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.
“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?
“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.
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.