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

What better way for us to start the New Year than with resolutions that are apropos for disability income insurance claimants, both ERISA and private.
So, here goes:
 

For a potential claimant: I will read my policy carefully and ask some one who knows to clarify what stumps me. And, I will do it now, before I become disabled.
 

For an actual claimant: I will do my best to get myself back on track so that I may go back to work (if I can get a JOB!).
 

For an insurance company: I will do my best to:

Train my claims employees to consider all of the evidence fairly when assessing claims.

 Halt the practice of getting a stable of shill doctors to “examine” claimants and call these exams “independent”.

Spend more money paying claims and less on fighting people who I know are entitled to benefits.
 

For an Independent Medical Examiner: I will call them as I see them, reread my Hippocratic Oath and conduct disability physicals so as to “do no harm” to those I examine.

For a treating physician: I will pay strict attention to my medical reports, knowing that insurance companies are just waiting for me to make a mistake or an omission which will prejudice my patient’s claim.

For myself, as a disability income attorney: I will continue to work hard to get all disability claimants the benefits they have paid for with their premiums.

For all of us: A wish for good health and that you never have to make a claim to any insurer for anything!

                   What a Happy New Year that would be!

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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.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

For recent decisions on this issue:
 

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

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

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

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

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

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

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

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

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

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


 

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

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

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

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

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

Issues which must be carefully considered for the beneficiary are:
 

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

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


 

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

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

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

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

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

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

Undefined “accident” is no accident.

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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.
 

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