Issue 15 - December 2003

Are you prepared if you can’t practice?
How to avoid the pitfalls of long-term disability insurance
By Ray Bourhis, Esq., Alice J. Wolfson, Esq. and David M. Lilienstein, Esq.

As a doctor of chiropractic, you are prepared for all the contingencies. Like millions of others, you have paid disability insurance premiums for years. If anything should happen to your ability to work, you and your loved ones are financially protected. Your income is assured by your disability policy. You’re covered — right? Maybe not!

Regardless of what your disability policy says or how long you have had it, some insurance companies will go to extraordinary lengths to keep from paying you the benefits you are owed.

What’s worse, because claims under disability policies are often filed when the benefits are sorely needed for financial and health reasons, the failure or refusal of an insurer to pay can cause dire consequences.

How insurers disqualify claims

Here are some of the more typical tactics employed by insurance companies to disqualify claims:

• Redefining occupation. An “own occupation” policy is meant to protect those who become disabled from their specific occupation. With this in mind, some insurers claim an insured has two occupations and that although disabled from one, he or she can still perform the other.

Thus, the sole practitioner may become a doctor/business owner. In one case, a musician who had been referring overflow work to other musicians was denied benefits based on the argument that she was a musician/booking agent. Such redefining obviously contradicts the whole purpose of “own-occupation” coverage.

• Redefining duties. Closely akin to the above is the argument that in order to be disabled, a claimant has to be unable to perform the “substantial and material duties” of his or her occupation. Sometimes, insurers reinterpret this to require the claimant to be disabled from all duties.

Consequently, the insurer might say that a chiropractor who can still do chiropractic evaluations but not procedures is not disabled as a chiropractor.

• Objective or subjective findings of disability. No policy requires an “objective evidence of disability,” but insurers sometimes demand it anyway. An insured with serious, debilitating back injuries but without positive MRI findings may be in for a long fight. Even if an MRI is positive, some insurers argue that the positive findings are insufficient to cause the subjective complaints.

• The independent medical examination (IME). Some insurers demand an independent medical exam before they pay a claim. However, the findings of these IMEs are often less than objective. For example, some IMEs are doctors chosen by wholly-owned subsidiaries of the insurance company. Others are selected through a rigorous screening process in which companies search for pro-insurance “forensic experts.”

The problem with such IMEs is that they can overrule the opinions of two or three treating physicians who certify a disability.

• ERISA. If an employer pays for a policy (and often, even if not) an insurer may attempt to claim that one’s policy benefits are governed by a federal law called ERISA.

If successful, this tactic limits an insurer’s liability to the past benefits due. Claimants cannot recover for any future benefits or for emotional distress, attorneys’ fees or exemplary damages. They are also deprived of a right to a jury trial.

All of this has the effect of reducing or even eliminating the leverage simply to get a claim paid.

• Surveillance. Insurance companies often conduct videotaped surveillance and other secretive investigations of claimants. The purpose of this type of surveillance is to argue that if an insured can carry groceries, hold his or her children or exercise, then he or she is not disabled. One surveillance company actually followed a claimant in her car to prove her powers of concentration were sufficient to return to work. After six hours they realized they were following the wrong person.

5 steps to protect yourself

Disability insurance is a “good thing.” Here are some things you can do to protect yourself from unscrupulous insurers who may try to deny a claim:

1. Save everything. Those promotional materials telling you how good your policy is, the ones you probably throw away — keep them. Keep every letter your insurer writes you. Do not rely on telephone conversations without either taking notes or without following up every conversation with a note, letter or email.

2. Document everything. Never pick up the telephone to talk to any insurance company representative without a pen and paper. Write down everything — the name of the individual you speak with, the date, the time and everything that is discussed.

3. Know your rights. Educate yourself on the insurance laws and regulations applicable in your state. Read your policy and ask questions about anything you do not understand (and get the answers in writing).

4. Ask for help. Before discussing your claim with your insurance company you should know what you are talking about. Talk to an attorney who is a specialist in the area of insurance “bad faith” law. “Bad faith” attorneys will usually provide free legal advice and assistance to you.

5. Find out about available remedies. If all else fails and your insurer refuses to pay you benefits under your policy, you have certain rights under the law. Although these rights may differ from state to state, in most jurisdictions a company that unreasonably or unfairly terminates benefits can be held responsible not only for the policy benefits up to the present time, but for the following:

• The present value of all your future policy benefits;

• General damages for all losses suffered as a result of an unlawful denial or termination of benefits (for example, if you were forced to sell your house or to declare bankruptcy);

• Emotional distress caused by your insurer’s acts;

• Attorneys fees (many states require insurers to pay for your attorneys fees if you are forced to sue them to recover your benefits); and

• Exemplary damages. Many states permit the recovery of damages to serve as a deterrent to insurers acting unlawfully in an attempt to increase profits.

Ray Bourhis, Alice Wolfson, David Lilienstein are attorneys with the law firm of Bourhis & Wolfson, which specializes in insurance law and policyholder representation The firm is located in San Francisco. They can be contacted through the company’s Web site, www.bourhis-wolfson.com or by phoning 415.392.4660.