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Long-Term Disability Claims - Navigating the Complexities

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Long-Term Disability Claims - Navigating the Complexities

Long-term disability claims are complex mixtures of insurance policy interpretation, medical, vocational, and financial issues, often injected with a dose of federal statutory and regulatory interpretation under ERISA. The process can be amplified in pressure by the difficult circumstances of a client who is sick or injured and simultaneously losing their job or occupation. The purpose of this program is to assist lawyers and those otherwise interested in identifying basic issues involved in preparing and filing a long-term disability claim and managing the claims process with the insurance company.

Presenters

Evan Schwartz
Founder, CEO, Managing Partner
Schwartz, Conroy & Hack, PC

Transcript

Evan Schwartz: Hello everyone. My name is Evan Schwartz and I am the founder of the law firm, Schwartz, Conroy & Hack. We are a law firm that represents business and individual insurance policy holders in claims and lawsuits against their insurance companies. We make the insurance companies keep the promises made to their insureds. I'm here today to talk to you about long term disability claims, navigating the complexities. My firm for over 25 years has been representing the disabled professionals and others in claims and lawsuits against insurance companies involving long term disability insurance policies. I wanted to give you some information concerning how to deal with these claims. We're going to start and go right into things with understanding what kind of long term disability insurance coverage you're dealing with.

  If you're a lawyer and a client comes in and they're going to talk to you about either making a claim or having a problem in a claim or what they need to do in order to manage their existing claim or denial, we're going to get into some of the basics and then we're going to move through some things you need to think about an issue spot, to navigate your way through the complexities of long term disability insurance and the claims that get filed under them. Let's talk first about everything, of course starting with a policy. When you are in the long term disability world, if you're dealing with an individual, it's going to start with the policy or the policies. There are lots of different types of policies in the long term disability world. And you want to make sure what your client has in order to figure out what all the issues are and how you are best going to be able to unlock the door to the client's money, or if you're on the defense side, how to deal with those claims and if appropriate to shut down and lock that door to the client's money.

  In any event, let's start with the basic individual disability income insurance policy. The policy that somebody goes to a broker and buys. Typically over the years, that is professionals, healthcare professionals and other white collar professionals are the ones primarily who get marketed these policies. We will occasionally get individuals who are non-professionals with these policies as well. Typically those are CEOs or business owners, more so than anybody else. But most often in my experience, we are representing the healthcare profession, lawyers, accountants, and business owners when it comes to these. The first one is individual disability income insurance. The question is, do they buy one policy? Do they have more than one policy? A lot of these policies include a rider which allows the insured to increase the benefit over the years without additional medical underwriting, only with proof that they're earning enough money to qualify for the increase.

  If they have additional policies that were subject to what we call, a future increase option in the policy, they might have additional policies, but those policies should contain the exact same language as the initial policy from which the future increase options flowed. Sometimes people have multiple policies that they purchase separately at separate times, either from the same company or different companies. You want to make sure that you have the full panoply of those individual policies, so that you know whether or not there are going to be nuances in language or other issues that you need to consider. Another form of disability insurance for business owners. Now we're going to talk about two different types. One is disability buyout insurance, or DBO, which is a form of what was traditionally called key man or key person insurance in the life insurance world. But it's the same thing.

  It provides money to buy out a disabled owner, partner, shareholder of a business. If someone's a sole practitioner, they're not going to have any usable disability buyout insurance, but if there's more than one partner and they have those policies, those policies are going to be something you're going to want to know about if they're a business owner. If they're an employee at a company, it's most likely not going to be relevant at all. But that's a form of insurance that typically provides that if you remain disabled for a period of at least a year or in, or about a year, then the policy may make monthly payments or a lump sum payment to whoever's identified as the owner and beneficiary of the policy, typically the business, which gets reimbursed for buying out the shareholder or the owner of the partner. And then you also have something called BOE or business overhead expense insurance, which covers ongoing monthly business operating when someone is disabled.

  And again, they need to have a business with ongoing operating expenses in order to take advantage of these policies. Those are the sort of three individual type, personally purchased or business purchase policies that you want to explore and ask whether your client has to review for purposes of evaluating what type of claim they have and how best they're going to successfully unlock the door to their benefits. On this topic, we also are going to get into group insurance, which many people either have exclusively, or they have it in addition to their individual insurance policies. But before we get into that, I want to also mention that many life insurance policies contain a waiver of premium benefit if your client is disabled. And so when you're evaluating their situation from a long term disability perspective, it always is a good practice to ask the client if they have any life insurance coverage and to review and make sure that you've reviewed to see whether the life insurance has a waiver of premium benefit for disability and what the language of that waiver of premium benefit is as part of the full scope of your review.

  That's before we move into group policies. In addition to all of that, you have your group disability insurance coverage, which someone may have if they are an employee of a private company or some other, even if they're employee of a public company, it doesn't matter if they're employed and if it's part of an organization, there's a chance that there may be group disability insurance coverage. Those policies, which we'll get into later, if they're a private employer of some kind, are most likely going to be governed by a federal statute called ERISA or the Employee Retirement Income Security Act of 1974. These benefits can be very, very similar to an individual long term disability policy, but for a lot of different reasons they're typically less protective of the insured and the language in them usually isn't good as an individual disability insurance policy, which the insured purchase on its own.

  They're also part of an employer or a larger group, so they're typically annually renewed by the employer and they can be canceled, changed or modified by the employer without any controller input from the insured client or the beneficiary client. Whereas most individual insurance policies that we just talked about, business overhead expense or BOE, DBO, or disability buyout, or just a typical individual insurance policy are non cancelable as long as the premiums are paid on a timely basis to the insurance company. Those policies are what they call non-can in the business, non cancelable, no matter what else happens, as long as you pay your premiums the policy stays in force. Whereas these group policies can change year in and year out. They're a little bit of a riskier proposition from that perspective. But having said that, they could be great policies. They typically insure 60% of somebody's income.

  And if somebody's making a lot of money, they could be a huge benefit. They're capped for maximum benefits, but they can be capped at 5,000 or 10,000 or 20,000 or more. And if someone's making a big salary like a surgeon, their group policy could give them 20, 25, $30,000 a month. And so they're not to be discounted just because the language may not as be as favorable or because they're non cancelable, because they are cancelable, I mean. That's the panoply of all types of policies that you want to be looking for if a client is coming in and talking to you about their long term disability claim. And even if they haven't mentioned any of those other policies to you, you still want to ask and explore whether they have any of them.

  The last thing I'll say about this, if you're talking to a client that is a high, usually a high level employee or an owner, if they're an owner of a business, some type of a shareholder or a partner or a member, they may have disability buyout provisions in a shareholder or operating agreement or owner agreement that provide for reimbursement to them if they become disabled and are unable to perform their duties in the business. In addition, they may have some form of employment agreement that talks about disability. When you are talking to one of these clients or when you're evaluating their situation, to me I'm always running through all of those things. Do you have business overhead expense policy, if appropriate? Do you know whether or not you have a disability buyout insurance policy, if appropriate? Do you have an employment agreement? Do you have some ownership agreement, shareholder agreement, partnership agreement, membership operating agreement?

  Because all of those things are going to contain language about trigger of coverage and entitlement to benefits that you're going to need to know and potentially harmonize with all the other policies when you're evaluating one of these client situations. Okay. That's the basics of, hey, what kind of insurance and coverage is there and what is it for? The next thing is, what do these policies basically insure? The classic individual benefits policy or the good group disability insurance policy is going to insure somebody's occupation and it's going to pay them benefits if they're unable to perform the material, substantial duties of their occupation. That quality language in its best form is going to say, you can't perform the material, substantial duties of your own occupation or the important duties of your own occupation, even if you're working in some other occupation.

  What's the classic example? Well, you're a dentist and you spend your days standing, evaluating and working in patient's mouths all day long. You become disabled and you can't do that anymore because you have a wrist injury, a neck injury, something of that nature, but now you want to own dental labs. The good classic own up occupation definition if you meet it, will entitle you to benefits and you could go out and own dental labs and make more money than you were making as a dentist and still get paid benefits under this policy. Okay? Now, that's the best and classic own occupation language. I'm not telling you that every policy you're going to encounter is going to have that language, but that's the concept of own occupation disability insurance, and understanding that it insures your own occupation and not just any occupation and understanding what the occupation of that person is, is a really important component of evaluating these claims and successfully managing these claims and litigating these claims.

  Do you have what they call an own occupation or own-occ benefit and is the client entitled to that own-occ benefit? And of course, that may present to you along a very different spectrum, depending on when the client comes to see you. Are they coming to see you when they're first filing the claim? Are they coming to see you whether in the middle of having problems, the benefits have been denied, the insurance company's giving them a hard time, the claim forms have already been submitted, the clients already made representations? Are you looking at a potential lawsuit and trying to look back on what was done thus far? But the classic own occupation definition is that. Okay? There are other definitions for total disability that may not be that. They may say you're not working at your own occupation and not gainfully employed in another occupation.

  Now, I will tell you, gainfully employed typically means that you're not otherwise working for wage or profit doing anything else. Okay? But if you're actively working and making active income, that's going to be considered gainful employment, whether full or part-time. And the insurance company's going to say you are not totally disabled within the definition of total disability in the policy if you're working for money doing something else. A caveat to this is, that making investment income or passive income and the distinction of passive versus active income is something that will be reported on an income tax return. In addition to being evaluated from a long term disability definitional perspective, but by bottom line is, if you're making money in the stock market, because your broker bought and sold you some stocks or you have investments of that nature, that's typically going to be passive income and not considered income for purposes of whether or not you're entitled to an own occupation long term disability benefit, or whether you're totally disabled versus partially residually disabled, which we'll get to later.

  But so not working in your own occupation and not otherwise gainfully employed is going to be some of the definitions you're going to see. And then you're going to have definitions that are not the true classic own-occ definition as well, where it says, not working in any occupation and that some definitions will say that total disability means inability to work in any occupation that you are reasonably suited to work in, in the national economy, or that you're reasonably suited to work in based on your education, training, and experience, which is what I would call an any occupation definition versus an own occupation definition. It's important for you to know, what does that definition say? And the other important thing is to make sure you understand what the occupation means in the policy. The words your occupation are often defined, or the word occupation may be defined in the policy. You need to see what that definition says.

  In the classic own-occ definition, your occupation is typically defined as the occupation you were engaged in at the time you became disabled. A lot of clients will come onto me and say, hey, I bought this policy to insure me as an orthopedic surgeon. I'm going to say, no, you bought this policy to insure you in the event you couldn't perform your occupation, but your occupation is the occupation you were engaged in at the time you became disabled. If you had morphed from orthopedic surgery to non surgical orthopedics, and you've been doing that for two years, and now you want to make a plan, the insurance company's going to look at your occupation as to what you were doing when you became disabled. And for the last two years you haven't been doing surgery. It doesn't matter what you were when you were insured anymore, it matters what you're doing when you file the disability claim and say you're disabled.

  And so what is the definition of your occupation is going to be very, very important when you are dealing with evaluating one of these claims, representing a client in one of these claims and working on making sure the client gets their benefits. Now, the classic problem that I've seen over the years, is that people change their occupation because of their disability and continue to work because they don't want to give up working, so that if you are a surgeon or a dentist or engaging in some high level profession like that, they change. They stop doing the harder surgeries. They stop doing the harder procedures. They stop taking call. They morph into nonsurgical procedures, and then they say, hey, I'm disabled for being a surgeon. I'm disabled for being some type of dentist that performs, like an endodontist versus a regular dentist, but they went to regular dentistry or they stopped doing the harder procedures because they couldn't work in the mouth for that many hours.

  Well, now you have a problem because you never made a claim back when you changed your occupational duties. And now I wind up looking at, and my firm winds up looking at, wait a minute, can we say that this person was disabled three years ago and just was late in filling a claim and what are the consequences of that? And can we prove that they were disabled three years ago from being a full-time surgeon and that when their income level was that much higher and their duties and activities were that much higher? Can we backdate a claim? What is the consequences of trying to backdate that claim to the insurance company? I will tell you that this fits into a concept in the insurance world called trigger of coverage, right? When was coverage triggered under the policy? Well, as I like to explain, as an example, trigger of coverage applies to almost all insurance. But to use a simple example, if your house burned down on January 1st, no matter what happened with regard to your homeowner's policy, the trigger of coverage was the date that your house burned down, because that's when the event or the loss occurred. Right?

  Now when you take that into disability world, your trigger of coverage was the date that you had an injury or a sickness that either prevented or limited you from performing the duties of your occupation. And when that was, has nothing to do with when you notified the company, when you gave them proof you were disabled or anything else. All that matters is that you can prove that you had a sickness or injury which limited or prevented you from performing your occupational duties. And if you're a partial, residual, it may be that you also had to drop an income as a result. But if you had those things, you triggered coverage even if you didn't know it and you didn't tell anyone about it. And so we get a lot of clients coming in, lawyers, accountants, doctors, dentists, other healthcare professionals that have that conundrum where they change their occupational duties, but never made a claim and now we're trying to figure out if we can backdate it.

  That is a good time for me to morph into the other disability definition, which is residual or partial disability. Number one, what is it? Well, as I just explained in my prior explanation about trigger of coverage, it usually occurs when you have an injury or sickness which doesn't prevent you from completely doing your occupation, but you just can't do it for as many hours as you did before. Or you can do some of the duties, but not all of the duties. You can perform the minor surgeries, but not the major surgeries. You can still do some harder procedures, but it takes you three times long to do them. Those are the types of things where you're now limited from performing the duties of your occupation. And once again, as I tell you, you've always got to go to the policy.

  Number one, does the policy give the insured partial or residual disability income insurance coverage, and under what terms? Now, to qualify for benefits under a partial or residual disability definition, most policies as part of the definition, require that in addition to having a reduction in duties or hours due to a sickness or injury, you also have to have a sufficient drop in income to give you a potential proportionate amount of the disability benefit that you are insured for under the policy. And some make it part of the definition. Some also don't make it part of the actual definition of disability, but they'll say you still need a reduction in income to qualify for benefits. That is a whole nother analysis that needs to be performed when you are trying to figure out, well, this person says they're residually disabled. Okay. Assuming the policy has a definition that provides for it. Now we have to analyze it.

  Okay. When were they limited due to sickness or injury? At that time did they see a doctor? Did they get a diagnosis? Is there going to be medical support during that timetable? Okay. Is there medical support? Now can we prove a reduction in their duties and gathering and marshaling up that evidence? And then the third part, can we prove that during that timetable they also had a drop in income, sufficient to entitle them to benefits under the policy? Most policies require that you have a minimum of a 20% drop in your prior income before you're potentially entitled to a benefit. Some policies say you need maybe a 25% drop or a 20% drop or a 15% drop. It just depends on how the policy reads. But most of them say, if you have at least a 20% drop in your income, you're going to be qualified for benefits.

  You start analyzing those things and that's when you get into another interesting issue when you're looking at these claims is, what was the date that the client actually became disabled under the policy? When did all those three things, reduction in duties, medical support, and drop in income, all come together? Such that I can determine whether or not and when this client met the definition of partial or residual disability. Okay? Those are the components, an injury or a sickness that caused a reduction of the ability to perform the occupational duties and a competent drop in income. That's the basics of, okay, what do these policies do and what is their purpose? These policies have other features, all of them do, but understanding the basics of how they work is the first step to evaluating these policies, making sure you have the complete coverage and all the different types of coverages that may exist for the client. Okay? And then determining what they are claiming and what the policy support.

  Okay. Let's move on. You've got that. You also have to understand when you're looking at these policies and typically you're going to the declarations page, how much monthly benefits somebody's entitled to, and if they're residual and you're going to have to try to calculate and estimate what the partial benefit amount is that they're entitled to, which is a whole nother analysis. We've got an example here in the materials. And then the next question is, what's the maximum benefit amount and what's the maximum benefit period and the waiting period under the policy or the deductible period? Most policies have a waiting period anywhere from 30 days to six months before someone can be eligible to receive a benefit out the policy. The old individual policies will have the shorter ones. The group policies typically have the longer ones. You just have to look at the policies and see how long the waiting period is. The waiting period like a deductible is a period where the insured needs to still be disabled, but is not entitled to receive any money.

  The most typical waiting period in an individual policy you're going to see is 90 days. That is because 90 days is a date that the insurance companies have determined is a good length of waiting period to get rid of basic surgery claims, basic illness claims and pregnancy and delivery. They get around a lot of having to pay on those short term claims when they use at least a 90 day waiting period. Okay. And then does the policy pay to age 65? Does it pay to social security retirement age? Does it pay for life? There are a lot of policies that have lifetime benefits, but there are all older policies and the older policies will have a full lifetime benefit typically before somebody reaches age 65. Or the lifetime benefit may be less generous for someone that's disabled due to a sickness versus an injury, where that person may need to be totally disabled earlier than age 65, in order to get the lifetime benefit for sickness. Some policies have a descending benefit where at a certain age the lifetime benefit starts going down.

  If you were disabled before the age of 60, you might get the full benefit. Before the age of 61, you might get 90% of the benefit or 80% of the benefit. Before 62, 60% of the benefit. It keeps dropping as you get older. Again, you've got to look the policies and see what is the trigger of coverage for a lifetime benefit or a later maximum benefit period, if it's available. Okay. Going to shift gears completely now and talk a little bit more about ERISA and understanding just for purposes of issue spotting, when ERISA may apply to a policy and what that means. As I had previously said, ERISA stands for the Employee Retirement Income Security Act of 1974. It was designed to protect employee trust fund monies after two large companies took the pensions and deferred compensation money from their employees and went bankrupt. Congress quickly jumped in and made this law.

  It was determined that it applied to all types of employee benefits, including those fully funded by insurance. But the most important thing to know when you're looking at as to whether ERISA is going to apply, is that it applies to private employers only. It does not apply to government employment and government would include federal city state, and municipality. It does not apply to church plans. It typically doesn't apply to school districts. And so if it's a private employer, more likely than not you're going to have ERISA applying to your plan. I guess the only thing I'll say there are also association plans like the American Dental Society or the American Medical Association. Those plans typically are not governed by ERISA, because those groups are not employers and they're not private employers. They're just association plans. But you have to be careful when you're looking at these things to make sure you know whether it's going to be governed by ERISA. The insurance companies want these policies to be governed by ERISA and I'll tell you why.

  Number one, if a policy is not governed by ERISA and they deny or terminate a claim, the insurance company, you have a mandatory appeal. You must appeal. If you don't appeal as an insured or a planned beneficiary, you have been deemed not to have exhausted your administrative remedies and will be thrown out of court and you may lose the case entirely. That's number one. Number two, no jury trials. Number three, many plans have something called discretionary authority where the decision by the plan administrator or the claims administrator, I.e the insurance company, is to be afforded discretion by court and not to be overturned unless it's determined to be an abusive discretion. In the tie goes to the runner concept, tie goes to the insurance company in court, not to the insured or plan beneficiary. In addition, discovery will be extraordinary limited when bring that case. In addition, it's a federal statute, so you're going to be in federal court for these cases.

  There are a lot of negatives if you are a planned beneficiary/insured or disabled individual seeking to challenge a determination by an insurance company on a case that's governed by ERISA. There are ways to get around it. There are also certain potential benefits of ERISA, the most significant being you can get cost and attorney's fees if you win the case and you can press for them if the insurance can company voluntarily changes its mind in litigation. They can't stop you from making a fee application. It's a load star application, it's hours for dollars. Lawyers need to assiduously track their time because the court's going to review it and they need to make an application to the court. It's not an automatic.

  Some lawyers like it if they're on the plaintiff side, because they think it's a truncated procedure and they don't have to deal with a trial. But my view of the world personally is, there's nothing better than suing an insurance company than knowing that they have to face down a jury trial of a bunch of people who do don't like them to begin with. In any event, those are some of the things that you need to think about and know about if you're going to be dealing with an ERISA claim. I will tell you that, if you have a case with a policy that's governed by ERISA and one that's not, it can be very interesting determining are you going to bring both in the same court? Can you bring both in the same court? Do you want to do all the discovery together?

  There's just a lot of interesting issues that come up with multiple policies and some that are governed by ERISA and some that are not, which is a little bit beyond, it's a little bit beyond what I want to get into today. I wanted to give you some basics about ERISA and understand what you might be facing in issue spotting when ERISA is involved in one of these claims. Okay. Let's move to the claims process itself. Let's say you've got a client, they come in, you get their medical records and their policies and you understand their occupational duties and you determine that you're going to take on their case, you're going to represent them and you're going to move forward. Well, what happens? With clients that come to us in that stage, the first thing is, well, assuming your doctor's going to support your claim, you have to pick a date to stop working, because you can't be more working and saying, you're totally disabled. You have to stop.

  Big leap for clients, but they do it. Because as I like to say a lot of times, the medical condition drives the issue. If you can't do it because you're unable due to your sickness or injury, well then you're unable and eventually you're just going to get taken out. The first thing you do that you think about that is giving notice of claim to the insurance company. Now, notice of claim in these particular scenarios is really, really simple. In our case, we usually just send a letter to the insurance company that says, we've been retained to represent John Q Public. Please don't communicate with our client or his treating physicians without our participation and consent and direct all future correspondence communications to our office.

  On behalf of John Q Public, we're submitting notice of claim. Please send us the claim forms. Have a nice day. Evan. Right? Basically you just need to identify the insured enough for them to understand who it is and tell them you're making a claim. These policies have provisions for notice of claim, just telling someone you're making a claim. We counsel clients all the time that when we give notice of claim, we don't tell them what type of claim it's going to be. We don't tell them what's wrong with the client. None of it. It's not required. We'll worry about that when we're putting together the claim forms or the proof of disability that we need to file. But in the meantime, all you need to know insurance company is, we're making a claim, give us the forms and don't talk to anyone without us being involved, right?

  That stops the clock running on any further obligations once the notice of claim is submitted. Typically you're going to get in the mail after you submit that notice of claim, you're going to get a letter from the insurance company with the claim forms that they want you to fill out to prove that you're disabled. That's going to include the claimant's forms and the attending physician statement form or forms that need to be filled out and submitted to the insurance company for them to evaluate whether or not they believe you meet the definitions of disability contained in the policy and are entitled to receive benefits. Notice of claim comes in and then ordinarily there's a timetable within which the insurance company is supposed to send you claim forms. They send in the claim forms and then the process of dealing with those begins.

  I will tell you that in these policies, proof of disability or proof of loss or proof of claim is separate from those of claim. Typically the individual policies, some of the group policies, but the individual policies give the insured a year and 90 days typically, from when the claim was actually, not when the claim was made, but when the disability occurred and when covers was triggered for them to submit proof of loss. Ordinarily the insured, unless they've come to you extremely late is not going to be in some time crunch and you are going to have adequate time to prepare for and, or submit this claim.

  Giving notice is important and it's particularly important in states like New York, for example, that allow an insurance company to refuse to pay certain claims or certain benefit amounts if they believe the notice to them was late and was not timely furnished by the insured, right? New York, for example, when it comes to these things has a rule that says, that they can deny claims if the notice was late and there was no reasonable excuse for being late. Then the rule in New York is they don't have to show prejudice to deny the claim. Now, the distinction there is, in New York a claim under these policies is not viewed as an all time yes or no proposition from a notice perspective. Meaning, if I submitted my notice a year late, then I may forfeit my entitlement to benefits for that year, but I haven't forfeited my entitlement to benefits going forward from the date that I provided notice, or maybe even sometime earlier than that.

  And so you could be very late with a claim. You could be two years late, but if there's another 30 years left on the policy, the tail is the two years of late claim and the 30 years of the other 28 years is the doll. And so understand at least in New York that you're not forfeiting the entire claim if it's late. Now, other states are less draconian about notice. And they would say, even if your notice is late, the insurance company has to show that it was prejudiced by the lateness of the notice. And if they can't show they were prejudiced, then the notice will deem to be timely. And showing prejudice is not the easiest thing necessarily, because ultimately records will need to be destroyed and witnesses unavailable, or some documentation that can't be accessed in order for the insurance company to say they were prejudiced by the lateness of the notice. And again, a lot of things that go on in individual benefits policies or individual policies that are governed by state law involve the specific state law that's going to apply to your client's claim, to your client's lawsuit and understanding that is beyond the scope of this particular review. But I can tell you it's a complex and important issue.

  Okay. Moving on to the next topic, we're going to of talk a little bit about establishing necessary medical support. We've had many, many clients over the years who come in and they don't have sufficient or adequate medical support. It's a major, major problem. You become in certain ways an amateur medical professional when you're exploring and meeting with these clients and you learn from experience that there are certain things that you need to do and not do. But ultimately, as I always like to say, I can do a lot to help a client get paid on a long term disability claim or on a long term disability lawsuit, but without medical support, I'm doomed. You need to have the appropriate support of an appropriate doctor. Someone comes in and, have they seen a doctor? What are their symptoms?

  Is the doctor appropriate to diagnose their symptoms and tell them what is going wrong with them? Is that the right doctor to treat those symptoms and will that doctor support disability if the client needs to stop? Now, I always tell clients that one of the last things they need to do before they decide whether they're going to hire us to submit a claim for them, is to ask their or doctor, will they support them stopping work and filing a claim. It doesn't mean they need to get any more involved in the process as a client than that. We can take it from there, but we need to know their doctor's going to support them before they stop, and that doctor is the right doctor to support the claim and that the doctor's medical records are going to be consistent with the support for that claim.

  One of the other things I talk about with clients all the time is something that I like to call documented deterioration. Is it documented in the medical chart that your condition has been deteriorating over time? Because you started to not feel well and you continued to do your job, and then you fell worse, but you're still doing your job. Well, are you going to the doctor? Are you reporting more and more symptoms saying you're having more and more difficulty and is the doctor recording that stuff in the doctor's chart? Documented deterioration so that when you reach the point where you say, I need to stop, and the doctor says, yes, I'll support you, there is a paper trail showing that you've been getting worse over time, that you need to stop. Now, I'm not saying that works for every client that comes in, but there are many times when you need to make sure that's curbed. Because a lot of times the client's working and then just stops, and the insurance companies think of what changed between Wednesday and Thursday. Why did you stop? What's the problem?

  You were working on Wednesday, how was your conditions such that it was so bad you couldn't do it on Thursday? We all know that these things run along a spectrum, pain and limitations and ability to do things. If you can have some documents deterioration in the medical charts sufficient to show that drop, so that when you decide to stop work the record support it, is something that I'm always talking about. Again, qualifications of the doctor. Okay? If you have an arthritic condition, you want a rheumatologist. If you have a spinal condition, you're going to want an orthopedist or a neurologist or a pain management specialist. If you have a mental or nervous condition, you're going to need most likely an MD psychiatrist, but at a minimum a licensed psychologist. A social worker is not enough.

  Does the person have a diagnosis? Do they understand what's wrong with them and is there a doctor going to support the claim? Those things are critical if someone is going to submit one of these claims and ultimately get paid. A lot of times also you want your doctor to be able to advocate a little bit, to write a narrative, to fill out a little bit more of an expressive attending physician statement that explains a little bit of the conditions and limitations. Some doctors don't want anything to do with this process at all. Some doctors understand completely and know it's part of their job. Some doctors, especially surgeons like to say, hey, I fixed you and now don't want to be part of an ongoing problem where the surgery wasn't successful, where the patient still has pain and limitations. They just want to say, hey, I went in and I cut. It was all good and I'm done with this. Generally speaking surgeons are not a good long term play to support these claims.

  Ultimately you're going to need to see whether or not that surgeon's going to help you after they say expected recovery date is six months from now and you're not recovered. In any event, getting the appropriate medical support is a critical thing to supporting the claim. Sometimes you have multiple disabling conditions and sometimes you need more than one doctor, because one condition in and of itself may not totally disable or disable you at all, but it may be a combination of conditions. What we call comorbidity in the business. Multiple conditions that together disable you, and that needs to be assessed and evaluated the purposes of determining who is going to and who needs to support this claim. At the end of the day, that is a very, very important component, is getting that medical support, getting it right, getting those medical records, making sure when you read them, that they show some level of deterioration and support for the person's claim, because the insurance company's going to gather up all those medical records, and they are going to look at everything before they acknowledge liability to pay these claims.

  When an insurance company gets these claim forms, they're going to do a detailed medical review. They're going to look at your occupational duties and they're going to look at the history of the policy. They're going to look at a lot of things to make sure that they've dotted their eyes and crossed their T's before they go ahead and authorize a determination that you meet the definition of total disability and that you're entitled to benefits. As I talk about this medical review issue, this morphs us into the manner in which insurance companies respond to the receipt of these claims. Obviously the medical review is one of them, which is why I'm talking about the importance of ensuring that both the attending physician statement, which will need to be submitted by or on behalf of the disabled individual insured, along with the medical records themselves which the insurance companies going to gather, are going to support this disability claim.

  When the insurance company gets these, that's one of the things they're going to do out of the box, is a medical review. I can't stress enough the importance of that. Okay? The next, what comes up. One of the things that they do is a financial review. A lot of someone's an employee and they're making a W2 income and it's pretty simple, but a lot of my clients and a lot of the insureds in the long term disability world are business owners or have multiple earning endeavors. And so it gets a little bit more complicated and the insurance company is always going to demand tax returns as part of its review. They want to verify income. They want to verify that the income came from your occupation and they want to see whether or not you have any other sources of income that could affect your claim for total disability benefits or affect your claim for partial disability benefits.

  If you are going to make a partial, residual disability benefits claim, one of the other things that the insurance company's going to want to see is monthly profit and loss statements during the period of claim disability, to show that you have a drop in income sufficient to potentially entitle you the benefits under the policy. I'll just conclude on this topic by telling you that some policies, in addition to the right to receive that financial information, give the insurance companies the right to conduct a full financial audit of your business and personal books and records, and that you have a duty to cooperate. Draconian? Yes. Does it make sense in certain circumstances? Yes. When someone has a complex series of businesses and a complex structure, they can do a lot of sheltering and hiding of income that may be relevant for purposes of the insurance company's evaluation.

  One of the other things that the insurance companies like to do when they get a claim, is something called an application review or rescission review. This is where they want to see whether or not you the insured made any misstatements on your application that could be used to avoid the policy. And in doing that, one of the things you need to understand is that the contestability clause of these policies, there are two types. The older type, which mostly doesn't exist anymore, said that the insurance company could only contest the policy within two years of its issuance and couldn't contest thereafter. But most policies will say that no statements, quote, except fraudulent misstatements can be used by the insurance company to rescind the policy. In that case, when that language exists, I can tell you that for the first two years under the policy, the insurance company would not be obligated to prove that you lied with intent on your application for the insurance. Because for the first two years, they don't need to prove fraud in order to seek to rescind the policy.

  But after two years, they're going to have to prove that you made a material misrepresentation and did so deliberately. And so they are going to be looking at that very carefully, anytime submits a claim under one of these policies, including going back through your entire medical record, to see if there's anything that you the insured willfully failed to disclose or deliberately misrepresented on the application, giving them a basis to get out of the claim that we're looking at now, and any other claim to actually take back the policy in the concept of rescission where they take back the policy, they give you back all the premiums you paid with interest and the relationship is over. Now, there are a lot of, a lot of permutations and issues that surround those types of cases that I'm not going to get into with you now, but suffice it to say, they're not typically slam dunk cases.

  Now, two other things you can expect during one of these processes includes, I'll just tell you what they are. A field interview and surveillance. A field interview is when a representative of the insurance company comes down to meet with the insured, usually preferably in the insured place of residence, where they sit down and ask him a series of questions about your occupational duties, your restrictions and limitations, the medications you're taking, your life activities and get a sense of who you are. I will tell you that in our practice, the field interview is done in the presence of one of our attorneys, typically at our offices or at some location if the insured doesn't have an attorney outside of their home. We counsel the insureds not to have the field investigator come to their house, because the field investigator looks around and makes judgements about the insured's abilities based on their financial circumstances, based on what they see there.

  If you don't have a lawyer, then we recommend that the client meet them somewhere else, at a restaurant, at a library, at some space that is isn't at their home. In addition, having done so many of these field interviews, we already know all the same questions from the script that are going to be asked and we're able to prepare the client how to present themselves in the best light to the field interviewer. The field interview is one example of what you're going to typically see these days when one of these claims is submitted and the insurance company is evaluating it. Another one that's tried and true for many years now, is surveillance. Insurance companies, I tell my clients, surveillance is not something that you consider whether it's going to happen, just assume it's going to happen. It's the rule more than the exception. Typically the insurance companies hire outside companies and investigators to conduct surveillance.

  It's usually a three day stint and a lot of times to make sure that they can find the insured, they'll have the surveillance run at the same time as either the field interview, so they know where the insured is going to be or an IME when the insured is going to be examined by a doctor that's been hired by the insurance company to evaluate their medical condition, their restrictions and limitations. That leads us of course to the IME. One of the final tactics or tools that the insurance companies use to evaluate whether or not someone meets the definition of disability. Now, of course anyone that's not familiar with the world of independent medical exams, they're not independent. Typically a doctor's hired by an insurance company not to find that the insured is disabled. I'm not going to say that's always the case, but that's been our experience of the vast majority of cases. And so you want to make sure that the doctor doesn't have a reputation and do some research and get some scuttlebutt if you can.

  You want to make sure that the doctor is of the appropriate discipline to evaluate the client's condition and restrictions and limitations. You want to make sure that the doctor understand that they're evaluating this insured's ability to perform their occupational duties and understand what their occupational duties are. Lastly, you want to make sure that that doctor has all of the relevant medical records in their possession, so that they're not overlooking anything that's very supportive of clients claim for disability. Those are some of the tactics that the insurance companies use. That for today is the basics of navigating the complexity of long term disability claims. Again, I am Evan Schwartz, founder of the law firm, Schwartz, Conroy & Hack, representing business and individual insureds in claims and lawsuits against their insurance companies. Making insurance companies keep the promises they made to their insurance. Thanks for listening. Stay well, stay healthy and I'll see you on the next one. Bye-bye.

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