Almost every group long term disability insurance policy contains wording allowing the insurance company to reduce the monthly benefit it pays by any other income the disabled person receives.
The most common other income is social security disability. The practical effect can be seen in the following example:
Annual Income: $60,000
SMDA recently helped a registered nurse obtain a favorable settlement of her claim for long term disability insurance resulting from her significant orthopedic spine problems. Our client had worked as a registered nurse for a local hospital system for more than two decades.
As anyone in the nursing business knows-nursing is hard, physically demanding work. The physical nature of the work takes a toll on your body. Over time that toll can accumulate and result in orthopedic harm. In this case, that meant low back problems leading to surgery with long lasting restrictions and limitations.
Despite this, the LTD insurer decided she was not disabled. SMDA filed a comprehensive administrative appeal of the claims denial decision. When the long term disability insurer upheld the claim denial decision, SMDA filed suit.
ProPublica recently filed a very well sourced article on the lengths health insurers will take to deny coverage in order to preserve profits. https://www.propublica.org/article/priority-health-michigan-cart-insurance-vanpatten-denials
When a claim is denied you as the claimant have certain rights.
https://www.propublica.org/article/find-out-why-health-insurance-claim-denied
SMDA was recently able to get Long Term Disability insurance benefits reinstated for a client who had developed significant orthopedic spine problems. The client had last worked at a sedentary job for an engineering firm. The Disability insurance company (Reliance Standard) had initially approved and paid benefits for more than a year. However, they subsequently reversed course and terminated benefits.
SMDA filed a comprehensive administrative appeal including voluminous medical records as well as a comprehensive analysis of the client’s various medical conditions with supporting documentation from numerous treating physicians. Upon review, the disability insurance company agreed to reinstate the benefit claim.
This is a good example of why a claimant should prepare a comprehensive administrative appeal-Because it may result in the reinstatement of benefits without the need for lengthy and time consuming litigation all while the claimant has no income coming in.
The attorneys at SMDA recently convinced long term disability insurer, Cigna to reverse its decision to deny an Oakwood Hospital employee disability insurance benefits when the claim transitioned to the “any occupation” standard.
As with most LTD insurance policies this Cigna policy paid benefits for 24 months if the claimant could not perform the material and substantial duties of her own occupation at a local hospital (Henry Ford). Cigna denied her claim when the definition of disability changed to “any occupation.”
SMDA filed a comprehensive administrative appeal of the adverse benefit decision explaining in detail why the client’s combination of significant medical conditions prevented her from performing the duties of even a sedentary occupation. SMDA was able to provide significant documentation including a favorable SSD decision along with a number of objective test results confirming both her multiple medical diagnosis and the basis for her significant pain and functional limitations.
The team at SMDA recently obtained a favorable administrative decision reversing Cigna’s (Life Insurance Company of North America) decision denying disability insurance benefits for a Registered Nurse who had been disabled by her treating physicians as a result of her significant orthopedic (back and shoulder) problems. The original denial was based primarily on the fact that the claimant was neurologically intact with normal strength and reflexes indicated in the treating medical records.
SMDA prepared a comprehensive administrative appeal including disability statements from the client and her treating physicians, medical records and peer reviewed medical journal articles. We were able to establish that an individual with normal strength and reflexes may still suffer from disabling pain which interferes with their ability to perform the material and substantial duties of their occupation as a Registered Nurse. The disability insurance company overturned the denial decision retroactively reinstating the disability benefits and placing the client back on claim.
Almost every Long Term Disability Insurance Policy I have ever reviewed contains a limited period (usually 24 months) of time that it will pay benefits if a claimant is unable to perform the duties of his/her “Own” (see prior post on how “Own” occupation is misleading) occupation. The plans most commonly contain a change in the definition of disability from “Own”occupation to “Any” occupation after the 24 month period runs. So, after 24 months the claimant must be able to establish that they are unable to perform the duties of “Any” occupation in order to continue to receive benefits. A few caveats-there is also usually a qualifier for “Any” occupation that the claimant may be qualified to perform the identified occupation by education, training or experience. There is also usually an earnings qualified that the identified “Any” occupation must usually pay some percentage (commonly 60 or 80%) of the claimants “Own” occupation.
We see many claims where the Long Term Disability insurer refuses payment past the 24 month “Own” occupation period by identifying some less demanding occupation it asserts the claimant can perform.
In this recent case out of Louisiana the court rejected Cigna’s (Life Insurance Company of North America) efforts to deny a claim by a man who was permanently paralyzed and wheelchair bound. The claimant, Mr. Hughes, had been employed as an electrician when he was forced to stop working as a result of his paralysis. While Cigna initally approved his claim for LTD benefits in 1999, what followed was very troubling.
Despite the fact that he was permanently paralyzed and wheelchair bound, Cigna denied his claim for benefits on at least 4 different occasions. The last denial because he “failed to provide requested documentation.” After the last denial Mr. Hughes failed to file an administrative appeal within 180 days as the denial letter advised. When he finally did appeal, Cigna denied the appeal as untimely.
Mr. Hughes hired an attorney who filed suit claiming that the actual Insurance Plan did not mandate an appeal within 180 days. The Court agreed rejecting Cigna’s argument that Mr. Hughes administrative appeal was untimely. The Court then found:
Anyone familiar with LTD Insurance claims and ERISA knows that you must first exhaust your administrative remedies before filing suit. In other words, you have to try and convince the LTD insurer to reverse its decision to deny the claim for benefits. While this may seem like an difficult task since the LTD insurer who makes the claims decision is the same entity that pays the claim, it is not impossible.
SMDA has been fortunate to convince CIGNA to reverse its LTD claims denial decision in several consecutive recent claims.
The first client was experiencing significant back problems as a result of degenerative disc disease. She was unable to continue her job as a customer service representative for a dental services company. The second client had a number of medical problems including pretty severe carpal tunnel syndrome which caused problems with any repetitive hand movements. Unfortunately, she was unable to do her job which required non-stop typing.
In Rochow v. Life Ins. Co. of N. Am., 2015 U.S. App. LEXIS 3532 (6th Cir. 2015), the Sixth Circuit Court of Appeals (the Court) en banc overturned a previous decision of a 3 judge panel that had allowed plaintiff’s claim for the disgorgement of profits earned by the disability insurer.
Background: Under the ERISA statute and regulations the only traditional remedy for a claimant was the recovery of the monthly LTD benefits that were wrongfully denied. This remedial scheme has one very large problem-there is no incentive for the LTD insurance company to pay the benefits. In other words, if the LTD insurance company denies a claim for benefits, it gets to keep and use the money during the time period it takes for the claimant to file his or her claim, administrative appeal and lawsuit. During that time the insurance company can invest this money and earn a significant return. At the same time, the claimant is deprived of the use of the money. So, at the end of the day, if a claimant wins their ERISA suit for LTD benefits, the LTD insurer only pays the past due monthly benefits and gets to keep the return on the investment. In Rochow’s case the Life Insurance Company of North America was eventually ordered to pay about $700,000 in disability benefits, but it got to keep almost 3 million dollars it had earned on the money while the claim and lawsuit was pending.
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Long Term Disability Insurance Lawyer Blog