Insurers - Don't Kill The Gift Horse

Why do insurance companies shoot themselves in the foot by trying to penalize claimants who try to work through their medical problems before applying for disability benefits.

If insurers really succeed in broadcasting the message that if you continue working when you have a disabling condition, that fact will be used against you if you ultimately have to give in to the disability and apply for LTD benefits. Afflicted employees will be forced to make claims much earlier and will never try to “tough” it out.

We know that insurance companies use whatever they can find to oppose disability claims, giving little thought to the consequences for their insureds. But withholding benefits because a claimant tried to work through a disability is just plain shortsighted.

Insurers must realize that every day employees stick to their jobs and continue working while suffering the early stages of disabilities which may plague them the rest of their lives. In doing so, these employees are saving insurance companies millions of dollars in benefits which they would otherwise have had to pay out.

Rather than encouraging those who try to work despite trying medical or psychiatric conditions, insurers instead try to penalize them by throwing this work effort in their faces when they finally have to succumb and apply for LTD benefits. In effect, insurance companies penalize people for trying to avoid applying for benefits.

This attitude on the part of insurers is not only unfair to the claimant (who ever thinks of the word “fair” when discussing an LTD claim), but it actually does harm to the insurer’s position.

If word gets around that insurance companies will use your working through an illness or injury to defeat a legitimate disability claim, no employee in his or her right mind will try to do it. Employees will be more likely to apply for STD as soon as they have a condition which may have long term implications.

Why should someone force themselves to work in pain or severe discomfort, when their efforts will be used against them if they are forced, in the end, to stop working because of their disability?

The problem with insurers is that they consider all disability claimants the same – they think they are all looking for an excuse to stop working and collect benefits.

But, people are different. Some have a great work ethic. Some don’t. Some can bear pain much better than others can. There is no “one size fits all” when individuals become disabled. Some will be able to work on – some won’t.

If insurance companies continue to raise as a defense that you worked when you claimed a disability, no matter how difficult it was for you to do so, they will soon find all claimants claiming benefits much earlier that they do now to avoid the defense.

Claimants aren’t stupid. If insurance companies persist, many more claimants will seek benefits earlier to avert this knee-jerk defense raised by insurers.
If they do, companies will be paying out a lot more than they do now.
So, insurers, drop this automatic defense. Use it only where it is warranted.

If you do, you will save a lot of money.


Insurers Like Psych

The question of why mental illness is treated differently from physical illness was raised in a recent California case, Harlick v. Blue Shield , 656 3d 832 (9th Cir. 2011).   The case turned on the wording of a California statute which is not relevant to the purpose of this post.

What is most relevant is the reasoning behind the insurance industry’s effort to save itself money by classifying mental illness as less than physical illness.  Those who have had first-hand acquaintance with mental illness know that there is very little, if any,  difference in the disabling factor between the two.  If your mind can’t cope with the duties of your occupation, it is as if you have a physical disability which prevents you from performing.

Psychiatric disabilities can sometimes be cured in weeks or months and sometimes not for years.  The same is true of physical disabilities.

Yet, insurance companies frequently limit their obligation to pay LTD benefits to two years while physical disabilities will be paid for the term set forth in the policy. 

This has led to insurance companies developing a new tactic – all employment disabilities are caused by psychiatric problems rather than psychiatric problems being triggered by physical disabilities.  Now that the 2-year limit on paying for disabilities in disability income policies has become more or less standard, it has become the preferred denial “go to” for insurers when nothing else jumps right out at them.

If there is any psychiatric involvement at all in a disability income claim, you can bet your bottom dollar that the insurance company will be doing its darndest to say it was based upon a psychiatric disorder.  These days, it has become almost a knee jerk reaction.

So, if you are hit with this defense, whether as a claimant or a lawyer, don’t accept it without scrutiny.  The stakes are too high to take the carrier at its word. 

Insurance companies are not all the same and don’t act the same, except in one regard:

They hate to pay claims!

Don't Fish For Disability Trouble

Life is really strange sometimes. We were reading the paper last Sunday when we came across an insurance company advertisement which struck us as relevant to the insured as well.

The full page ad for Chubb Insurance pictured a lone fisherman in a rowboat placidly fishing on a quiet lake. His back was to a nearby waterfall towards which he was drifting. The caption was “Who insures you doesn’t matter. Until it does”. The unwritten message was “Buy your insurance from Chubb or you may face consequences when a claim made against you.”

It really caught our eye because it applies as much to what we try to tell claimants as it does to what the insurance company tries to sell, i.e., “Disability income insurance claimants don’t need experienced legal help, until they do”. Unfortunately, by then it may be too late.

We sound this warning time after time, not just because we are in the business, but because having done disability income claims work for 30 years, we know most all of the pitfalls and traps set before a claimant by insurance companies. (They always come up with new ones which even we haven’t seen yet).

The worst part for claimants is that the biggest trap is laid right at the start of the claims process. While most people, including attorneys not experienced in ERISA and disability income claims, believe an initial claim form is just a notice that a claim is to be made, in reality, the first disability claim form must be accurate and contain complete information necessary to support such a claim.

Failure to properly notify the carrier of a claim will certainly lead to a denial of the claim and be used by the insurer to attack the claim throughout the appeal proceedings. Any misstatement or omission will be thrown up again and again by the company in an attempt to impugn the claim. Full details and accuracy are a must, starting with the first claim form.

A checklist of data which should be included, is:

* Complete details of the injury or illness upon which ther claim is based.
* Complete description of the claimant’s job duties.
* The claimed medical reasons why claimant can no longer perform those duties.
* Full hospital and physician reports to support the claim.
* Occupational testing which supports the claim.

Leaving out or making a mistake on any of the above will be cited over and over throughout the proceedings as proof that the claim is unfounded and should be denied.
It is difficult enough to try to establish a disability income claim. Why make it even harder by giving the insurance company a home run on your first pitch?

Just as the insurance company advises (although unwittingly):
You don’t need an experienced disability claims lawyer…until you do!






Don't Let Them Snow You

While looking out of the window at another snowstorm today, it occurred to us that the weather we are having in the New York Metro Area this Winter is much like pursuing a disability income insurance claim – never-ending, frustrating and requiring a BIG shovel to get through all of the bull___ thrown at you, even though all you want to do is get on with your everyday life.

If you are unfortunate enough to get caught up in the world of disability income insurance claims, you had better know what you are doing. Most people would think that the insurance company on the other side of your claim will play fair and give you an even break – WRONG!!!

The ordinary claimant is just “plain folks”, a person who has worked all through life and is now stricken with a crippling illness or injury which makes it impossible to continue working. On the other hand, insurance company claims-deniers do little else but deny, deny, deny and receive applause from their superiors for doing so. The more they save the company, rightfully or wrongfully, the more they are held in esteem for the work they do.

And, ERISA cases can be particularly galling to claimants because the Supreme Court added brass knuckles to the fists of insurers by handing them the doctrine of deference in Firestone v. Bruch, 489 U.S. 101 (1989). Not only do the companies get to dip into their unsavory bag of tricks, the Supreme Court says that Federal Courts have to give deference to their denials.

Trying to establish a disability income insurance claim gives you the same feeling you get when you look out of the window and see the snow tumbling down week after week. More shoveling, more slipping and sliding, more cold and less sunlight. It puts you in a depressed winter mood. You feel as if you want to give up.

That is exactly the mood an insurance company wants you to be in when you are pressing a claim. They want more and more information and regard it with less and less attention. They deny and delay, knowing that you are not working and therefore not able to properly support yourself and your dependents. Why shouldn’t they take their time?

Not only do you have to know what, when and where the insurance company is taking advantage of you, but you also have to know that they are counting on you to fold your tent and slink away because of the legitimate pressure they can put on you. Denying claims is second nature to most insurers and they seem to wield this power without remorse. Insurers hold all of the cards (and the money) while you struggle to get them to fairly evaluate your claim.

Disability income claimants need someone in their corner to point out the objective of insurer tactics and to help counter them while standing by to encourage claimants to obtain what is due under the terms of their policy. Claimants not only need knowledgeable help to properly press their claim, they need someone who has the experience to encourage them to stick to their guns and not be discouraged by insurance company tactics.

Part of the insurance company claims strategy is to keep you and your family “barefoot” for as long as possible so that you get disgusted with the whole system and walk away from your claim or settle for much less than it is worth, just to be out of the grinding process of pursuing an income disability claim.

Either way, they win and you lose. From the insurer’s view, this is the Perfect Storm.



Figure In The Tax, Too

A recent 3rd Circuit Court of Appeals ruling got us to thinking about the effect of lengthy litigation on an award in disability income cases.

In Eshelman v. Agere Systems, Inc., 554 F. 3rd 426, the appellate court upheld a District Court decision awarding additional damages to the plaintiff’s jury award of $200,000, to cover the added taxes she would have to pay because she received a lump sum award rather than having been paid her salary over a period of years as she would have if she had not been discriminated against.

Well, we reasoned, shouldn’t the same thinking be applied to disability income insurance cases which many insurers cause to be dragged on for years and years when it is apparent to any disinterested observer that the claim should have been paid early on. The insurance company’s reluctance (almost a reflex action when it comes to paying claims) should not cause the disabled policyholder more grief by adding to his or her tax burden.

The circumstances are very similar. When a person loses a position because of the wrongful action of the employer, the person loses the benefit of being paid weekly or monthly and paying income taxes periodically through withholding and annual tax returns.

When an insurer wrongfully drags out the award of benefits to a disabled person, the claimant loses the benefit of being paid these insurance monies weekly or monthly and paying income taxes (if the benefits are taxable) annually. (Generally, disability income benefits are taxable if an employer pays the policy premium and non-taxable if the insured pays the policy premium).

If a disability income case drags on for awhile (some are known to have gone 10 years or more), and results in a lump sum award to make up for the years during which no monies were paid, that lump sum is taxed in the year it is received by the claimant. Many times this puts the recipient in a much higher tax bracket, meaning that a much larger percentage of the award will have to be paid than the claimant would have paid if benefits were received and taxes paid each year.

As a result, the claimant is not made whole, receiving less money in his or her pocket than he or she would have received if paid monthly for the period

We believe it fair that a District Court judge have the discretion to make an additional financial award to make up for the tax difference so as to make the plaintiff whole when appropriate evidence has been elicited to support such a tax award.









Don't Ignore SSDI

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.