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Michigan Long Term Disability Insurance Lawyer Blog

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From the Insurance Companies perspective, the answer is simple- there is no reason for them to pay.

My clients are universally surprised to learn that under ERISA the only thing you can sue for are the unpaid LTD benefits. There is no claim for emotional distress, or pain and suffering. There is no claim for bad faith or anything else. The vast majority of Long Term Disability claims are governed by a federal law (ERISA) because they are part of an employer provided benefits package.

I regularly hear tragic tales of financial devastation. Clients are unable to pay their bills, are losing their cars and their homes. Clients are forced to rely on their friends and families and the charity of strangers.

Guess what? The insurance companies could care less. You see, the LTD insurer gets to review your claim and decide if they want to pay or not. If they decide they don’t want pay your claim, they simply deny your application and hope you give up. If they approve your claim, then they have to pay and in turn make less money. Every dollar they pay on your claim is a dollar less of profit to line their pockets.
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Most Long Term Disability cases in our office are governed by ERISA as they are non-governmental employer provided benefits. The fact that they are ERISA claims is usually all bad for our clients as the law in this area has a number of inherent anti-claimant aspects. Primary among those aspects is that discovery was typically extremely limited or, more often simply not allowed.

What is discovery and why is it important?
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The federal 8th Circuit Court of Appeals rejected a Long Term Disability Insurer’s (Unum Life Insurance Company) claim denial in the case of Chronister v Unum Life. Citing an important change in the law since Metlife v Glenn the Court determined that Unum’s failure to comply with its own claims handling manual was an important factor leaving the “firm impression that Unum’s decision to deny the claim was an abuse of discretion.”
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Recently, the new majority of 4 Michigan Supreme Court Justices upheld a decision by the Court of Appeals in Thorn v Mercy Memorial Hospital. In Thorn, a mother of young children died as a result of a medical error. When the family sued the defendant’s argued that the children could not recover any of the economic cost of paying to try and replace the services that their mother would have provided during their lifetime. The Court of Appeals rejected this argument.

The Defendant’s appealed this decision to the Michigan Supreme Court. The Supreme Court decided that the Court of Appeals got it right and upheld the decision.Justice Robert Young (who is up for re-election in 2010) strongly disagreed.
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In testimony presented to Congress, the Washington Post recently reported on the testimony of Cigna Insurance’s former VP, Wendell Potter who said insurers “make paperwork confusing because ‘they realize that people will just simply give up and not pursue it’ if they think they have been shortchanged.”

Referring to the industry’s objection to changing its business, Potter said he “worries ‘that the industry’s charm offensive, which is the most visible part of duplicitous and well-financed PR and lobbying campaigns, may well shape'” insurance reform in a way that is more beneficial to Wall Street than to “average Americans.”

This “charm offensive” reminds me of those terrific Allstate commericals where the good looking gentleman says “Your in good hands with Allstate” after some vaguely disturbing scenario is played out in the background. Man, who wouldn’t want to be in Allstate’s hands. Unfortunately, when it comes time to pay a claim many of my client’s feel like Allstate laced up some boxing gloves to cover those “good hands.”

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In my continuing effort to do the best job that I can for my Long Term Disability Insurance clients I attended that ACI Long Term Disability Insurance Conference in Boston this past week. For the the second year in a row that I have attended this conference I thought it was excellent. The seminar presenters were all top notch-clearly some of the best and brightest practicing in this niche area.

There were a number of very interesting and useful sessions dealing with the Supreme Court’s Metlife v Glenn decision and how it is impacting cases across the country as well as various other in depth discussions on a number of relevant issues. The last day we had a panel of a half-dozen federal court judges discuss their view’s of these cases.

Related Posts: “Own” vs “Any” Occupation in Long Term Disability Insurance Plans, The misleading nature of “Own Occupation”, SUPREME COURT SIDES WITH LTD INSURERS, COLORADO JOINS GROWING LIST OF STATES THAT OUTLAW DISCRETIONARY CLAUSES

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Michigan residents injured in auto accidents beware of Auto Insurance tactics.

According to the sworn testimony of a representative of State Farm Insurance it appears that the company paid millions of dollars to a consulting firm to analyze and modify its claims handling practices in the mid 90s. According to the recent testimony of former State Farm employee Robert Butler in the case of Armisted v. State Farm (No. 2:07-cv-10259, Hon. Arthur J. Tarnow) in the US District Court in Detroit, State Farm implemented the ACE program. An integral part of this program was to “capture opportunities.” Those “opportunities” happened to include the indemnity payments made to people who were insured by State Farm in Michigan when they were injured in a car accident. State Farm determined that there was the opportunity to capture millions of dollars annually in payments for PIP benefits.

Mr. Butler confirmed during his testimony that State Farm determined that it was settling too many cases. Accordingly, it appears to this writer that State Farm then decided that more claims should be forced into litigation in order for State Farm to “capture” the potential “opportunities.” In Michigan alone State Farm concluded the potential “opportunity” included about $30 million dollars a year in indemnity payments. Mr. Butler confirmed that the ACE program was a nationwide initiative.

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In a tremendously important decision, the 6th Ciruit court of appeals affirmed today a decision limiting the language that disability insurance carriers can include in their policies to protect themselves from making payments. In American Council Of Life Insurers v. Ross, No. 08-1406 , the panel agreed that the Michigan Insurance Commissioner could restrict an ERISA plan from including language giving itself discretion to interpret the plan language and determine the participant’s eligibility for those benefits.

This is critically important because up to this point in time Court’s were forced to review these cases using the very deferential “arbitrary and capricious” standard of review. In non lawyer speak, the court did not review the evidence to determine if the insurance company made the correct decision. Instead, the court was forced to determine whether there was any reasonable basis for the decision. The practical effect of this limited standard of review was to make it exceedingly difficult for a claimant to win. After all, if the insurance company hires a qualified doctor to review the claim and that doctor says the claimant is not disabled then there is a reasonable basis for the claims decision. (And oh by the way, never mind that we use that same doctor over and over and over and pay him and the reviewing company that he works for hundreds of thousands of dollars a year. they can be fair an impartial. yeah right.)

Now, the courts will review these claims de novo. In other words, the Court will be empowered to determine whether or not the correct decision was made-Whether or not the claimant meets the policies definition of disability. This is really huge.

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In a recent decision, Delisle v Sun Life, the 6th Circuit Court of Appeals affirmed a decision requiring Long Term Disability Insurer Sun-Life to pay disability benefits even though 6 of its hired physicians supported its decision to terminate benefits.

In finding that Sun-Life’s decision was arbitrary and capricious the Court recognized that 5 of the 6 physicians were “under regular contract with Sun Life” and that such physician reviewers may have an incentive to make a finding of not disabled in order to save their employers money and preserve their own consulting arrangements.

The Court also pointed out Sun Life’s failure to attach any weight to the fact that plaintiff was awarded SSD benefits. In fact, Sun Life failed to even acknowledge the award in any of the three denial letters.
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The Second Circuit Court of Appeals cited First Unum’s deception as one of the grounds for granting an attorney’s claim for long term disability insurance benefits. In McCauley v First Unum the Court the Court cited several isntances of biased and deceptive claims review in granting McCauley’s claim for disability benefits.

In an important decision the Court analyzed the claim under the new standard set forth by the Supreme Court in Metlife v Glenn. The Court cited in detail First Unum’s history of deceptive claims handling and abusive tactics in reversing the denial decision.