Disability Insurance

Private Disability Insurance

Group Disability Insurance

Disability claims have become a significant issue as the baby boomer generation ages. In addition to new claims, many people who had already qualified under their disability coverage are finding their claims being reevaluated and denied. First-time disability claim applicants find their claims rejected despite the opinions of their own treating physicians. Insurance companies can use medical examinations performed by “independent” medical professionals to determine disability. You do not have to accept a denial of your claim if you feel you are disabled and your doctor backs up your disability claim. One of our clients was a physician himself, who had suffered brain damage. The insurance company had the client examined and its doctor agreed that our client had brain damage. After paying the client disability for five years, the insurance company then offered him a lump sum of money to eliminate the monthly benefit. Our client did not feel it was in his interest to accept a lump sum at a reduced figure. The insurance company then had him reexamined. The doctor who performed the reexamination determined that our client was still brain-damaged and should not engage in his former occupation. In the intervening five years, our client had surrendered his license to practice medicine. Our client also had memory lapses which prevented him from performing his duties as a physician. Potentially, he would have been subject to charges of medical malpractice had he actually treated patients. Nonetheless, the insurance company discontinued his benefits.

When it becomes apparent that the insurance company is not going to honor your claim, you should consult a professional immediately. The more ammunition that you permit the insurance company to develop before you are represented by an attorney, the more problems you may face in the future if you attempt to litigate your claim. You should contact an attorney who is an expert in disability law to tell you whether or not you have a viable claim.

There are primarily two types of disability insurance coverage. Private disability insurance is purchased directly from a private insurance agent. Group disability plans are provided to you through your employer or union. Disability policies of either kind contain definitions of disability. The most important definitions are those of “disability from former occupation” and “total disability.” “Disability from former occupation” means you are unable to perform the material functions of the position that you held at the time that you became disabled. “Total disability” is generally defined as being unable to engage in any gainful employment to which you are suited by virtue of your age, education and training.

The standard that courts use to review a decision by a disability insurer denying a claim for private insurance policies is preponderance of the evidence. You must show that it is more likely than not that you are disabled. If you can do that, you can win your claim and compel the insurance company to pay disability benefits.

When documenting your file for the insurance company, do not assume that the insurance company will know what is wrong with you. Always make sure that the file is fully documented. If you are seeing your family doctor for a problem involving an orthopedic or neurological problem, make sure that your family doctor refers you to a specialist. Try to make sure that the specialist to whom you are referred has the highest qualifications available in your community. A specialist from a hospital which has a medical school is often given more credibility than a specialist from a community hospital.

It is important that you make sure that all information being submitted to the insurance company is documented. You should always have a cover letter which tells the insurance company what you submitted. That cover letter should be dated. By keeping a careful record, you will eliminate the possibility of the insurance company saying that they did not receive a particular report or other document that helps to prove your claim.

An insurance company can take actions which can ultimately cause physical harm to the claimant. This goes beyond the disability claim and the potential bad faith involved in the claims handling. Sometimes the actions of an insurance company can create actual injury to a claimant by denying treatment or causing the client to return to work before he is able, thereby causing additional physical damage. We represented a client who had surgery for a herniated disc. After his surgery, he wanted to return to work part-time, based on his surgeon’s instructions. The insurance company cut off his partial disability benefits after he returned to work. Our client was a young man with two children and a mortgage. When his partial disability payments were cut off by the disability carrier, he felt he had to return to work full-time to support his family and make his mortgage payments. He was forced to work more hours than his doctor recommended. He suffered a re-injury to the surgical site and permanent disability. Because the insurance carrier was instrumental in creating the permanent injury to this young man, it faced a claim for that damage in addition to the original disability claim which they should have paid in the first place. This case underlines the importance of telling your layer everything that is going on with respect to your claim and any additional problems which develop in your life because of the conduct of the insurer.

Private Disability Insurance

Private disability insurance is that which you purchase yourself from a private insurance agent and is known as an individual disability policy. The disability claim of someone with a private policy is relatively straightforward. The claim becomes an issue of medical testimony. The complicated issue is whether the insurer engaged in bad faith conduct or committed insurance company malpractice. In an effort to determine the nature of the actions of the insurer, it can be necessary to look beyond the individual claim in an effort to establish a pattern and practice by the company.

Group Disability Plans

Group disability plans are generally covered by the Employee Retirement Income Security Act (ERISA), which is Federal law. In general, group policies provided by employers and unions are construed to have restrictions on the ability of the disabled employee to file suit. The standard of review of a denial of disability benefits under an ERISA policy is most often that the denial must be "arbitrary and capricious" to be reversed. This is a very high standard of proof. It means that if the person denying the disability claim was wrong but had a valid reason for his opinion, the denial will stand. ERISA disability cases can be won, but they are extremely difficult.

In order to make a claim for disability under an ERISA policy, it is necessary to submit the claim to the claim administrator for the plan. In the event that the claim is denied, there is an appeal process that is part of the plan. The record being generated by the disabled individual must contain all of the information that would persuade someone that he is disabled. If, for some reason, the disabled individual does not provide a particular document or piece of information to the adjuster analyzing his claim, that information ceases to exist as far as the disability claim is concerned. A court’s review of the decision to deny the ERISA disability claim can be confined to the contents of the file generated by the adjuster handling the claim. If a piece of information is not contained in the file, it will not be reviewed by the court because the adjuster did not have the benefit of that information when making his or her decision to deny the claim. The review process is not designed to find the truth. It is imperative that all information supporting the disability be provided to the claim adjuster.

ERISA plans generally have a set-off provision for workers' compensation or social security benefits. This means that any money obtained by the disabled individual from another source is subtracted from the benefits due under the plan. It is not unusual for people that have been disabled for an extended period of time to be told by their insurer to apply for social security disability. Some disability companies will provide a lawyer to make a social security disability claim on behalf of the disabled plan member. One should cooperate with the insurance company or lawyer since cooperation does not involve a net loss of benefits. In addition, insurance companies have been known to attempt to discontinue benefits for failure to cooperate in applying for social security disability.

If you have applied for and been granted social security disability, make sure that information is conveyed to the disability insurer. The fact that the federal government has determined that you are disabled can go a long way in establishing your disability with the insurer. Do not assume that because you have been granted social security disability that the ERISA insurer will automatically accept that as proof of your disability. The fact that the federal government has accepted your disability can be persuasive but it does not pre-empt the issue. The ERISA insurer still has the right to contest your disability on the basis that an error was made or that your disability does not meet the requirements set out in the plan.

If you are making a disability claim under an ERISA disability policy, you should get a copy of the plan. Some plans have a definition of disability as being disabled from your former occupation. That means specifically the occupation you were performing at the time of your disability. Some plans will pay for a disability from your former occupation for a set number of years (most often two years or five years). If your disability exceeds that time frame, there is often a switch to total disability. Total disability is generally defined as disability from all work that the employee is capable of performing based on physical limitation, education and training. This means that after your initial period of disability has been paid because you can't do your former job, you must re-qualify for disability based on the definition of your inability to perform virtually any job.

Many ERISA disability plans contain a provision limiting benefits available for psychiatric or psychological problems. The disability period for emotional problems is generally one or two years. That means even if you are totally disabled after that period of time because of the emotional injury, you would no longer qualify for disability benefits. Because there is a built-in method for eliminating continuing disability claims, insurance companies have been known to use the cut-off provision for psychological injuries for claims involving other disabilities. You should always be aware of the nature of the exam that an insurance company is asking you to attend. If you have an orthopedic or neurological problem and the insurance company is asking you to be examined by a psychologist or psychiatrist, they are telegraphing their next move. Make sure you continue to document the file with your continuing orthopedic or neurological problem and disability information from the doctors who are caring for you.