Disability Insurance Lawyer Blog

Long Term Care Policy Challenges

Long term care insurance policies, marketed heavily in recent years as a way to protect older persons and provide financial benefits where they are no longer able to care for themselves, have seen a poor claims history, and insurers are reacting aggressively.

Met Life has already indicated that they will leave the long term care marketplace in 2011, while John Hancock has sought to increase its rates for in force coverage by 40%. It is quite likely that these long term care insurance policies will cause all insurers to reflect upon its go forward sales, and to increase pressure upon the claims teams dealing with both current and future claims.

This is a remarkably similar pattern to what occurred with long term disability insurance policies, where the insurers were quite aggressive in marketing the coverage, and when the claims history became unfavorable, an increased amount of claims were denied and/or terminated, often improperly.

We will continue to provide information about what is likely to become an alarming trend.

2010 Group Disability Market Survey Results

The 2010 mid-year summary of Group Disability Market results offers some interesting insight into the marketplace for LTD benefits. This survey is published by JHA - a division of Gen Re, a Berkshire Hathaway company. This report is largely published for the insurance industry, but the information is significant to those on the front lines of battle, representing claimants on a daily basis.

Thus, the results have some valuable insight for the claimant community.

It was reported that premiums were down over 17% from mid-year 2009, a cause of some concern, as with lower premiums, insurance companies have left money available to pay benefits, and/or invest. Thus, some level of concern exists as insurers are likely to focus on claim management as a means of preservation of assets. It was noted in the report that while the number of companies offering group disability insurance remained level, there was a decrease in the number of covered employees, a trend likely attributable to the increased unemployment seen across the U.S.

The companies with the highest percentage of LTD Sales Premiums were CIGNA, Hartford, Met Life, Prudential and UNUM. These are the companies where we see the highest volume of claim denials and terminations as well. With premiums down, we can only expect to see a higher volume of claim denials and terminations, whether justified or due to business concerns.

If you have a delayed, denied or terminated claim, please call us. We can help.

Critical Illness Insurance - Cause for Concern?

It has been suggested by industry insiders that the demand for critical illness insurance will be a major growth opportunity in 2011. This type of insurance typically pays a lump sum benefit following diagnosis. It is marketed as a supplement to typical disability insurance, to help cover medical bills and other needs.

As attorneys for claimants, our concern is that the claim consideration will be similar to many seen in typical disability coverage. Delays and denials of legitimate claims. Delays in receiving these benefits could prove devastating to claimants, who will typically be struggling to deal with a recently diagnosed medical condition, and will have to fight for this coverage.

We will continue to report on these issues, and will provide both claim guidance and success stories to assist claimants that are involved in the claim process.

LONG TERM DISABILITY INSURANCE IS NEVER A DO-IT-YOURSELF PROJECT

If you spend any time on the Disability Insurance Forums, you'll learn first-hand how badly the disability insurance companies treat their claimants, and read heartbreaking stories about women and men who simply want to be treated with honesty and decency. There are a handful of challenges that are repeated year in and year out. Let's address some of them:

Getting a copy of your policy - For Individual Disability Policies, you really do need to have the exact policy that was in place when you signed up. This is the contract that details what you are entitled to. If the insurance company sends you a policy that was issued in 2010 and you started with the company in 2004, the policy will not be the same. Sadly, most don't take this seriously until it's time to file a claim. For Group Long Term Disability (LTD) Policies, the opposite is true. The contract which will govern your claim will be the policy that is in place at the time of disability, so ensure that you are able to secure a copy of the policy from the employer.

Continuing benefits after employment is terminated - a tough challenge. The problem is, once you are terminated from employment, you will be unable to file a prior claim for disability benefits. However, if you have filed a disability claim, and are terminated subsequent to the claim, your coverage should remain in full force. The insurance company may try to persuade you that this is not the case, but without knowledge of the details of the law, how will you know?

Negotiating a lump sum buy-out - a layperson trying to negotiate a lump sum buyout with an insurance company is like a small child negotiating an arms treaty with a hostile country. No matter how bright and charming the child is, it will not end well, or on any kind of favorable terms. We have worked many with professionals who were convinced that their intellectual skills would be no match for an insurance company's employee. They were stunned to find themselves unable to navigate through a deliberately complex series of roadblocks and dead ends.

This is one project you don't want to tackle on your own - and you don't have to. Contact us today at 1-877-LTD-CLAIM (877-583-2524)

CIGNA Caves on Administrative Appeal

CIGNA had attempted to terminate our client's claim for long term disability benefits, a claim in which they had previously terminated, only to voluntarily reinstate benefits while in litigation, back in 2008. Two years later, CIGNA again made efforts to terminate the claim, on the purported basis that our client's treating physicians no longer supported her impairment.

In order to achieve this result, CIGNA intentionally miscast the doctors' opinions, and performed a cursory medical review, which on administrative appeal, we were able to destroy medically. We demonstrated that CIGNA's claim determination had no reliable evidence to support its position, and provided a wealth of additional claim support. Our client's claim is being re-opened and she will be paid all of the benefit appears.

This is a prime example of an insurer seeking to wear down a claimant's treating physicians, and why claimants need to remain vigilant in the claim process, even if their claim has been paid for a long period of time, or even where an insurer capitulates in litigation and agrees to pay the claim.

Our effective advocacy of this claim has helped ensure a happy holiday season to our client.

Insurer Acted Improperly In Rejecting Claimant's Medical Support

Another court has offered insight into how to determine when a claim administrator acts in an arbitrary and capricious manner. A Federal Judge in Michigan determined that Sedgwisk, a third party administrator of claims for General Motors, abused its discretion, by adopting the opinions of a hired medical reviewer, over the well supported opinions of the claimant's treating providers. The Court found the hired doctor's opinions to be conclusory, failed to properly consider the objective support for the claimant's impairment, and lacked substantial support. Another factor noted by the Court was the fact that the hired doctor submitted an addendum at the urging of Sedgwick, deciding that such supplemental report was entitled to very little weight, as it was clear that the second report was issued to satisfy the requests of the insurer.

We see this type of conduct often, where insurers seek "addendums" from their hired paper reviewing physicians, where the initial report is either equivocal or not supportive of a claim termination or denial.

The Court was also concerned that the insurer relied upon a well known insurance doctor, who "cherry picked" the medical evidence to support his conclusions.

Blajei v. Sedgwick Claims Management Services (E.D. Mich. 2010).

A DIRE WARNING .... AND NOT UNEXPECTED..... ABOUT DISABILITY INSURANCE

Peter Orszag, director of the White House Office of Management and Budget from 2009 to July 2010, a distinguished visiting fellow at the Council on Foreign Relations and a contributing columnist for The New York Times has shared his thoughts on what he considers one of the key challenges facing our weakened economy - the long-term unemployed workers who give up looking for work, in some cases, permanently, and who apply for disability insurance where, in a robust economy, they might have continued to stay in the work force.

The number of applications for Social Security disability has reached more than 750,000 - - an increase of more than 50% from four years ago. That is not even including all of the applications for disability coverage through employers or privately owned. Orszag correctly notes that the weak labor market is driving people who might otherwise be working or at least looking for work to apply for disability benefits.

The author points to a paper released by the Center for American Progress and the Hamilton Project argues that employers should be required to offer private disability insurance and restructure the relationship so that disabled workers would be privately financed for two years and then be able to apply for Social Security Disability Benefits.

It's not a simple problem, and the solutions he proposes will no doubt see tremendous push-back by employers. But we're glad that at least a dialogue is taking place, and not necessarily limited to one driven by litigation.

Court permits Insurer to Hide Identity of Medical Reviewer

In a disturbing decision from a Federal Judge, one court has permitted a long term disability insurance company to hide the identity of its medical reviewers who provided the insurance company with opinions that were utilized to deny benefits to an insured.

In Houser v. Alcoa, Inc., a case from the Western District of Pennsylvania, the court stated that because the qualifications of the reviewer were provided (indicating that the reviewers were board certified and in active practice), there was no basis to discredit the qualifications of the reviewers and thus attack the reviews. The court held that a claimant's entitlement to a full and fair review does not mandate the specific identification of the medical reviewer. The court also noted, however, that the claimant never specifically requested the identity of these reviewers, a potential practice pointer for claimants.

Frankel & Newfield aggressively pursue the identity and credentials of the medical reviewers involved with our clients' claims, as we have created a wealthy database of information about many of the third party vendors providing support to insurers, and the individual doctors who facilitate these improper claim decisions. If you are facing this issue with your disability insurance company, please do not hesitate to protect your rights, and contact our firm.

Don't Mess with Texas - Disability Insurance Companies Get a Real Boot from the Texas Department of Insurance

News that the Texas Department of Insurance has adopted a new rule prohibiting the inclusion of discretionary clauses in disability insurance policies makes us right proud of our southwestern neighbors.

Discretionary clauses are not typically seen in state-law governed policies, but are present in nearly all employer-provided policies because they are permitted by the laws of ERISA, the federal statute that governs most employee benefits.

The use of discretionary clauses in disability insurance policies give insurance companies free reign to make any decision they like - no matter how self-serving and arbitrary. When Courts decide claims where the insurer has had discretion, the battle is quite uphill for claimants, who are required to demonstrate that the insurer "abused" its discretion, or acted in an arbitrary and capricious manner. Many court decisions actually turn depending upon whether an insurer has discretion, where a Judge would have ruled for the claimant but for the discretion issue.

The new rules will come into effect on February 1, 2011 for some types of disability insurance and on June 1, 2011 for all other disability policies and all other health and life insurance policies issued in Texas.

We congratulate the Texas Department of Insurance and all of our colleagues at the Texas bar who worked to get this legislation in place. Twenty three states and the National Association of Insurance Commission have also adopted statutes, rules or policies prohibiting discretionary clauses. This is progress - but it also means that many other disability policyholders in many other states do not enjoy the same protection.

If you want to know more about this issue, or want to know if your state prohibits the use of discretionary clauses, call our office at 1-877-LTD-CLAIM (877-583-2524).