifted gears and decided to back the people who opposed the law so that they could milk them for the legislative and regulatory “fixes” the insurers want.
Any person who thinks about it has to come to the conclusion that an insurance pool cannot work if the people who are most likely to need the insurance are the only ones in the pool. Unless many who will not require the insurance pay premiums just to play safe, there would not be enough funds in the pool to pay the claims of those most at risk.
So, just as automobile insurance is required from all, so health insurance will be required from all.
But, having obtained this treasure trove of possible new business, the insurers then set about paring the potential amount of benefits they would have to pay. They have a laundry list of items they want to cut or excise from the law. After all, they have what they want in the way of potential business, now it’s time to cut down on potential payouts.
Some of the things in the new health law that have insurance companies on the warpath are:
* Prohibiting denial of coverage to sick children
* Prohibiting canceling policies when policyholders get sick.
* Prohibiting lifetime caps on benefits to disabled consumers.
* Policyholders will receive new appeal rights when a claim has been denied.
* Insurers will have to cover payment for more preventive care for their policyholders.
Which just goes to show:
To the policyholder, health insurance is a life-saving mechanism which hopefully protects the family in the event of disaster.
To the insurance company, health insurance is a cash cow which keeps on giving and giving and giving…
Don’t be blindsided by the simple words “own” and “occupation". Joined together, in a policy of disability income insurance, these words become a minefield, ready to blow up your and your family’s life in the event of a disability.
“Own occupation” is a complicated insurance policy phrase requiring your complete attention and understanding before you can believe you have done what you could to protect your own and your family’s future.
For those who don’t earn high incomes, the nuances of “own occupation’ clauses in disability income policies are not of great import. But, to those earning the “big bucks” the definition of “own occupation” in their disability income policies can be the difference between life as they know it and an economic wasteland.
A cardiac surgeon making $750,000 a year and up, who becomes disabled and can’t practice and earn as a cardiac surgeon, adds a financial catastrophe to the already heavy burden of the disability. Smart high earners insure themselves and their families by taking out “own occupation” disability policies to provide substantial disability benefits while they are disabled and unable to earn anywhere near their usual income.
And, when buying these policies, these people are usually smart enough to ask their insurance agent or broker if their policy has an “own occupation” clause. If the agent says “yes”, they feel content. But that question hardly touches the core of what a person with a substantial income should be asking.
The major issue for the prospective policyholder is the way “own occupation” is defined in their policy. Is it the occupation at the time you buy the policy or is it occupation at the time you become disabled? Are there time limits on how long the ”own occupation” benefits will be paid? How does the policy define “unable to perform the duties of your occupation”? What happens if you start working in a totally different occupation while disabled? Are you entitled to benefits? Are there any other limitations or restrictions on the type of injury or illness which will trigger benefits in the event of a major disability?
Each of these issues is among a myriad of other considerations which have to be understood and evaluated before a high-earning professional can feel comfortable that whatever could reasonably be done to protect the family’s future has been done.
Some other important considerations are:
* Should the renewal of your policy be guaranteed in case you contract an illness or injury which might lead your insurer to think it is in its best interests to cancel your coverage before you actually become disabled?
* Should you include a cost of living clause in the policy to keep your benefits in line with the cost of living since disability benefits may go on for years and years?
* Should you contract to continue benefits after age 65, the usual termination of policy benefits?
* Should you contract for residual (partial) disability in the event you still can do “some” but not “all” of your “own occupation”?
As with everything else, you have to pay for any additional coverage protection. But, the important thing is that you should have the opportunity to decide before you buy the policy whether you want or need the added protection.
So, if you are a person to whom an “own occupation” clause is important, you shouldn’t feel secure even if your insurance adviser assures you that your policy contains an “own occupation” clause.
While you are thinking of it, read your disability insurance policy TODAY! The language may be tough to understand but you can do it if you try.If you haven’t the time, get someone who knows to help you with it NOW.
Making the effort NOW is better than having your complacency shattered by receiving a letter from your disability carrier when the chips are down: BENEFITS DENIED!
Why should disability income insurers be allowed to ignore the decisions of Social Security judges, yet take their share of the claimant’s money and run?
This vexing question was raised in Austin v. Life Insurance Company of North America, (2010 LEXIS 38294 (C.D.Cal. 2010), with the court coming down hard on the insurer for its cavalier attitude toward a Social Security decision. In that case the insurance company didn’t have the “couth” to even mention the SSDI decision favoring its policyholder in denying the disability benefits claim.
In the court’s words the failure of the insurer to mention the SSDI decision indicates “…complete disregard for a contrary conclusion without so much as an explanation and raises questions about whether an adverse benefits determination was the product of a principled and deliberative reasoning process.”
It has become common practice for group disability insurance companies to require their insureds to make a claim for benefits to the Social Security Administration if they want to keep on receiving their long term disability income benefits. In fact, this tactic is so important to insurers that they will many times supply free of charge professional assistance to claimants to pursue these SSDI claims.
Why this considerate conduct by insurance companies, you might ask? Because, if the insured claimant is successful in receiving disability benefits from Social Security, the insurer is fully reimbursed from the first SSDI monies received for prior payments it has already made to claimant and, is an offset against future benefits.
What is so unfair about these disability policy “claw back” provisions is that the insurer usually disregards the SSDI judgment in defending its denial of policy benefits to its own insured without considering in any way the SSDI decision. This is a common practice and should be dealt with as sternly as the California District Court did in Austin.
As those who practice in the SSDI world know, a claimant has no walk in the park when pressing a claim for benefits. SSDI judges require convincing proof of disability before they make long term awards. And, once such an award is made, it should be carefully considered by a private insurer in determining a claimant’s case for long term benefits under the terms of its policy.
An SSDI ruling is not res judicata in an ERISA matter. The policy language, procedural matters and a truly different determination by the insurer’s medical experts may affect the decision. But, what must be required by all judges in support of the insurer’s decision, is a reasoned denial, citing the basis for differentiating between the SSDI ruling and the private insurer denial.
Simply ignoring the SSDI decision should be anathema to any judge considering an ERISA appeal. Disability carriers should not be allowed to disregard contrary SSDI judgments without explanation. This is particularly so because insurance companies recoup benefits paid to the insured from the proceeds of the insured’s SSDI award.
Further, Federal District Courts should always keep in mind that SSDI judges have no conflict of interest. Both sets of judges are sworn to uphold the law of the United States.
Insurance companies, on the other hand, have a definite conflict of interest. Why should such a conflicted party have the ability to ignore an unconflicted judge’s finding without having its feet held to the fire?
It makes no sense.
What a surprise! A California newspaper investigated 567 disability insurance claims and found that insurance-sponsored IMEs resulted in denials in almost every case.
This is just the tip of the garbage heap (we hesitate to say “iceberg” because cold keeps things from stinking). The article clearly points out that disability claimants, particularly those covered by ERISA, are being hosed by insurance companies day in and day out at the very time when they are least able to fight back.
The article points out a basic failing of the “Independent Medical Examination” which lies at the root of a large percentage of the injustices inflicted upon claimants who are in desperate need of fair evaluations in claim determination.
In the case which triggered the investigation by the newspaper, a woman with degenerative disc disease was so afflicted with pain after surgery that her physician prescribed large doses of morphine for her. The woman applied to MetLife and the Social Security Administration for benefits. SSA granted her the benefits, but MetLife, after first starting payments, stopped because “…the medical information we have received does not support your inability to perform your duties as a client manager…”
An “Independent Medical Examiner”, paid by the insurance company, disagreed with both her treating specialist and the SSA and said she was fit to go back to work.
Although the case laws is rife with findings that IMEs are heavily tilted in favor of the insurers who pay for the exams, there is no mechanism in place to even this inherent disparity in medical “opinion”. Part of the problem is that while the treating doctor is subject to suit for malpractice if the diagnosis or treatment are medically negligent, an IME physician has no duty to the claimant because the IME examiner has no doctor-client relationship with the claimant. Therefore, the insurance company doctor has nothing to fear from the claimant even if the doctor conducts the examination blindfolded and with a closed mind as to the outcome.
Plaintiff lawyers practicing in the ERISA field have been aware of this unfair practice for years and years but have been unable to deal with it because of the ERISA precedent that shielded this practice from open view. The law required courts to give deference to the findings of ERISA plan administrators and precluded them from looking at how the decision was reached once the court found any reasonable basis upon which the administrator’s decision could be based.
To make a dent in this unfair IME bulldozer which continues to bury the hopes of so many heavily disabled employees, there must be a precedent which holds the IME physician legally accountable for misreporting a claimant’s condition to an insurance company. The problem is that under the law, the IME doctor owes no duty to the claimant and therefore is not accountable for negligence in reporting on the claimant’s condition.
It is time to stop this sham of “bought and sold” IMEs. Even if a claimant does not pay an IME doctor directly, courts should hold that since the claimant’s premium is helping to pay the doctor, a relationship is established which requires the doctor to use ordinary medical care in examining and reporting on a claimant’s condition.
This will give the IME physician something to think about other than the need to placate the insurance company so that he stay on the IME fee list, which in some cases provides most if not all of a doctor’s annual income.
It is time the Hippocratic Oath replaced cynical IME hypocrisy so that disabled ERISA claimants get a fair shake, as the ERISA law clearly intended them to.
You run into the darndest arguments from insurance companies when it comes time to pay up, whether it’s a disability income, accidental death or any other kind of policy.. When it comes time to pay, they say, “Go away.”
We recently represented the husband of a 31-year-old mother with three young children who died as a result of surgical malpractice when she tried to alleviate her scoliosis condition. The poor woman went in for a major back operation and never came out of the hospital. She died because the anesthesiologist in inserting a catheter, nicked a large vein which bled into her chest cavity, and then having not deposited the catheter in the vein, fluid flowed from the catheter into her chest cavity rather than into the vein.
When the insurer American International Group (AIG) was asked to deliver the accidental death policy proceeds, AIG claimed her death was not an “accident” because it was caused by complications of surgery due to “misplacement” of a central venous catheter.
AIG hired a supposedly independent physician to review its findings. This doctor decided to call the negligent insertion of the catheter a “complication” of surgery rather than the malpractice it was. (For more on insurance company “independent medical exams”, see IME. Relying on this doctor’s “complication” call, AIG again denied the husband’s appeal and refused to pay.
Upon our appeal, the Federal judge, in his 15-page opinion , Barnes v. AIG, 2010 WL 376127 (S.D.N.Y.) carefully documented his finding that the malpractice was accidental under the terms of the policy. The court found there was no language in the policy that would authorize AIG to not pay the policy benefits to the husband of the deceased wife. The Court also ordered AIG to pay interest, legal fees and costs.
As the court pointed out, the insurer had every opportunity to exclude medical malpractice from triggering benefits by clearly putting such language in the policy. But, not having done so, AIG then tried to dance around the issue to its advantage thereby delaying payment in an effort to get the claimant husband to “wimp” out and abandon his claim.
Insurance companies know that it is almost universally held that any ambiguities in policy language will favor the policyholder. If any unstrained interpretation of a policy would favor a policyholder, just about every court in the nation will so do, with a long line of precedents lending support.
So, you may wonder why insurers such as AIG go through such a song and dance routine when they know deep down that the policy and the facts say they should pay.
The simple answer is that while they hold the money, the claimant doesn’t have it and they do. Lots of things can happen to eliminate a claim before the insurer has to pay:
* The claimant may die and there may be no one willing to pursue the claim further.
* The claimant may give up the chase in disgust or frustration.
* An inexperienced claims attorney may fumble the ball and lose the case.
* A claimant may settle for far less than entitled to just to stop the music.
We have all heard the expression, especially when we were kids, that “Possession is 9 points of the law”. It is not accurate. The saying should be: “Possession is 9 points of the law when you have to go to court to collect”. This is because the burden of proof is on the claimant to obtain possession of what the possessor already has.
The possession may be absolutely wrong but the claimant has to actively prove to a court that it is wrong, meaning the loss of legal fees, court costs, and a lot of time and energy. All the possessor has to do is sit back and snipe at the claimant’s case, while enjoying the use of the money in its possession.
Is it any wonder that insurance companies hold on to benefit monies for as long as they can? One of the many things that can happen to eliminate a claim could happen.
Then possession by the insurance company becomes “…all 10 points of the law.”
A recent article outlining the effect of insurance regulators trying to do away with the “discretionary clause” in ERISA disability income insurance policies raised an interesting and basic issue concerning life in these United States.
Why do we keep kidding ourselves about what we do?
The “discretionary” issue here concerns whether plan administrators should have the discretion to determine whether a claim is covered by an ERISA policy when the insurance company is both the insurer which will pay the claim and the administrator of the ERISA plan. It doesn’t take a genius to know that this “discretionary” situation creates a powerful incentive for the administrator to favor the insurance company in making that decision.
Defenders of this “discretionary” system say this procedure keeps costs manageable and that to do otherwise would raise the cost of insurance because with the discretionary clause the insurer will pay fewer claims. They are correct. But, what does unfair favoritism have to do with protecting the sick or disabled?
Is it better to call a thing a nice sounding name, but not give the nice-sounding protection the name implies? Have we become so used to Madison Avenue that we are willing to play the ad game with the terms of our insurance policies?
When you buy an insurance policy, you expect to be fully protected against risks you bought the policy for. Why should the insurer insurer have the advantage of unfairly denying your claim and then having the courts constrained to defer to that unfair denial, simply because such a system leads to smaller disability payouts and, hence, lower premiums. If the insurance doesn’t cover what it is supposed to cover, who cares how low the premiums are?
What good is a policy that doesn’t do what it s supposed to do? And, how far do we carry this sham?
Policies are supposed to be statistically underwritten so that the insurance company knows the risk and sets its price accordingly. If the price is high, so be it. Reduce some of the benefits so that the premium meets the cost. Don’t use an artificial stricture on paying benefits to deprive deserving claimants what is due them.
During the last decade, we have all had the experience of living a lie: Banks urging people with bad credit to take their credit cards and use them recklessly; calling “liar’s loans” home mortgages; thinking housing prices would go up and up and up forever; Wall Street becoming a crap-shooting gambler, shuffling paper back and forth and making billions in bonuses on the paper shuffle; rating companies being fooled (or worse, just okaying any deal for the fee money); and on and on and on.
We are suffering for living the lie because it felt so good. Now, let’s start getting real. If insurance requires a certain premium, require that it be paid. Shortcuts created by fudging what is actually going on leads to injustice and worse.
If an ERISA policy calls for “discretion” on the part of an administrator who works for an insurer, and the decision is required to get deference in the courts, let’s call it what it is:
A maybe disability income policy
We think it was a welcome relief for recently discharged or about-to-be-discharged employees that a law, recently enacted by Congress and signed by President Obama, extended much needed help to those in need. The American Recovery and Reinvestment Act extends COBRA subsidies for an additional six (6) months for a total of fifteen (15). months..
In a move to help those laid off between September 1, 2008, and February 28, 2010, the government provides a subsidy to employers of up to 65% of the COBRA health insurance premium to be paid on behalf of a recently unemployed person. The COBRA beneficiary will have to pay the balance of 35% of the premium.
The subsidy program is available to employees discharged between the requisite dates whose adjusted gross income for tax purposes was less than $124,000 for an individual and $250,000 for a couple.
The details of the legislation are somewhat complex. For those interested in more information, click here.
If the administration and Congress really want to come to grips with this recession, they should provide more of this type of grassroots relief. Such relief gives hope and hope is the foundation stone upon which this country will climb out of the recession. .
A recent article on the high cost of air ambulance service raised an old issue in our mind: How much would you be willing to pay to save the life of your loved one? Or somebody else’s loved one?
When a child is ill and running a high fever from a cause unknown, a parent would pay almost anything to get the fever down and make the child well. But, once the emergency is over, the parent looks carefully at the charges and may become upset at the cost.
Air ambulances are usually used in emergencies where the medical personnel on the ground evaluates a victim and believes the illness or injury is so severe that the trip to the hospital by ground ambulance would be life-threatening and that the most immediate full facility attention is required.
When this occurs, neither the patient nor any friend or relative, worries about the cost of air transport. They just want to get the best available medical personnel and equipment working to save the victim. It is only after the patient is stabilized and on the way to recovery that the $12,000 to $25,000 cost of the flight becomes an issue.
• This observation is not a criticism of people’s conduct. It is an observation which goes to the basic foundation of the type of health care system we want in the United States.
• Do we want a system which gives basic medical, hospital and custodial care to all people? Do we want a system which gives the utmost care to all people?
• Do we want a system which gives the utmost care to only people who can afford to pay?
• Do we want a system which gives the utmost care to people who are lucky to be old enough to be covered by a government system which will pay, while younger people with much longer life expectancies are left out in the cold?
To find our answer to these questions we must put ourselves in the position of a parent with a very sick child. What would we want in the way of care for that child?
The air ambulance is a good example. It is called when time appears to be of the essence. Trained, high-priced air and medical crews have to be on standby 24 hours because one never knows when an emergency call will come in.
Once on the scene, should the aircrew check the victim’s insurance papers before acting? And, if the crew finds the victim isn’t insured should they refuse him or her transportation to a hospital even if it means the person will die?
These are basic questions we must answer to have a coherent approach to health care in this country.
Slick slogans won’t solve the basic problem: Do we want a health care system that gives everyone a chance to get the medical help they need or do we want a system which favors some and ignores others?
Drug companies have been raising their prices in anticipation of a government health reform program which may try to rein in uncontrolled drug price rises the companies have grown used to pocketing over the years. So, what’s new?
As reported in the NY Times, the wholesale price of drugs has gone up about 9% in the last year while the Consumer Price Index fell by about 1.3% during the same period. The drug industry claims the prices have risen at this rate, a rate unprecedented for the last
15 years, for good and valid business reasons. Realists say the industry is preparing for health reform, one of the cornerstones of which is trying to curb drug spending.
Whichever it is, the consumer gets caught in the middle again. While the drug industry trumpets its agreement to cooperate in lowering the nation’s drug bill by $8 billion a year in support of national health reform, it has already increased the nation’s health bill by more than $8 billion even before the health legislation gets its legs under it.
The excuse they use is the old saw that they have to charge more to generate monies for research and development of new products. Drug manufacturers have been using this excuse for raising prices for decades although the real reason is to keep their shareholders happy.. But, nobody seems to give a darn about the end user, the person who desperately needs the drug to stay alive or functional. Whether or not these afflicted people can afford the price, they have to find some way to pay.
Speaking of new product research and development, how about the billions and billions taxpayers spend on basic research at universities which lead to the development of many of these drugs and medications? Why doesn’t the taxpayer get a cut of the profits just as shareholders do? Why does all of the good stuff (profits) go to the company owners, while the taxpayer whose funds started the research and development, gets zilch?
It’s amazing how the drug companies, among others, have no argument with the government (taxpayers) putting money into basic research which leads to discovery, but object to government (taxpayers) sharing in the fruits of discovery.
Businesses in public transportation are held to a higher standard of care in their business because of their obvious obligation to see to the safety of the public. Why aren’t drug manufacturers which get a patent (and a monopoly) on a critical medication also held to a higher standard when it comes to pricing these vital drugs? These drugs also are an integral part of public safety for our most disadvantaged population – the elderly, the sick and the injured.
Not only that, the drug companies use the same “research and development” ploy to do away with the competition they claim to love. They get government agencies, which are huge buyers of their product, to tie their hands when it comes time to negotiate pricing, thereby bloating Medicare and other budgets, while fattening profits for “research and development”. And, who ultimately pays? Us, the taxpayer.
It’s time to stop blithely accepting the “research and development” excuse for allowing drug companies to price vital medications at whatever they choose. “Research and development” should be thoroughly researched to determine a valid percentage of cost which makes sense for the drug companies as well as consumers. Then that percentage should be used in pricing a new drug so that consumers are not swamped by what drug companies decide they need for “research and development”.
Once that percentage is established, drug companies should not be allowed to price above what that percentage calls for. No more nebulous “trust us to be fair” leeway for drug companies to price at whatever they see fit while holding a monopoly on a patented drug.
If Congress and the drug companies won’t go for that, then give the taxpayer a “research and development” percentage for all of the tax monies used to develop that drug.
But, don’t add it to the price. Just take it out of profits, for a change
Sometimes getting back to basics is the most helpful way to keep people informed about their disability income insurance coverage. One of the most basic of the basics is to read and understand your disability income insurance policy. It has always distressed us to find that many, many people don’t read their policy - the contract under which they will present a claim for benefits.
The first basic is what type of disability income insurance you have. Is it a group policy covered by ERISA or is it an individual policy?
Many policyholders are not certain of the difference the answer to this question makes in terms of coverage and requirements for proving a claim of disability.
An ERISA policy purchased by an employer for employees is not nearly the same as a policy bought by an individual. The ERISA policy is somewhat of a mystery to the employee because usually no policy is delivered to the individual. The employer has the policy and may give the employee only a Summary Plan Description (“SPD”) of what is in it.
Anyone familiar with insurance companies and policies knows a summary does little good when a claim is contested and the insurance company looks into every nook and cranny of the policy language to find a reason not to pay.
So, if you are covered by an ERISA policy it would be most wise for you to take a good look at it before a disability arises so that you know what protection you have or don’t have and can prepare yourself before a sickness or injury strikes. Ask your boss or your Human Resources Director for a copy so you can read and understand the ERISA policy yourself.
But because a disability income policy may be privately purchased and not subject to ERISA doesn’t mean that it doesn’t remain a mystery. If a policyholder doesn’t read and understand the terms of the policy, the individual doesn’t really know what protection is afforded and is, therefore, as much in the dark as an uninformed ERISA policyholder.
Relying on an insurance agent’s or an insurance company ad’s description of what protection is in the policy is never a good idea. It is a particularly bad idea when a disability income policy is involved because of the complications of exactly what is covered, how it is covered, for how long it is covered, and the difficulty of the hoops the policyholder will have to go through to get benefits.
In both ERISA and individual policies, once you know what you have, you are able to decide if that coverage is what you want for yourself and your family. If it is – fine. If it is not, then you may seek to change your individual policy or buy additional individual coverage to add to an ERISA or private policy to bring your coverage up to your standard.
Either way, once you understand your policy, you will be certain of what protection you have before disaster strikes and it is too late to do anything about it.
We know all too well that insurance policies are boring to read and difficult to understand. But, don’t be lazy. Don’t be intimidated. Take your time. You can do it!
But, if you do all of the above and you still have questions, get the answers you need now while you can still do something about any changes you might want to make for the sake of yourself and your family.
Almost 40% of health insurance consumers don’t understand they can appeal an insurance company denial of a claim, according to a recent survey by the National Association of Insurance Commissioners, an organization of State insurance commissioners.
This statistic means a large percentage of policyholders accept insurer denials at face value even though history clearly shows that most of these companies do their best to deny, deny, and deny claims. Add to this group many claimants reluctant to push their claims in the face of what they see as the impenetrable wall of insurance company resistance and one can begin to fathom the rich returns to insurers and their shareholders of insurance company intransigence.
How this works to the benefit of insurance companies may seem to require monumental mathematical machinations. But it is really quite a simple formula. The insurer calculates its underwriting risk by taking a mathematical “worst case” scenario and calculating its premiums based on this scenario. This affords the insurer the highest amount of premium to cover its risk in the event the worst happens. This is good business practice because there is no guarantee that the worst won’t happen.
But, having collected the highest premiums, the insurance company then wages all out war on claimants, denying many perfectly valid claims. These insurers rely on the fact that many claimants don’t know a claim denial can be appealed and also on the natural reluctance of many claimants to undertake an appeal. (See Don’t Be A Wimp).
What a windfall for the insurance companies! They charge the highest prices for their product because they base the premium on the high end of the underwriting spectrum and then they cut their outlay on claims so as to push them to the lowest end of the spectrum. All of the cash saved in between goes to insurance company profits. And, when you are talking health insurance, the cash saved amounts to billions of dollars.
Can anything be done about this system which hits many sick and injured people at the worst time in their lives? Yes, it takes an all out effort by lots of people to get the word out – insurance company denials are not the Gospel. If a claimant has a valid claim, then they must appeal the denial and right the wrong.
Those who can help:
* Friends and family who know that the insurance company turndown is not the last word. They have to let their uninformed relatives and friends also know.
* Doctors who treat claimants and lawyers who pursue claims have to preach to the uninitiated that they have the right to appeal for benefits for which they may have paid premiums for years.
* In the interests of compassion, fairness and morale, Human Resources Departments should inform employees that they have the right to appeal an adverse ruling by an insurance company even though the employer may think its interest lies in paying the fewest claims.
* Web sites and bloggers have to continually get the word out to those seeking information on claims at their sites that there is life after an insurance company claim denial.
* State Insurance Commissioners should mandate that a denial of a claim must be accompanied by a “plain English” and unequivocal outline of the claimant’s right to appeal the decision and the method for filing such an appeal. To be certain of the simplicity and clarity of the information, the State may require the notice to be in a certain form approved by it.
Insurance companies are entitled to deny claims in proper cases. They have to protect the financial stability of their businesses and have a duty to their shareholders.
But, this duty should not include taking advantage of almost 40% of consumers or a policy of denying claims knowing that a substantial percentage of the turned down claimants either don’t know they don’t have to accept the turndown or don’t have the gumption to fight the denial.
This is especially true when many of these claimants are making health claims at a time when they are seriously sick or injured. Denial may be a good way to jack up profits but it’s an awful way for one human being to act toward another.
And, all insurance companies act through the agency of human beings. Or do they?
There was a very enlightening statistic in Nicholas Kristoff’s column in the NY Times today (11/5/09) – Americans over 65 years of age have a longer life expectancy than people in the average industrialized nation, while Americans under 65 rank 31st in life expectancy (on a level with Chile and Kuwait) when compared to those nations..
The obvious reason is that people over 65 in the U.S. have the protection of “government-run health insurance” while those under 65 are left to the tender mercies of private insurance health plans or no plan at all.
With this statistic staring people in the face one can only wonder why there is such vehement opposition to a Medicare type health system for all Americans. People tend to forget that there was much the same outcry against Medicare when it was first proposed for passage in 1966. How many Medicare beneficiaries would give Medicare up today?
The latest Ken Burns TV documentary on our National Parks is a strong reminder that not everything run by the government is a flop. In fact, as shown by Burns, some are startling successes and do a lot of good for the American people..
When the statistics show that life expectancy for Americans bumps up substantially when Medicare-style health care comes into the picture, why not try it?
Who knows – in another 60 years we might find that none of us wants to give that up either!
We can't help notice the recent striking increase in hospital and health insurer advertising on radio and television. It seems that every hospital and health insurer suddenly feels the need to sing its own praises, in commercials which are elaborately produced, at great expense, by professional spinmeisters, and are designed to inspire a sense of fear and awe in any patient who might even consider going elsewhere.
Indeed, hospitals are now being marketed just like any other commodity. We are told repeatedly, not only of their prowess in medicine and technology, but also of the kindness and caring which makes each one special and superior to the next.
We recently went to visit a friend at a local hospital and were amazed to see, displayed on a mantel behind the main reception desk, (which, by the way, had the look of a 4-star hotel), a series of ornate plaques announcing the ratings given the hospital by a well known private commercial testing agency (heretofore known more for its evaluation of cars than care).
When exactly did we come to this point, and why? Is nothing, including life and death, free of spin anymore?
More importantly, as the hospital and insurer rush to publicly proclaim and "sell" the public about their claimed superiority becomes more pervasive, has there been any corresponding increase in quality of care? Has there been any sign that the cost of health care is going down? Unfortunately, the answer to both questions is a resounding NO. Are the spinmeisters being hired to distract us from these very sad facts .
As the nation debates the wisdom and cost of national health insurance, and bemoans the outrageous expense of health care in this country, maybe we should start to think about what is really important in the delivery of health care. Why are slick commercials and private ratings accolades becoming so important, and what does that say about the delivery of healthcare in this country?
Perhaps the healthcare and insurance industries, and hospitals in particular, should spend less time and money telling us how good they are, and more time and money actually being good.
What a revolutionary concept!
Being invited to speak to a doctor’s organization in the New York Metro Area about how confident they should be in the protection they think they get from their disability income insurance policies, got us thinking specifically about doctors’ insurance problems.
And, doctors have plenty of them, although most physicians don’t know it until they are stricken and it is too late.
First off, doctors have to realize that they will get special attention (of the wrong kind) from a disability carrier if forced to make a long term disability claim. Why? Because a doctor’s long term DI claim, especially if the doctor practices in a specialty, usually involves a heavy potential payout for the insurer and heavy payouts are something insurance companies despise.
Most physicians think they have “Own Occupation” coverage and feel secure. Not so fast. Believe it or not, there is no one definition of “own occupation” in insurance policies. For example, a policy may have a perfectly sound “Own Occupation” clause, but with a time limit. Therefore, it may be described by the company as an “Own Occupation” policy, but the protection of the clause ends in say, 2 years, and after that the definition of disability may become much more general.
So, if you are a surgeon and think you are buying a disability income policy that will cover you and your family in the event you can no longer perform surgery, you may be surprised to learn, after 2 years, that you have to go back to work in a lesser medical field and will no longer be paid your disability benefits by your insurer.
Another major issue doctors should resolve before they can feel secure about income if they should become disabled is to determine if their policy is an individual policy or a group policy which involves ERISA, a Federal statute, which adds a completely new set of problems to the doctor’s woes if the unthinkable happens.
It is difficult enough to pursue a disability income claim when the insurance company is determined to find any way it can not to pay, without having the insurer have the advantages that a group ERISA policy gives it.
The way to tackle this problem before a disaster strikes is for the doctor to read and parse every word of his or her disability income policy before the need for claim arises (hopefully it never will), because the policy language (strictly construed) determines the benefits available. No more and no less.
If the doctor wants help to understand the language of the policy a lawyer with disability income insurance experience should be consulted. Don’t rely on what the insurance company ad or the insurance agent or salesman told you. Read it and understand the policy yourself.
And, most important of all – DO IT NOW – while you think of it and BEFORE you have to make a claim.
Being good can be very, very bad for disability income insurance claimants in many ways, all locked away in the fine print of the policy. See Mr. Nice Guy.
A recent New York case added a new pitfall for claimants who try working at a lesser job even when they are physically or mentally not up to it. Insurance companies ambush unsuspecting “Good Joes” waiting for them to fall into the trap of trying to continue to work even if they can’t hack it because of their disability.
The issue in McCauley v. First Unum Life Ins. Co., 551 F.3rd 126 (2nd Cir., 2008) , did not involve the warning we issued in Mr. Nice Guy. McCauley dealt with the insurance company tactic of wrongfully withholding benefits and thereby forcing a disabled person to do anything in order to live, and then claiming that the new work cut off the insured’s right to claim the disability under the terms of the policy.
The First Unum policy in this case contained a provision that if the insured was employed for more than 6 months while earning more than 80% of predisability income, the insured would not be entitled to benefits.
After Unum wrongfully denied him benefits, the insured, desperately needing money to live, worked for 8 months at a salary exceeding the 80% limit. He worked at a company which was sympathetic to his disabling condition and employed him anyway, recognizing the limitations of his disability. But, even with this compassionate help and despite his pressing financial needs, the claimant could not continue because his condition was too debilitating.
Even though the policy was governed by the ERISA statute, First Unum jumped on the issue of claimant’s employment for 8 months, citing the policy language, even though First Unum’s wrongful denial of benefits put the claimant in a position where he needed money to live so desperately, that he was forced to try to work, no matter how trying or demeaning it was to work in his condition.
But, the court, in its wisdom, applied the ERISA doctrine of unconscionability, declaring that to wrongfully deny ERISA benefits and force a disabled claimant to try to earn income at peril to his health, and then to claim this employment destroys the claimant’s right to benefits, is unconscionable and First Unum’s denial of benefits would not stand.
It is heartening when a court recognizes that the reality of just trying to go on living trumps the cold, hard, sometimes unrealistic and impractical, language insurance companies use in their policies.
Isn’t it time for the naysayers on health care reform to face the reality of what is going on? For too long we have buried our collective heads in the sand and refused to look reality in the eye.
What we mean is that the health care system in the United States in going to hell in a hurry and very few seem to want to do anything about it. This seems most true for older people who will be the hardest hit victims of the coming health system train wreck. (Most people don’t recall that when Social Security was passed in the 1930s, life expectancy for men was about 65, the age of retirement. Today the life expectancy for men is about 78, a gain of 13 years).
The health care system is more than the convenience of your next visit to the doctor. We all want to get right in to see the doctor, get the best medical advice and treatment and not pay for it. GREAT! However…
• Medical science is making more and more breakthroughs, prolonging life, which means more costly doctor and hospital visits for more and more people.
• Medicare premiums are not nearly enough to sustain the system for its
ever-expanding population. (Remember the baby boomers).
• Health insurers continually raise premiums to provide more and more profits for their shareholders (and larger and larger bonuses for their execs).
• A “free enterprise” system in which there is no free enterprise. U.S. law prevents Medicare from exercising its vast buying power to lower drug prices in the U.S. Is this free enterprise? U.S. law prohibits Americans from freely buying medications overseas where prices are substantially lower. Is this free enterprise? Exorbitant drug prices eat up health dollars at an alarming rate and deplete the ability of the health system to take care of all of us at less cost.
We could go on and on about the cost of “defensive medicine”, doctors owning an interest in testing and service providers thereby having a great incentive to order unnecessary tests and services which provide them profits, wasteful and harmful recordkeeping, and, worst of all, 45 to 50 million Americans without health insurance, leaving them to fend for themselves by going to hospital emergency rooms or not going to the doctor at all.
We all know the old saw – “You get what you pay for”. If you can’t pay, you don’t get. With fewer people paying into Social Security will there be any security, social or otherwise in our near future or will the system as we now fund it have to change? With Medicare expenses skyrocketing because more and more people are living longer and requiring more and more medical and hospital care and with new and expensive treatments being discovered every year, how can we pay for it with the old Medicare and the “profits at all costs” private insurance system?
There is momentum for change now. It took almost 20 years from the Harry and Louise Days for the country to get up the nerve to face the issue again. We can’t afford to just make cosmetic changes which don’t get to the basic needs of health care in this country. There aren’t another 20 years left to get it right for all of us.
We have just read an appellate court analysis of a technical legal point which carries with it a pressing human consideration under ERISA disability claims..
The legal issue is whether some appeals of ERISA rulings are actually ripe for appeal. Or, should they be dismissed because the remand order of the Federal District Court below was not a “final order”.
The foundation for refusing to rule on such disputes is that an appeals court will generally not hear an appeal unless it is an appeal of a final order or judgment, in which all issues of the dispute below have been adjudicated. Appellate courts generally do not want to make decisions on only portions of a case, leaving other issues unresolved so that the court may have to deal with a later appeal in the same case.
This approach may be OK for cases which do not involve ERISA disability income claims. In ERISA disability cases, an insurance company administrator usually controls the decision in the matter. Knowing the appellate court aversion to ruling on a less than final order, the administrator may find it advantageous to “pingpong” his decision by failing to set forth completely the reasoning for the administrative decision. This would likely cause the hearing court to send the matter back to the administrator to complete the record.
This can lead, as it did in Gerhardt v. Liberty Life Assur. Co. of Boston, U.S.App.LEXIS 16170 (8th Cir, 2009) , to rejecting the appeal of a remand by the District Court because the administrator failed to consider all of the issues in deciding to reject the disability claim.
But, as another court has said, if the process of granting remands becomes routine when an administrator fails to present a complete case, it would allow “Mulligans” to sloppy administrators at the expense of both courts and disabled claimants.
In fact, we are certain, if insurance companies realize that this ploy would add substantial time and expense to a claimant’s burden, we know they will use it to the fullest extent.
We agree with Chicago attorney Mark D. Debofsky who brought this case to our attention in the August issue of his DISABILITY E-NEWS ALERT – “If a claim decision is defective, the claimant deserves an award of benefits.”
Let’s not allow insurers use a racket to play ping pong while claimants in physical and economic pain are forced to follow the bouncing ball.
There’s nothing a disability insurance carrier likes better than a claimant who is “Mr. Nice Guy”. These are people who keep trying to do work even though they can no longer continue the occupation for which they have an “own occupation” policy and have a
clear cut claim for disability benefits.
What’s wrong with trying to keep working, one may be tempted to say? It’s the pioneer spirit. “Don’t give up the ship” and all that.
What’s wrong is that Mr. Nice Guy may scuttle his claim for benefits by trying to work at another job before making a claim under his policy. The carrier may have the right to say the claimant can perform duties similar to the ones he is performing at the time the claim is made, so he is not disabled as defined in the policy and, therefore, is not entitled to any benefits, let alone benefits for the occupation and income intended to be protected when the policy was purchased.
The problem is that “own occupation” is interpreted to mean the actual occupation at the time of claim – not the original occupation for which the insured originally purchased coverage.
So, if you modify your occupation to accommodate a disability, by giving up the duties you can no longer perform, then those duties are no longer considered part of your occupation when you subsequently file a disability claim.
Also, even if the carrier has to pay, the carrier may be required only to pay benefits based upon the salary or income of Mr. Nice Guy’s employment at the time of making the claim. These benefits would likely be much less than the benefits originally contemplated by the policyholder at the time of purchase. And the hefty premiums paid for the anticipated coverage would be gone with the wind.
So, if you have been astute enough to cover yourself and your family with an “own occupation” disability policy and you become disabled under its terms, don’t be a Mr. Nice Guy. To be safe, make your claim with your insurer under the terms of your “own occupation” policy when you become disabled under its terms and before you start doing any other work.
Certainly be Mr. Nice Guy to your family, your friends and even to people you may meet in the street. But, not to your disability insurance carrier.
If you are one of those who still believes the private health insurance industry is there to protect your interests you probably still believe in fairy godmothers, because you are really going to need a fairy godmother when you are sick or injured and the insurance company has to cough up cash.
For a thorough and detailed exposition on the motivations and tactics of disability income insurance carriers such as UnumProvident and Paul Revere, you should read the opinion of U.S. District Court Judge James C. Mahan in Merrick v. Paul Revere Life Insurance Company, et als, 594 F. Supp 2nd 1168 (D. Nerv. 2008). It is a clear and convincing scorecard of the ways in which the insurance companies hit their policyholders, especially when they are down.
In the carefully worded, detailed opinion, by Judge Mahan, he finds that the reprehensible conduct of these insurance companies has garnered them “…hundreds of millions if not more…” in benefit dollars at the expense of physically, mentally, emotionally and economically vulnerable individuals (their policyholders).
The judge, after hearing all of the evidence presented by both sides, obviously concluded that the reprehensible conduct toward the clearly disabled plaintiff in the case was “…not the result of accident or inadvertence, but was part of a widespread corporate plan or scheme to augment profits through wrongful conduct targeted at disabled policyholders…”.
He went on to declare that the only conclusion he could draw after hearing all of the evidence and weighing the credibility of witnesses for both sides is that the defendants, Unum and Paul Revere, “…engaged in a widespread corporate plan, and conscious course of conduct firmly grounded in established company policy, to disregard the policyholder-plaintiff’s rights and the rights of tens of thousands, if not hundreds of thousands of other policyholders…”
The detailed and thoughtful decision by Judge Mahan puts the lie to opponents of health care reform. The system isn’t functioning for those most in need for it to function fairly, those whose health requires a claim to be made. When you are sick or injured, you are not at your fighting best – and that’s when the insurance sharks start their “delay and deny” act.
If our health system is ever to work properly, insurance companies will have to take seriously their obligations to policyholders and go beyond corporate profits only, “first, last and always”. Insurers will have to give fairness and “peace of mind” to policyholders who will then actually get what they paid for without the unconscionable “scorched earth” policy in regard to claims.
Only those who still believe in fairy godmothers can really believe that anything but government health reform is big enough to force such a change for the better.
Now that we are coming down the home stretch on the Congressional vote on health care reform, the hucksters are getting their baloney machines into high gear. Us guys who are just ordinary folks have to watch out to see that we don’t get slapped between two slices of white bread, doused in mustard and swallowed whole in the barrage of half truths and slanted statements by the people who don’t want change – our friends the health insurance industry. They just have it too good.
An article we posted just a few days ago (What You Can Do For Your Country) becomes more and more important as the battle heats up. Television and newspapers will be filled with pro and con position papers espousing the propaganda of whichever side is footing the bill. The best advertising and public relations minds are hired to press the public’s buttons so as to build support for their side.
We thought of a way to level the playing field in the struggle to come up with a fair law that would do the trick for most Americans:
Prior to Congress undertaking the job of writing a health bill, all of their governmental health coverage should have been canceled with a proviso that when they passed legislation, they would be covered by the new plan which they enact, and would have to pay health premiums for their respective policies out of their own pocket.
Only then, when they were in the same position as the rest of us, could they really act in the interest of all and come up with a fair program for the American people. But, it just ain’t gonna happen.
Many people seem to fall for the “Socialism” and “big government” labels fostered by the insurance company funded ads. But, what is Medicare, if not a “big government” run health care system? Yet, not one of those ads will say a negative word about Medicare because the American people have seen it in action and they know it works.
So, as we said a few days ago, first, it is vital to check who is behind any statement made by any individual or organization in this fight. A group may have a name that sounds strictly neutral – but are they? Know the real people and organizations behind the statement and you’ll be able to evaluate it properly.
Second, is to listen carefully to what is being said. If a statement says nothing more than “big government”, “Socialism” and “health czar”, it offers no help to you in evaluating the merits of the proposal. These are catch phrases which seemed to work before to defeat what the insurance companies don’t want and they are hoping it works again. Don’t allow it.
Evaluate arguments based on more than slogans because the health care issue is of vital importance to you and your fellow Americans. Health care costs are breaking the economy and threaten to become a full-blown economic disaster in just a few years if we don’t try to do something about it now. If each of us is not willing to consider sacrificing a little bit now, we could very well lose it all in the near future.
The false ogre of government-run health care is a false god. Look at Medicare, Armed Forces medical care and the Veterans Administration programs. They are clearly government-run and are operating just fine for many millions of Americans. Why can’t a government program fashioned on these examples operate just as well as an alternative to private insurance? Where is the proof that it wouldn’t?
With the vote in Congress on health care reform not due until some time in September, the health insurance companies have more than a full month to bombard Americans with propaganda that talks about everything but the real issues:
* Refusal to cover those with preexisting conditions
* Escalating health insurance premiums which fewer and fewer can afford
* 45 million Americans without any coverage at all
* A serious illness can bankrupt the average uninsured family
Any new law must deal with the real issues in the interest of all of us. Your input to your representatives in Congress will have a lot to do with the outcome. Don’t follow the insurance company party line – do what’s really good for you and the rest of us.
UnitedHealthcare, a UnitedHealth Group company and a major player in the health insurance industry, announced today that it has agreed to acquire Health Net of the Northeast's licensed subsidiaries. Health Net of the Northeast operates a large health insurance business in the New York Metropolitan Area.
Although we are certain the companies involved will profit from this move, we are not so sure about Health Net policyholders.
The transaction, subject to regulatory approvals and other closing conditions, is expected to close within 12 months.
Health Net serves 578,000 members in Connecticut, New York and New Jersey: 437,000 commercial risk members, 35,000 self-funded commercial members, 55,000 Medicare Advantage members and 51,000 Medicaid members, according to the announcement.
Based upon our history with UnitedHealthcare on health insurance claims, we are not certain this ownership change is going to be beneficial to policyholders when they have to make claims.
We guess we will find out soon enough.
A recent article in The Washington Post reminded us of one of our pet peeves – people relying on studies or reports as incontrovertible fact without checking the background of the person or organization making the report.
The Post article pointed out that Representative Eric Cantor, House Republican whip, and Republican Senator Orrin Hatch both cited the Lewin Group as “nonpartisan” when speaking out against proposed Democratic health care change legislation.
The Lewin report predicted that 100 million people would go off the rolls of private, employer-sponsored health coverage if a version of a health bill was made into law. This was seized on immediately by opponents of new health care legislation and cited time and time again as an “independent” study. (The Congressional Budget Office came to an entirely different conclusion after a study. The CBO estimated that enrollment in a public plan would involve only 11 to 12 million people.
What was unsaid by Mr. Cantor and Mr. Hatch was that the Lewin Group is wholly owned by UnitedHealth Group, one of the nation’s largest health insurers. Further, Lewin is a part of Ingenix, a UnitedHealth subsidiary which was accused in New York for skewing doctors’ fee data to save health insurers millions in out-of-network insurance payments to policyholders. (Earlier this year, United Healthgroup agreed to a $50 million settlement with New York State on this issue).
This is a “nonpartisan” organization when it comes to health insurance issues? We think
With the health care battle entering its final stages, it becomes more and more important for people trying to untangle the complicated issues in health care coverage to take the statements of each side with several “grains of salt”. This is particularly true when either side makes a statement based on an “incontrovertible” source for its information. It is up to us the listeners to delve further into relationships and history to see if the claim of independence of judgment really holds up.
But, this holds true for more than just the present most important health care battle. Whenever a claim is made that raises any doubts, the listener should take it with a grain of salt. Who made the claim? Whom does the claim benefit? Who paid for the study upon which the claim is purportedly based? Are there relationships which might cast doubt on the veracity of the claim?
Prime examples are advertising endorsements. Without an affidavit as to how much the endorser received for providing the endorsement, who can believe in it? Yet, many people must or else the ad agencies wouldn’t spend so much time and money on them.
The upcoming health care decisions in Congress are vital to the future of America. Each person has a vital interest in the outcome. There will be many “nonpartisan” claims made by both sides. Get out your salt shaker and investigate them yourself.
The future of yourself, your family and your country truly depend on it.
A recent editorial in the New Jersey Law Journal (7/13/09) reignited a fire in us about how insurance companies play hard ball with their policyholders because litigation wears down the hardest claimant and leads to settlements totally advantageous to the insurance company.
As a result of this hard ball policy, insurers get another advantage – policyholders usually have to pay their own attorney’s fees and legal costs (many times, considerable) even when the courts find their claim was absolutely justified.
The genesis of the problem is the “American Rule” which requires each party in a contract action to bear his or her own legal expenses. This rule is the law in most States, except where they have been modified by statute or court rule.
In New Jersey, R. 4:42-9(a)(6) permits the award of attorney fees to a litigant for being forced to pursue a third-party claim against their insurer. The New Jersey Law Journal editorial decried the distinction made by the court rule which allows policyholders to collect their legal fees from the insurer if the company wrongfully refuses to defend them against third parties, but not if their insurer wrongfully refuses to pay the policyholder in a direct claim, under an individual disability policy, for example.
From years and years of practice in pursuing disability income insurance carriers, both ERISA and private, we have come to understand that with many insurance companies, obfuscation and delay are primary strategies because these companies know that many litigants will become discouraged and either drop their claims or accept a lot less than they deserve under the terms of their policies, simply because they cannot afford the enormous cost of litigation.
The worst part is that because of the American Rule, there is no downside for insurance companies. Under the Rule they do not have to pay the policyholder’s legal fees and costs, even when they are wrong, so the insurers “song and dance” their way through litigation, all to their benefit and to the heartache and loss of their policyholders.
On the policyholder’s side, there is a definite downside to the insurer’s recalcitrance. If the insurer pushes the “NO” button, even on an open and shut claim, when the policyholder wins, the policyholder still loses because the attorney fees and legal costs, which must be paid by the policyholder, substantially reduce the net value of the judgment won.
When an industry uses the American Rule as a defensive tactic to impair the rights of policyholders who have been paying premiums for years, it is time the Rule is held not to apply to insurance companies.
If insurers decide to dispute a claim, they are much less likely to do so when the claimant is likely to prevail, if they are required to pay attorney fees and costs when they lose. Such a rule would give them pause in many cases in which they have no real defense , but defend anyway to see if they can discourage the claimant and because they have nothing to lose. The entire burden of such defense is put on the insured.
Effectively, contrary to the very idea of insurance itself, this Rule allows the insurer to shift a substantial (and in many cases, crippling) part of the risk of loss back to the insured, even though the insurer has been collecting premiums for years, to assume the entire risk.
With nothing to lose, insurance companies use denials without fear (and, in many cases, without conscience) all to the detriment of the policy buying public.
This injustice should end now.
A recent article in the NY Times decried the fact that doctors receive little or no training in treating older patients even as more and more of the population attains advanced age.
Pointing out that 80-year-olds do not always have the same symptoms nor require the same treatment protocols as 50-year-olds, Dr. Roseanne M. Leipzig blamed the lack of knowledge on the startling fact that medical schools do not require training in geriatric medicine.
With more people going into long term care, there is a pressing need for clinical training in geriatrics. According to Dr. Leipzig, patients 65 and older account for 48% of all inpatient hospital days and yet few medical schools offer training in elder care.
The doctor suggests, and we agree, that Medicare, which contributes more than $8 billion a year to support medical residency training, require that part of that residency training focus on the unique health care needs of older persons.
Long term care insurance companies should join in the effort to offer this elder care training which would lead to better medical results and give older people the ability to live on their own longer.
Wider geriatric knowledge in the medical profession would mean better insight to the needs and treatment of older people. This better insight would mean fewer of these people needing long term care facilities.
A former PR exec for insurance companies told it like it is last week when he told a Senate subcommittee, in essence, “Don’t trust insurers”.
Wendell Potter, a former Cigna vice-president, testified that health insurance companies have a policy of trying to avoid paying benefits to their policyholders, use deliberately incomprehensible documents to mislead consumers and sell “junk” policies that do not cover needed care.
Potter declared that insurers make paperwork confusing because they realize that people will simple give up and not pursue a claim if they think it is difficult to do so.
Potter’s revelations reinforce our previous warning in this blog to claimants and potential claimants that disability income insurance companies rely on many a person’s visceral dislike for conflict to save insurers untold millions on claims they should pay, because they know people just give up on them. (See “Docility” below).
We cannot stress too forcefully that giving up should not be an option for a health claimant facing economic hardship. The insurance companies have a policy of making benefits collection a hard road. Claimants have to make up their minds to take the ride or suffer the consequences on top of their illness or injury.
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.
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.
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.)
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.
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.
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.
Most plaintiffs’ disability income insurance lawyers are aware of the heightened emotional and psychological needs of their clients – up to a point. Our Kathleen takes up whatever slack our clients miss in the way we communicate with them.
Although attorneys in the disability field know that their clients are usually in pain, economically behind the 8-ball and aching for some one to talk to them about all aspects of their case, attorneys are not always able to spend all of the time on the phone some clients think they require.
That’s where Our Kathleen comes in. She is a paralegal who is knowledgeable about the factual requirements of properly pursuing a disability income claim. But more than that, she seems to have a natural empathy about the human needs of the people filing such claims. And, she makes the time to talk to clients and prospective clients who call our office and need a “listener” who cares, shares and wants to help.
Every attorney in plaintiffs’ disability insurance work would do well to make sure they have an “Our Kathleen” on staff to alleviate some of the stress their clients are feeling as they pursue their claim under the most trying circumstances.
That’s if you can find another Kathleen.
It was brought to our attention by a reader of an April 17 blog entry about ERISA discretionary clauses that there is a need in the disability insurance business for an easy way for people having business with state insurance regulators to have access to names, addresses, phone numbers, email addresses, etc.
This information is necessary not only to people who have complaints or suggestions for the insurance regulator in their state, but also for insurance agents and brokers for remote licensing and for attorneys who may have business or questions for the regulator.
As a service to claimants, lawyers, insurance agents and brokers we have established on the firm web site, a handy address book for all 50 states giving the pertinent information concisely.
Knowing that the information in this address book is a fluid entity, we will have the information in the address book updated periodically so that the data is not stale. We also intend to update the address book with specific addresses and phone numbers for licensing, etc. if the need arises.
So, hoping it is helpful, we offer state insurance regulators.
Today’s high-speed world seems tailor made for centralized, quick-as-a-flash oversight which can keep pace with the latest trends in finances. That’s the basis for a strong push in Washington to take supervision of insurance products away from the states and hand it over to a Federal agency, the same system which was watching while the financial system crashed.
WHOA! Not so fast. The one area of the financial world which did not go into a tailspin in the past year is the insurance industry which is generally governed by those slow-moving, conservative state insurance regulators. Three cheers for slow-moving and conservative.
Why? Because insurance companies must abide by rules set down by the 50 state regulators and these regulators were not “sophisticated” enough to jump on the free-wheeling, anything goes financial bandwagon of recent years. This saved insurers from the money meltdown and safeguarded policyholders during the current crisis.
One may point to AIG, a major insurance company, which owes the Government more than $175 billion, and say “How come?” The answer is that AIG got into a financial products operation which is the part of the company which is in deep trouble. The insurance part of the business is on a relatively even keel.
So, why race to go Federal when the states seem to have saved the day for the nation’s policyholders? In today’s rush-rush world a little time to think about consequences is needed so that the herd doesn’t stampede towards a cliff.
Remember the fable about the tortoise and the hare!
Ever wonder why insurance companies pursue a policy of turning down apparently valid claims out of hand? I have and the only thing I can figure is that they are relying on the “docility” factor. They have found through experience that a substantial number of people will accept a turndown, right or wrong, and do nothing further about it.
One would expect an insurance company to have a tendency to say “no” when asked to pay a claim. That is not what is surprising. What is surprising is that they say “no” in cases where they know they are likely to have to pay. This is because when they say “no”, there are a slew of additional costs in defending a claim which they know they are likely to have to pay anyway.
Why they do this is a mystery which seems to have one likely solution – they do it because it saves the insurers money.
The one thing you can bet on with certainty is that insurance companies can mathematically calculate the probability of any financial result they face. They know how much the legal, medical, court, and internal costs of litigating a claim will likely be. And, they know these costs are substantial. So, why do they do it?
They do it because they have also calculated the “docility” factor – the chance that a valid claimant will not challenge a denial of a claim for a variety of reasons. Nobody but the insurance companies know the percentage of valid, but denied, claims which are never pushed to a conclusion, but even if the number is between 10% and 20%, the savings turn out to be a big windfall for the insurance companies.
Some of the reasons people may not fight for their rights are innate - they hate conflict and controversy. Other reasons (excuses) are:
- "You can't fight City Hall", i.e.,insurance companies are too big and powerful ever to be challenged by an individual.
- They find it difficult to cope with stress.
- They believe the insurance company acted fairly and made an unprejudiced decision.
- They won’t take the risk of spending money on fees without a guarantee they will win.
- They have an aversion to getting involved with a lawyer (I wonder if insurance companies have been fostering all of those “shark” jokes about lawyers). The vast majority of lawyers don’t bite, no matter what the jokes lead you to believe. If they are retained by you, lawyers work for you and only for you and your claim.
There is a whole host of reasons (maybe excuses) why a goodly number of people will not take on an insurance company. And, in that goodly number of people lies a treasure for insurers.
This is particularly so in disability income and long term care insurance claims. The payments for these types of claims can go on for decades and cost millions of dollars. Evading payment on 10% or 20% of these types of claims comes to a hefty amount of money saved for the insurance companies. And, since insurers do this consistently, one has to believe that they know that the “docility” savings more than offset what they spend to defend claims they know they will have to pay – if the claimants undertake and follow through on the job of properly pursuing the claim.
Advice to the leery claimant: Before you become one of the “docility” herd, have a competent insurance attorney evaluate your claim and advise you on if and how to challenge a denied claim.
Only then is it fair to yourself to decide whether or not to pursue you claim.
The easier things become, the harder some people make them. Wouldn’t you think that when medical science advances so that a patient can swallow a pill and replace chemotherapy with all the expense and trouble it involves, it would make the treatment process simpler? Wrong!
As President Obama said recently, insurance payment protocols, like the ship of state, are humongous, and can’t be changed quickly. Pill treatment, which would seem a no-brainer since it will lead to less medical and hospital costs for patients and therefore insurance companies, should be received with open arms by insurers. Not so.
As reported in the New York Times recently, insurance companies seem to be hung up on the issue of how to classify pill treatment. Drugs which are administered at a clinic or hospital are usually treated as a medical benefit. Prescription drug plans cover pills and normally require copayments which are sometimes substantial.
With all of the talk about how Social Security and Medicare are going broke, why don’t the insurers or the government jump on this opportunity to save big dollars on cancer drug treatment?
Some one in authority should do a fast analysis of what it costs to go to a place, have a trained medical person administer an infusion, have a doctor on premises, pay for the chemicals, the rent, equipment and personnel, and compare it to the cost of the pill medication. It seems obvious that the lesser cost would be the pill even omitting the patient’s loss of time and transportation costs.
The State of Oregon, according to the Times, is the only state so far to deal with the situation. It 2007, Oregon passed a law requiring insurers to reimburse oral and intravenous chemotherapy drugs equally. Other states, including Colorado, Hawaii, Minnesota, Montana, Oklahoma and Washington are in the process of passing similar legislation.
I’m thinking a lot more states ought to be joining the parade – and ASAP.
Do 27 years of legal battle give a foot soldier the right to offer his opinion to the world on how to run a war? I obviously think so, because here I am going out front of the world with my thoughts and ideas on ERISA, other health insurance claims and whatever else occurs to me.
My hope is that at least one person who reads here will benefit.