Disability Insurance Lawyer Blog

The politics of CFS and the Center for Disease Control (CDC) - a long and bumpy road

If you suffer from Chronic Fatigue Syndrome (CFS), we encourage you to read a substantive article written by David Tuller that examines the history of CFS and the Center for Disease Control (CDC).

Tuller, a journalist who is also coordinator of a new concurrent master's degree in public health and journalism at UC Berkeley, provides a close examination of the intrigue and politics that have dogged CFS since its first appearance in the 1980s. It is a long article, but well worth the read.

Tuller explains the arguments of critics who claim that that the CDC, which is charged with investigating threats to the health and safety of the population, has failed miserably when it comes to CFS. Worse, he explores the claim that the CDC's failure to take CFS seriously and treat it as a real disease is a large reason why even today CFS sufferers are treated as maligerers, not people suffering from a real illness. The dismissive attitude to CFS as an organic disease or cluster of diseases has been "a font of misinformation and has been routinely used by insurance companies to deny legitimate claims for tests ordered by doctors."

If you have CFS and your disability insurance company is delaying or denying your claim, call us today to find out how we can help. We have worked with many CFS patients over the years and are well-versed in the politics as well as the pragmatic facets of disability claims for CFS.

Court Finds CIGNA Arbitrary, Applied Wrong Standard of Disability

A recent decision from the Federal Court in Pennsylvania has chastised CIGNA's claim handling conduct and awarded back benefits to an insured whose claim was terminated by CIGNA based upon its effort to apply the wrong standard of disability. CIGNA terminated the claim on the purported basis that the claimant was able to work in some occupation, despite the fact that her claim was in the own occupation stage. In litigation, CIGNA sought to argue that this was a typographical error, and that it actually applied the own occupation standard.

The Court methodically picked apart the arguments, and demonstrated how CIGNA wrongfully applied the any occupation definition. The Court also rejected CIGNA's argument that evidence supported its claim decision under whatever standard was applied, factually demonstrating why CIGNA's argument lacked merit. The Court held that "any action taken by a plan administrator inconsistent with the terms of unambiguous policy language is arbitrary."

This strong decision serves to highlight how insurers often will apply erroneous standards, and will attempt in litigation to craft arguments to fix the holes in the logic of the underlying claim handling. Fortunately, this Judge appreciated the issues, and did not permit CIGNA to "mend the hole".

Loomis v. Life Ins Co. of N. Amer. (CIGNA)

UNUM Abused Discretion in Terminating Claim

A Federal District Court judge has found UNUM to have abused its discretion in terminating long term disability insurance benefits to a claimant, who was on a disability claim for orthopedic difficulties following a motor vehicle accident. The Court determined that UNUM failed to adequately consider the nature of the claimant's occupational duties, instead simply focusing upon the physical demand requirements of a generalized occupational class. This is a common technique employed by long term disability insurance companies, who focus only upon a physical functional capacity to perform work generally, rather than appreciating the actual work requirements, or considering the non-physical, cognitive requirements of a particular occupation.

The Court noted that UNUM rested its decision solely upon the results of a Functional Capacity Evaluation, a test that only is able to provide general overall functionality, and not any type of occupation specific abilities. Another troubling aspect of UNUM's claim handling was its selective embrace of portions of the report, while ignoring other aspects that were favorable to the claimant. UNUM also sought to impugn the claimant's credibility, another commonly seen approach by long term disability insurance companies. The Court rejected these efforts, noting that the subjective complaints of a claimant must be considered in connection with a long term disability claim.

Soucy v. First UNUM Life Ins. Co.

Another Horror Story of Abuse of Discretion Standard of Review

One of the most challenging aspects of disability insurance claim litigation is that the case can literally turn based upon what legal standard a court chooses to apply. These cases often would be claimant victories if a Judge was decided the case on a de novo standard of review (meaning a full review of the evidence), as opposed to the abuse of discretion or arbitrary and capricious standard (which adjudicates whether the decision is supported by substantial evidence or was erroneous as a matter of law).

Numerous judges have made this point clear in their decisions, and the most recent one highlights this issue. In Curtis v. Kan. City. Life Ins. Co., a decision from the Federal Court in Kentucky, the Court ruled for the insurer, holding that the decision to terminate the claim was not an abuse of discretion. The Court commented however, that If the standard of review was de novo, the Court would be inclined to find for Plaintiff. The Court even stated that it did not like the result, but it was mandated to rule as it did.

The application of this insurer favorable standard of review has lowered the bar of acceptable claim handling, or better stated, has further incentivized insurers to terminate legitimate claims with flimsy claim handling, as there will often be sufficient information for the insurers' lawyers to cite to in litigation to justify the claim handling under this standard of review.

Because of this, claimants must aggressively pursue their appeals with strong evidence of impairment and be able to counter each and every aspect of the claim termination. Our firm has developed a formula for success on appeals that helps us secure good results for clients without having to resort to litigation, where the landscape has become very insurer favorable.

Why Do Courts Reward Insurers who Fail to Comply with ERISA?

One of the more frustrating aspects of ERISA disability insurance practice is where insurers are not taken to task more forcefully where they fail to comply with ERISA and the regulations governing ERISA disability claim. As one example, an insurer is obligated to issue a benefit determination on an appeal of a claimant's adverse benefit determination (a claim denial or claim termination) within a proscribed period of time. This time frame is usually within 45 days, with the potential for a second 45 days if the insurer identifies special circumstances.

However, quite often, an insurer will fail to issue a decision timely. What can be done in such circumstances? Can a claimant file a lawsuit and claim to the Court that the appeal has been "deemed denied"? What will be the effect of this?

Courts throughout the country have wrestled with this concept. Many courts have adopted the "deemed denied" approach, which in essence strips the insurer of whatever level of discretionary authority it may have held, and proceeds to conduct a de novo claim determination. This alteration of the standard of review can result in a markedly different litigation posture, as many cases are lost where the standard of review is considered abuse of discretion or arbitrary and capricious.

However, numerous courts continue to reward insurers who have failed to comply with ERISA and the regulations. Some refuse to alter the standard of review, claiming that the insurer has "substantially" complied, while others have directed that the claim to be remanded to the insurer for further consideration. This has the effect of rewarding an insurer's recalcitrant behavior, and results in further delays to a claimant's ability to secure adjudication of his or her claim (perhaps something the insurer is hoping for, in an effort to forestall).

Thus, depending upon what jurisdiction your claim can be heard, it is important to consider strategy in commencing litigation where an insurer has failed to comply with its obligations under ERISA. If you are faced with such a situation, please do not hesitate to contact us, we can help.

Court Reinstates Hartford Life Claimant

An Ohio Federal Court recently ordered a claimant to be reinstated to active benefits, where she suffered from dumping syndrome, and chronic fatigue, following treatment for cancer. Hartford had terminated her claim at the transition of disability from own occupation to any occupation benefits.

Hartford, as is very typical of its claim handling, relied upon the opinion of a paid, paper reviewing physician, who noted that fatigue could be a typical limiting factor following cancer treatment, but failed to find any impairments in this claimant. Hartford also performed an internal vocational review, based upon the findings of its paid, paper reviewing physician, failing to consider the limitations set forth by the claimant's treating doctors.

The Court was troubled by several aspects of Hartford's claim handling, including that it appeared to make credibility determinations of the claimant without the benefit of actually examining her, and found that the decision was not the product of a deliberate principled reasoning process.

Thus, the Court ordered that benefits be reinstated to prior to the claim termination.

Sedgwick - A Dangerous Third Party Administrator

A recent case reveals that it is often worse to have a third party administrator reviewing and considering eligibility for long term disability insurance benefits than it is to have an insurance company considering the claim.

Sedgwick Claims Management Services is such an entity, and their conduct has been criticized by one recent court. However, the existence of these third party entities is making it dangerous for the claimant community, as all too often, judges are formulating the opinion that these entities do not suffer from any conflict of interest that exists where an insurance company both decides claims and pays benefits. Notwithstanding some guidance from the United States Supreme Court that such relationships might also suffer from a conflict of interest, where a third party administrator has been involved, the challenges facing claimants have intensified.

In this recently decided case, one court has taken Sedgwick to task for its failing to provide a claimant with a full and fair review of his claim. The court found that Sedgwick failed to provide the claimant with relevant documents, and therefore impacted the claimant securing a full and fair review.

If your claim has been delayed or denied, or you are dealing with a third party administrator on your claim for disability insurance benefits, remember that you are not alone, we can help.

Disability Awareness Survey Results

The Council for Disability Awareness has reported on its 2010 Consumer Disability Awareness Survey. The results are interested, in that there is a disconnect between perceptions of the public and reality. As one example, most surveyed believed that disability was most likely to be caused by an accident, while in reality, less than one in ten claims are the result of injuries, while sicknesses cause the overwhelming majority of disability claims.

The report also indicated that more than one out of four disabilities are caused by muscle or bone disorders, such as back problems, joint pain and muscle pain. Cancer is the second leading cause of disabilities, with 15% of all claims. Cardiovascular claims have increased and are now the third leading cause of impairment.

An alarming statistic is that the odds of a healthy 35-45 year old male during his working career of becoming disabled is about 1 in 6.

If you have an impairment, or if your ability to work has become compromised, you should consult with the attorneys at Frankel & Newfield, P.C., who can guide you through the difficult process of filing a claim and securing benefits.

Decline in Claims Due to Recession?

A report published by the National Business Group on Health has found that both Short Term Disability and Long Term Disability claims dropped by a substantial amount, a result which is being largely attributed to the recession. However, the costs associated with the Long Term Disability claims actually rose on a per person basis.

The report actually served to counter a belief that employees would seek to take disability in the face of the economic downturn, but employees delayed or avoided altogether taking leaves that might otherwise have occurred.

Another factor which may have influenced the data is reduction in the workforce which would lower the pool of potentially eligible claimants to file either Short Term Disability or Long Term Disability claims. With substantial reductions in force occurring during this time frame, less people would be available to file such claims.

In our practice, we did not notice any substantial change in the volume of claims, although that is not any indication that can be compared or contrasted with the data from this report.

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.

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).

Disability Insurance Lump Sum Settlement - Taxable or Not?

Many claimants are presented with offers to resolve pending disability insurance claims in exchange for a lump sum settlement with their disability insurance company. An important question in determining whether a claimant can even consider pursuing this option, which is a very personal choice for each claimant, and largely based upon numerous factors, is whether the benefit payment to be paid as a lump sum will be taxable or whether it will be a tax free payment.

While we do not provide tax advice - as we are attorneys who focus our practice on disability insurance claims, and not tax law, a recent decision from the United States Tax Court offers some useful guidance. A claimant had received a lump sum payment to resolve a litigation with his insurance company. While the company provided the claimant with tax documentation, the claimant took the position that the payment was not taxable as it was for his injury. The taxing authorities took the position that it was payment for loss of earnings, and thus taxable. The Tax Court agreed that the payment would be taxable, as it was for the loss of earnings.

However, not every loss of earnings benefit payment is going to be taxable. Where a claimant pays for his or her disability coverage out of post-tax dollars, the benefits are ordinarily tax free.

If you have a disability claim that is being paid, and wish to consider a lump sum settlement, or if your disability insurance company has offered a lump sum settlement, contact us to discuss how to proceed.

US Senate Examines Disability Insurance and ERISA - Plaintiff's Bar Applauds

After decades of battling against insurance companies that deliberately mangled ERISA to stonewall policyholder's ability to fight for their benefits, we are of course very gratified to hear the words of Mark D.DeBofsky, attorney and law professor, as he testified that ERISA has been "transformed into a shield that protects insurance companies from having to face the consequences of unprincipled benefit denials and other breaches of fiduciary duty." However, we disagree with his putting the blame on the Courts for the way this law has been twisted far from its original intent.

Of course the insurance industry defended its position of handling claims, but we've been on the front lines for a while and have seen far too many claimant's lives destroyed by an industry that profits most when it denies claims.

Today's hearings are just the start of what may be a prolonged and somewhat painful process, as one of the most powerful lobbying forces in the Capital defends itself. We have a stronger argument - let the many Americans who are sick and injured stand before Congress and tell their stories, of lives left in shambles, houses lost, families put at risk, when the breadwinner who counted on the disability insurance lost the fight to get the benefits they paid for.

Unfortunately, the claimants whose stories deserve to be told aren't backed by deep pockets and professional lobbyists. And we all know how long it takes for Congress to act. So we'll keep doing what we do best - defending our clients and fighting on their behalf.