The definition of presumptive disability varies among contracts. Some contracts do not even have a presumptive disability insurance provision. The basic idea of presumptive disability is to protect against drastic disabilities that occur suddenly. They generally protect you against the loss of hearing, sight, speach, or the use of any two limbs. This is not a provision for which you pay an extra premium, it is built into most contracts. The main differences are in the definition language, specifically in the words; Total, Permanent, Irrecoverable. A total loss of sight, speach, hearing, or the use of any two limbs is a lot different from an irrecoverable or permanent loss. Total losses protect you from temporary loss of site, speach, hearing, and broken limbs. An irrecoverable loss is just that, the disability must be permanent. All contracts that have a presumptive disability provision pay first day benefits for these losses.
Saturday, July 25, 2009
Presumptive Disability Insurance
Renewability of Disability Insurance
The first aspect of any disability insurance policy one needs to understand is the renewability feature. There are three basic types of renewability on the market today.
Non-Cancellable and Guaranteed Renewable
Guaranteed Renewable
They can change the premium by state, policy year, or occupational class with approval from the state. For an individual disability insurance policy, it is my opinion that you would be making a mistake by going with a GR policy. I believe you are setting yourself up for a possible disaster several years into the future. Look for the words on your policy "Non-Cancellable and Guaranteed Renewable", They may not be on the proposal, but they must be on the policy! If it is just Guaranteed Renewable, you may be missing something.
Conditionally Renewable
The worst option of the three, a conditionally renewable policy offers you as a consumer virtually no guarantees for your disability insurance policy. Different companies have different conditions for you to renew your insurance every year, but the only guarantee you can get is that the conditions will be very hard to meet at the worst possible time. Stay away from these policies!!!Residual Disability Insurance
A large percentage of all disability insurance claims either start or end in a residual claim. The basis of a residual claim is that a person is still actively engaged in their occupation, but because of a sickness or injury is:
| Suffering a loss of time and duties |
| Suffering a loss of income of at least 20% |
As you can see there are two major types of a residual claim. One is based on a loss of income only, and one is based upon a loss of time and duties. I am under the impression that a residual disability provision which is based on loss of income is better. I want the bottom line to my residual claim to be that the insurance company will continue to pay me until my income is back up to what it was before I was disabled. Under a loss of time and duties claim they generally stop paying a residual claim once you are back to work full time. Some carriers will move you to a recovery benefit once you are back to work full time under the time and duties claims, but this is only for a specified period of time. A residual disability povision based on income is like having an unlimited recovery benefit, and protects a person from a claim like the following:
Let's assume this person is in sales, or a small business owner. Assuming they are totally disabled for a period of six months to a year, does anybody think that when they come back to work their income will jump up to what it was before they were disabled? The answer is likely to be no. They may have to come back to work for longer hours, and work even harder to get back the clients they lost while they were away, get new business in the hopper. Then maybe several months later they could hope to increase their income towards the previous level. The bottom line is that people may be residually disabled for a much longer period of time than they are totally disabled.
Gainful Occupation Coverage
This definition of total disability is very common in an employer sponsored group long term disability insurance policy, or with property and casualty insurance companies that decided to release a disability insurance policy. It is quite simply the worst definition available and should be at the very least supplemented with a quality contract if not replaced entirely. This definition basically leaves the determination of whether or not you are disabled up to the insurance company. A typical definition will look like this:
Because of sickness or injury you are unable to perform the material and substantial duties or your occupation, or any occupation for which you are deemed reasonably qualified by education, training, orexperience.
Could somebody be forced to go flip burgers at McDonalds under this definition of total disability? Pobably not but it does leave it open for litigation and interpretation. You should be buying disability insurance so that you do not have to worry about your income if you can't do the material and substantial duties of your occupation, going wih this type of disability insurance policy is an inexperienced decision, and should be re-thought for an own-occupation plan. Many people who simply shop for the best disability insurance rate end up with this type of coverage. In my opinion, it is worthless, and you may end up with the Lemon of the disability insurance industry.
Income Replacement Insurance
Because of sickness or injury you are unable to perform the material and substantial duties of your occupation, and are not engaged in any other occupation.
As you can see there is a major difference between an income replacement and an own-occupation definition of total disability. The income replacement definition will penalize you during a claim if you make the decision to go back to work, or earn another source of earned income while on a claim. I have found that most people if given the choice would go back to some work if possible, under this plan if somebody wants to go back to work in some capacity, the insurance company may offset your monthly benefit check. There is a common misconception that own-occupation disability insurance costs a lot more than an income replacement policy. While I am certain that in some scenarios this is true, as a blanket statement it is false. There are many professional occupations where an own-occ contract is actually less expensive than an income replacement policy. Many companies, as an example, do not like writing individual disability insurance on physicians. It is very likely that an own-occupation disability insurance policy may be less expensive from a company that still enjoys writing disability insurance for doctors.
Own-Occupation Disability Insurance
The inability to perform the material and substantial duties of your regular occupation, the insurance company will consider your occupation to be the occupation you are engaged in at the time you become disabled, they will pay the claim even if you are working in some other capacity.
What I have found over the years is that people will choose to fight their disabilities. They will refuse to sit at home and collect a monthly disability check. Instead, as long as they are not severely disabled, most people choose to go back to work in some capacity to give themselves a sence of self worth, or just to go do something everyday. Own-occupation disability insurance is the only plan that does not penalize somebody for going back to work in a different occupation while on a claim. Under this type of plan, the bottom line is if because of a sickness or injury you can not perform in your occupation, you will be considered totally disabled, even if you choose to do something else.
Personal Disability Insurance
All of the information on this web site is truly geared towards white collar occupations. Individual disability insurance for blue collar occupations is attainable through some carriers, however most of the carriers and contracts discussed on this web site do not specialize in providing coverage to blue collar occupations
Long Term Disability Claimant Wins Against Unum Provident.
Well, as one policy holder found, you can sue, and win. In this case, the insured sued because the infamous Unum Provident disclaimed coverage for his long term disability claim. Unfortunately for the insurance company, the claimant happened to have read his policy (he was an attorney), and took issue with their disclaimer all the way to the Second Circuit (federal appeals court).
In a scathing decision, the appeals court reversed the lower court and found that the administrator of the Plan (Unum) had a conflict of interest because it had both the discretionary authority to determine the validity of the disability claim, and paid the benefits under the policy; found that a reasonable person would conclude that the insurer's denial of long-term disability was arbitrary and capricious; and granted benefits and interest running from September 18, 1995, the date on which defendant-insurer rejected plaintiff's appeal.
Some of the Court's findings are interesting: For example, the Court found the reasons given for rejecting the information was unreasonable and deceptive because other evidence of the claim submitted by the doctors would have revealed a plethora of details about why this poor man could not work as a tax attorney for Sotheby's. Essentially, the nurse's rejection of the medical evidence "mischaracterizes the quality and detail of the evidence . . .submitted on appeal."
Indeed, First Unum never told the insured that they had rejected the application because one portion of the appeal did not have the physician's signature. Citing Juliano v. Health Maint. Org. of N.J., Inc., 221 F.3d 279, 289 (2d Cir. 2000) (finding an insurer's failure to communicate the reason for denying coverage sufficient evidence to warrant de novo review of the administrator's decision under our old standard). The Court criticized the insurance company for implying that it would have been pointless to undertake any efforts to sort out the obvious and facial discrepancies in his record by "hiding behind a terse initial response to a set of questions it posed three months earlier. Essentially, they ignored the evidence they didn't like and relied heavily upon evidence that was inconclusive of his disability.
Had he been told what their problem was, the insured would have "had no trouble addressing First Unum's undisclosed and uninvestigated concerns." Moreover, First Unum never explained how he could continue to perform the material duties of a tax lawyer despite these restrictions, and compounded its "deception" by representing that the records reviewed by their physician, when, in fact, no records were reviewed by a physician.
Apparently, this was not the first time that this insurance company was slapped on the wrist by a federal court. The opinion refers to at least 30 other cases).
The bottom line-- don't always believe what the insurance company says, and call your New York insurance lawyer.
UNUM PROVIDENT - AN INTRODUCTION TO PROBLEMS WITH THIS "INCOME PROTECTION" COMPANY
Letter to help you get your complete CIGNA or LINA file
Dr. Fantasia finds fibromyalgia Plaintiff disabled
In Whaley, Judge Thomas M. Rose found that the Defendant claims administrator abused its discretion. Dr. Fantasia, Plaintiff's chiropractor, opined that Plaintiff was disabled. That was the extent of Dr. Fantasia’s role. However, Dr. Fantasia’s name alone rates a headline.
Whaley was diagnosed with fibromyalgia. She completed a Daily Activities Questionnaire (“DAQ”) and an Employee Assessment Report (“EAR”). After completing those two forms, Ms. Whaley provided various doctor reports indicating she was disabled. The DAQ was 13 months old and the EAR was 11 months old on the date the claims administrator denied the claim.
Judge Rose found that the claims administrator abused its discretion in denying Plaintiff’s benefit claim. Judge Rose reasoned that, since the claims administrator had more current evidence from Whaley’s doctors at the time of the denial, at the very least it should have obtained updated DAQ’s and EAR’s at the time it denied Whaley’s claim.
Court awards $300,000 in COBRA penalties
A federal court in Nebraska recently
imposed penalties of over $300,000 plus attorneys
fees. Delcastillo v. Odyssey Resource Management Inc., 320 F. Supp. 2d 889 (D. Neb. 6/11/2004). Here, the court found that the participant and his family suffered particularly severe consequences as a result of the lack of health care coverage.
CANCER TOPS MOST FREQUENT CAUSES OF LONG TERM DISABILITY CLAIMS
12 percent – Cancer
10 percent – Complications of pregnancy
10 percent – Joint/muscle/connective tissue diseases
9 percent – Back injuries
8 percent – Cardiovascular disease
Labor Employment Law Blog: Federal Disposal Rule
We have a shredder for small jobs-5 pages at a time or less. We have also hired a shredding service to take care of the big jobs. The shredding service provides a free locked bin for us to fill. At the end of each month, or earlier if we fill the bin, they take the bin and destroy the medical records. All ERISA disability firms should be doing something similar.
Thanks to Sheppard Mullin and the laboremploymentlawblog.com for bringing this to my अत्तेंशन.
NMR (Network Medical Review's) relationship with Liberty Life Assurance Company of Boston
In Denmark, the Plaintiff's counsel, Jonathan M. Feigenbaum [JonF@Phillips-Angley.Com] propounded discovery on Liberty Life to learn how much it pays to NMR each year and how may cases NMR reviewed at Liberty's request and how many NMR actually found were disabled.
Liberty provided this information under a protective order so neither side could disclose it.
Despite finding for Liberty, the Court did disclose the following:
The supplemental evidence shows that Liberty paid over two million dollars ($2,004,656.00 to be exact) to Network Medical Review--Elite Physicians from 2001 through 2003. While this amount shows that NMR certainly has a financial interest in maintaining its medical consulting business with Liberty, any reviewing physician or network of physicians hired by an administrator/insurer has the potential to be affected by the inherent pressure of giving conservative opinions in order to receive more consulting contracts. To demand greater scrutiny on review, there must therefore be something more.
Denmark v. Liberty Life Assur. Co. of Boston, 2005 WL 3008684, * 11 (D.Mass. Nov. 10, 2005). Although the Court did not believe the dollar amount in and of itself was enough to show conflict I believe the Court is wrong. For that kind of money there will be a lot of competition to get the business. There cannot be too much competition on price since the cost of these reviews is relatively cheap. This is true in light of the Court's further disclosure that, during the 2001 - 2003 time frame, Liberty referred 1,204 files to NMR. Denmark, 2005 WL 3008684, *11. This is an average cost per case of $1,665. Thus there is not a lot of room to lower the price and still stay in business.
The Court did draw an inference in favor of the plaintiff as a sanction for not following a court order. The Court ordered Liberty to tell the court how many times (out of that 1,204 opportunities) NMR found in favor of the claimant and not in Liberty's favor. As the Court said,
"I also ordered Liberty to stipulate the number of cases where "they [NMR] have accepted a claim", which Liberty understood to mean stipulating "the number of claims accepted or granted and rejected or denied after a review by a physician retained through NMR and/or Elite Physicians, Ltd." Without moving to modify my order, Liberty refused to make such a stipulation claiming that it was "unable to provide this information ... due to the very substantial burden and expense that would be involved in retrieving and manually reviewing the over 1,200 claims files that were referred to NMR physicians from 2001 to 2003." "
Denmark, 2005 WL 3008684, *11.
As a sanction for refusing to provide the information, the court drew the inference that NMR decided all 1204 claims in Liberty's favor. Ibid. However, it turned out not to be much of a sanction. Instead of closely scrutinizing Liberty's decision, the Judge stated he would give close scrutiny only to the NMR's report. Thus, the Court applied the very lax abuse of discretion standard of review to Liberty's decision and the evidence that Liberty obtained from all sources other than NMR. The Judge should have applied the abuse of discretion standard of review with more bite (closer scrutiny) to all evidence Liberty obtained. If it was willing to contract with a company who always finds in its favor, as the Court inferred as a sanction, then the Court should have cast a jaundiced eye on Liberty's evidence and its behavior.
The Court also accepted the opinion of a nurse over a Harvard rheumatologist. Nurse Kaye...also questioned the usefulness of Dr. Schur's opinion in assessing the Plaintiff's condition for the past six months because his report only provides information for the particular date of the independent medical exam.
Denmark, 2005 WL 3008684, *4.
The next time your insurance company relies upon an IME (or one day of video surveillance) you to quote Nurse Kay's opinion that the opinion is not useful since it is only one point in time.
Allowing a nurse to overrule a doctor is something the Court, in a case in which i was the lawyer, found troubling. As Judge Hoyt noted:
"...when an administrator relies on nurses to override highly trained physicians, the court should decrease the level of deference afforded the administrator. Research reveals no published case directly on point, but indicates that other courts, at least in the context of determining medical necessity, have been wary of giving nurses broad deference. See C.N.S., Inc. v. Conn. Gen. Life Ins. Co., 9 F.Supp.2d 194, 198 (E.D.N.Y.1998); Pritt v. United Mine Workers of Am., 847 F.Supp. 427 (S.D.W.Va.1994).
Gellerman v. Jefferson Pilot Financial Ins. Co., 376 F.Supp.2d 724, 735 -736 (S.D.Tex. 2005).
Mr. Feigenbaum made the argument but the Court did not even mention it.
Allsup, Inc. v. Advantage2000
Sometimes things are not always, as they seem. In the recent case Allsup, Inc. v. Advantage 2000 Consultants, Inc., -- F.3d --, 2005 WL 3054130 (8th Cir. 2005) discovery revealed some things that Allsup may not want its Social Security claimants to know. Both Allsup and Advantage2000 are in the business of assisting disabled persons obtain Social Security benefits. Often the major disability carriers hire one of the two (or one of the others) to help the claimant obtain benefits from the Social Security Administration. The insurance disability carriers are not doing this for altruistic motives. Often the insurance policy allows the insurance company to reduce the amount of benefits the SSA pays to the insured. Thus, it is in the insurance companies’ best interest for you to get Social Security.
Often the SSA makes its claim determination long after the insurance company has paid benefits. The policies usually allow the insurance companies to offset retroactively the Social Security benefits. Paying the LTD benefits before the Social Security benefit is determined results in an overpayment. Since the insurance policy requires the claimants to repay the overpayment the insurance companies want to recover the money. However, the United States Supreme Court in Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 122 S.Ct. 708 (2002) (See PDF page 391), issued a ruling that made it extremely difficult to sue a claimant who did not repay the overpayment.
Allsup, even before the Court issued Knudson, began to develop a system to help the insurance carriers recover that overpayment. Allsup called its program the “Overpayment Recovery System™” or “Seamless ORS™” This system is what led to the lawsuit in Allsup. As Professor Tushnet explains, the Allsup case involved false advertising among other non-ERISA claims. The dispute involved Allsup’s concerns that Advantage2000 may have taken overpayment recovery business from it. Advantage2000 claims it did not enter the overpayment recovery business.
What this intramural squabble revealed is how much money there is in the overpayment recovery business. Allsup claimed that it spent over a $1, 000,000 developing its overpayment recovery mechanism. Allsup, Inc. page 2. What does Seamless ORS™ do? According to Allsup, it involves the ACH backbone and electronic funds transfer. It is a wire transfer (or automatic debit) from the claimant’s bank account to the bank account of the insurance company (after Allsup) gets its fee. Why does Allsup offer this service to the insurance carrier? It is paid for it and paid well if the development costs are any indication. In addition, as Allsup explains “[s]ometimes they [the claimants] can’t resist using this “found” money to pay off mortgages or their medical bills.” Click here to read the brochure.
Another service that Allsup offers to the insurance companies is its ability to identify those claimants who may be interested in a lump sum settlement. Allsup states, “[b]ecause our representatives develop strong and trusting relationships with claimants, many share information with us that they may not share with their employers or insurers.” Since insurance companies agree to settle if it makes economic sense to them this statement should give you a warm fuzzy feeling. Click here to read the brochure.
As the Knudson court and its progeny have held, it is extremely difficult for the insurance carrier to sue a claimant successfully to recover an overpayment. By authorizing the automatic debit the claimant is giving, a third party the authority to make a payment on a debt that he/she may not be subject to a successful lawsuit. Of course, the contract requires that you repay it. However, you need an experienced ERISA litigator on your side to explain Knudson to you. You can find such a person here.
