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Disability Insurance Claims & Coverage for Attorneys By: Brian K. Sims, Esq. According to the Health Insurance Association of America (HIAA), almost one third of Americans between the ages of 35 and 65 will suffer from a disability which lasts at least three months during their careers. As attorneys, it is often our job to represent these individuals and protect their rights from impingement by their health insurers, their employers, their lenders and sometimes even their families. Attorneys work tirelessly to ensure that an individual who has become disabled will be afforded the care, respect and protection that they deserve. But who do we turn to when we become one of the 90 million disabled Americans ourselves? Who helps guide us through the maze of a disability insurance claim? Unfortunately, many lawyers take it upon themselves to handle their own claims, setting aside the adage about a lawyer who represents himself, oftentimes ignoring major problems or failing to recognize red flags which are particular to claims brought by attorneys. Beginning in the early 1980’s, and continuing throughout the decade, the objective of most Insurance companies selling disability insurance was to cover “high end” professionals in areas such as medicine and law. Literally hundreds of insurers competed vigorously to increase their share of this expanding market and disability insurance policies were sold at a fever pitch. As time progressed, and many of these same policyholders aged, claims on these policies began to increase steadily and companies started to lose money on their disability lines. In response, disability insurance companies started to aggressively develop strategies to decrease their liability under these plans. Do you know what weapons you have in your arsenal if you become disabled and are forced to file a claim with your Long Term Disability carrier? More importantly, do you know what weapons your insurance carrier will utilize to attack your claim? Often times, policy holders assume that their claim will be handled in good faith by their insurer, only to find that months, and sometimes years later, they continue to battle a mechanism aimed at delaying and frustrating their claim. YOUR POLICIES Ordinarily, attorneys will be insured under two types of policies: 1) the Individual Disability Income Policy or DI policy, or 2) the Group Policy or Long Term Disability Policy (LTD policy). Individual policies are most often governed by state law, whereas Group Policies are generally governed by the Employee Retirement Income Security Act of 1974 (ERISA). Many insured attorneys will have both DI policies which they purchased themselves and LTD policies which are generally a benefit of group arrangements such as firms, or businesses. There are several important policy provisions which every attorney should be familiar with, both as they are written into their own policy, and the overall effect which these provisions will have on their claim for benefits: Total Disability: Most often total disability is defined as the inability to perform the “material and substantial duties” or “important duties” of one’s regular or “own” occupation. Attorneys should pay close attention to the definitional requirements in their policies and be prepared to provide their insurer with records identifying what practices and procedures are “material and substantial” to their specific practice. For example, a litigator who is only in Court several weeks of the year, but who’s practice is essentially defined by those several weeks, might not be considered totally disabled if he or she is no longer able to appear in court, but is still able to perform the tangential duties of litigation that they were performing before. Residual Disability: Otherwise known as partial disability, companies define residual disability as the inability to perform one or more of the required job duties of one’s occupation, or the ability to perform one’s regular or own occupation but for less time. An insured needs to show that as a result of a decrease in the performance of job duties, or a decrease in the time spent performing those job duties, they have suffered a decrease in monthly income. Policies that contain Residual Disability provisions can be extremely beneficial for the attorney who is not entirely unable to practice but such provisions do allow your insurer much greater access to your financial and professional information which is required in order to show the degree of economic loss you have suffered. Attorneys should be particularly cautious of efforts to include passive income which may not have been generated by the actual practice of law such as rental income, or expert advice income. Physician’s Care: Generally, for a claim to be successful, the claimant must show that he or she is under some degree of care by a physician. The degree of care required by various policies can range from simply receiving medical care, to receiving regular care, to receiving medical care which is “appropriate” for the disabling condition. These provisions become extremely important for conditions which may not require weekly or monthly doctors visits and for conditions in which the medical specialist which acts as a treatment provider may vary such as in cases of back pain, fibromyalgia, or certain types of cognitive distress. Pre-Existing Conditions: Applying for DI policies will require information about sicknesses or illnesses that may have manifested themselves prior to the application date. Non-disclosure of such conditions can be extremely important in the company’s attempt to rescind the policy or deny coverage. An insured needs to be fully prepared to have his or her disability insurance application scrutinized for misrepresentations. Additionally, be mindful of attempts by insurers to “expand” the breadth or scope of a particular question in an effort to create a “nondisclosure” issue where one may not have existed based upon an attorney’s understanding of the question. Incontestability Clause: These provisions state that an insurance company has a limited period of time in which to contest the policy; usually a period of two year. The language of these provisions can vary greatly and may allow for the later rescission of a policy or denial of benefits based on a “fraudulent misstatements” in the application materials. Attorneys should always keep in mind that while a misstatement may have occurred on a policy, that alone is not enough to trigger the application of the Incontestability Clause. The elements of “fraud” need to be satisfied before a rescission can be pursued and many times, insurers will attempt to bridge the gap from a misstatement to a fraudulent misstatement without addressing the elements of fraud. Discretionary Clause: These provisions generally grant “full discretion and authority to determine eligibility for benefits and to construe and interpret all terms and provisions of the group insurance policy.” In giving such discretion to insurers, these provisions are the basis for the standard upon which disability disputes are governed before the courts. Unlike most civil litigation, the standard of review here is not based on a preponderance of the evidence, but instead is based upon whether the insured acted fairly in reviewing the information it received and generated pursuant to a disability claims. This last area of disability law is perhaps one of the most hotly debated in courtrooms and legislatures as an effort is underway, nationwide to curtail the discretion which is granted to insurers as a result of discretionary clauses. In New Jersey, and a handful of other states, efforts to ban discretionary clauses have proven effective and functionally, require insurers to justify their claims decision based upon the facts of the claim, not simply upon the degree of effort that went into their claims decisions. CONCLUSION The bottom line is that attorneys need to be prepared to take on a disability insurance claim and carrier from all angles and this requires a thorough understanding of the entire policy and application, the tactics that the insurance company may use against the claim, and the numerous defenses available in our own arsenal. You must be familiar with the applicable statutory language, existing case law, and the techniques the company will use to combat your claim. Above else, remember that as an attorney, your disability income policy may be as valuable to you as your retirement plan, investments, or mortgage; Treat it as such! *** Brian K. Sims is an attorney and writer/editor in Center City Philadelphia and concentrates his practice on disability insurance matters nationwide. In addition to his practice, Mr. Sims is the Legal Editor of M.D News and an Associate Editor of the Philadelphia Bar Reporter and regularly reports on activities within the city’s legal and medical communities. He can be reached at firstname.lastname@example.org.
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