LONG TERM DISABILITY INSURANCE: Another Battlefield For Physicians and Insurance Companies
Throughout the 1970s and 1980s physicians were solicited by insurance agents whose briefcases bulged with long-term disability insurance policies that promised the moon and more in the event of total disability. More often then not, the policies defined total disability as the inability to perform the material and substantial duties of the physician's own occupation. The sales pitch often included assurances that the doctor merely needed medical proof that he was unable to perform his particular specialty to qualify for benefits under the policy. Even more alluring, premiums would be guaranteed at a certain price, and the policies were non-cancelable and guaranteed renewable as long as premiums were paid. Many included provisions for lifetime benefits with cost of living adjustments, with few, if any, exclusions or limitations.
In drafting such generous provisions, the insurance industry was banking on a historical trend: physicians were big earners, whose incomes grew higher each year, and more importantly, they loved their profession, and often worked through disabilities. It was a no brainer, as far as the industry was concerned. It was all premiums all the time with little pay out. All was well with the world until the advent of managed care, or so the insurance industry says.
Apparently, as the grip of the health insurance industry tightened physician's incomes considerably, stoicism was reconsidered by many who no longer chose to work through disability.
At a recent disability insurance conference for lawyers, a former executive of one of the nation's largest disability insurance companies remarked that the industry was tired of paying doctors for "burn out." Clearly, the tide has turned, and doctors once again find themselves in the David vs. Goliath mode opposing the insurance industry. Except in this context, the doctor is the patient and often too sick to fight.
Disability policies are still being offered to physicians, and others, but many are now sold with less attractive endorsements: payment for mental health disabilities for only twenty-four months (unless hospitalized in a mental health facility); elimination of the own occupation clause that pays benefits with proof of total disability when you cannot perform the material and substantial duties of your own occupation; or modified own occupation provisions for a period of 12 to 24 months with payment thereafter only upon a showing that you are unable to perform any work; nonguaranteed premiums (with the threat of an increase hanging over your head like the Sword of Damocles); payment of benefits only to age 65; and a cap on benefit amounts, to name a few.
To navigate the long-term disability waters, it is crucial to understand some basics. First, what type of policy do you have? Is it an individual policy that you purchased yourself? Or is it a group policy purchased by a practice of which you are one of the insureds? The answer to this query is extremely important because it dictates the type of Court review your case will receive in the event coverage is declined or terminated, as well as, the types of legal remedies available.
If you purchased an individual policy, your legal challenge will be based on state insurance laws. In New Jersey that includes the right to sue for breach of contract, and, under the appropriate set of facts, bad faith, and perhaps interest and attorneys fees. You are also entitled to a jury trial. A plethora of protections are at your disposal in such cases.
However, if your coverage is part of a group disability plan, you may fall under ERISA. ERISA, an acronym for Employee Retirement Income Security Act, is a federal statue which governs employee pension benefits. Most physicians are more familiar with ERISA's impact in the health insurance field, under the Patient Bill of Rights.
To determine whether your policy is controlled by ERISA or not, the courts consider a host of factors under the ERISA safe harbor provisions. (That is too long and complex a discussion for the purposes of this article); however, your policy should indicate whether it is governed by ERISA, and list basic statutory rights.
If your disability insurance policy is subject to ERISA, your legal remedies are more limited than those under New Jersey state insurance laws. For example, ERISA does not permit jury trials or bad faith awards. ERISA preempts state laws governing pension and employee benefits, but not those dealing exclusively with insurance. ERISA cases are heard in federal court. It might seem logical then to argue, using the ERISA "insurance" loophole, that unfair claims practices employed by long term disability insurance companies give rise to lawsuits under state insurance laws for bad faith conduct. For the most part, however, the federal courts have disagreed with that construction and have utilized the preemption doctrine in holding that decisions by long term disability insurance companies are governed by ERISA not state law.
In both ERISA and individual policy disability cases, the burden is on the person filing the claim to support it. In the case of physicians, it is important to examine the policy closely to determine whether your particular disability, and the restrictions and limitations you suffer as a result, would qualify you for total disability as it is defined in your policy. In filing the initial claim, you must set forth all the duties of your occupation. For example, a surgeon might list time spent on call, in surgery, examining patients in the office, and administrative work.
Identifying all your work demands becomes critically important when determining whether you remain capable of performing the substantial and material duties of your own occupation. For example, a surgeon with carpal tunnel syndrome in his dominant hand, whose symptoms persist sufficiently long to satisfy the requirements for long term disability, would have a stronger case in an own occupation context, perhaps, than an internist whose dominant hand is not as central to performing his work.
Medical evidence is the linchpin in all long term disability claims. In ERISA cases, where the court review is limited to whether or not the actions of the insurance company in denying the claim was "arbitrary and capricious", all that matters is the evidence that was before the insurance company prior to institution of the lawsuit. The Court will not review any medical evidence submitted beyond that point.
It is important for the physician's treating doctor to complete Attending Physician Forms as requested by the insurance companies. But frequently the Forms are not enough to protect against denial of the claim. Good strategy requires requesting a thorough report from all treating doctors setting forth the dates of treatment, treatment rendered, the diagnosis, prognosis and the signs, symptoms, lab and other objective findings which support the restrictions and limitations. It might even be necessary to request additional reports from treating sources to respond to adverse reports from Independent Medical Examiners hired by the disability insurance companies.
In ERISA cases, a claimant is permitted to review all Plan documents and the claim file which includes the medical reports of independent medical examiners (IME) and other consultants. However, there is no such obligation on the part of an insurance company where individual disability policies are concerned. Once a lawsuit is filed, however, all reports can be requested in discovery.
To memorialize or document what occurs during any IME, I always encourage my clients to request that it be videotaped, or that they be allowed to bring along a health care professional of their choice during the examination. Ordinarily, I discuss my intentions with the insurance carrier in advance of the exam, and if the doctor will not permit a witness or a video, I request another physician perform the IME.
An appeals process occurs in both ERISA and individual policy cases in the event of an initial denial. At each step of the appeal, the case must continue to be medically documented with restrictions in functional capacity described. A claimant should never exaggerate limitations or restrictions in functional capacity. Not only is it fraudulent to do so, but it is likely surveillance video will catch the discrepancy and defeat the claim.
For many years, long term disability insurance carriers limited surveillance to claims where benefits were substantial. I have, within the last several years, represented clients under surveillance whose benefits were as low as $1500.00 per month. It is also not uncommon for private investigators retained by the insurance carriers to question neighbors and "lay in wait" for activity that contradicts comments on the forms and reports submitted by claimants and their doctors.
In one case a carrier was convinced that a man who claimed to be housebound from lumbosacral pain following an unsuccessful laminectomy was capable of returning to work. After months of unsuccessful surveillance efforts, they planted a young beautiful girl in a halter top and shorts in front of his home where she pretended to be unable to change a flat tire. The bait worked, and the man came out of his home and changed the flat for her. Despite the claimant's treating physician's protestations that those actions were uncharacteristic and indeed dangerous in light of his severe back impairment, the video persuaded a judge that benefits should not be awarded.
There are limits to acceptable surveillance and actions on the part of private investigators hired by insurance companies. Improper use of credit information by an insurance company while negotiating a "buy out" with the claimant's attorney was ruled to be a violation of the Fair Credit Reporting Act, and actionable against the private long term disability insurance company.
Overstepping surveillance bounds such as wiretapping phone lines or trespassing on private property have also been found to be actionable as an invasion of privacy rights.
Surveillance is only one of many methods used to not pay claims. Other examples include multiple IMEs, or no IMEs at all, just the use of "medical consultants" who review the forms and reports and simply deny the claim. Sometimes favorable IMEs are ignored or misrepresented to claimants or their attorneys. In other cases, conditions such as chronic fatigue syndrome, fibromyalgia, and lyme disease are rejected out of hand by "medical consultants" who have no expertise in those illnesses. These same tactics are used to terminate existing claims.
The most recent New Jersey Federal District Court case dealing with an ERISA long term disability policy deals with a physician. In Lasser v. Reliance Life Ins. Co., 130 F. Supp. 2d 616 )D .N.J. 2001) and 146 F. Supp. 2d 619 (D. N.J. 2001), an orthopedic surgeon, Dr. Lasser, was denied disability benefits under an ERISA Plan. He then sued Reliance Life Insurance Company, the long-term disability insurance carrier.
The plan defined total disability as "the inability to perform the material and substantial duties of his/her occupation." Dr. Lasser had suffered a heart attack. His treating physician recommended he decrease stress in his personal and professional life. He was thereafter taken off call, cut his patient load by half, and suffered a decrease in earnings from $28,000.00 to $6,000.00 per month.
Reliance denied the claim after an IME doctor rendered an opinion that the results of a treadmill test did not support a finding of a cardiovascular disability, and that he could work without restriction. Several other physicians, including other IME doctors, disagreed and concluded that Dr. Lasser could no longer safely perform the work of an orthopedic surgeon in view of the mortality risk associated with stress. Due to the protracted litigation, and the financial stress he was under, Dr. Lasser resumed on call and emergency room duties. The insurance company pointed to his renewed efforts as proof that he could indeed resume the material and substantial duties of his occupation. The Court disagreed and awarded benefits.
The Court held that the medical evidence "overwhelmingly supported the fact that occupational stress posed a serious risk of further deterioration of Dr. Lasser's heart condition and of another heart attack. It is a basic tenet of insurance law that an insured is disabled when the activity is question would aggravate a serious condition affecting the insured's health." With respect to his return to work, the Court found, "In the context of a disability where the claimant hazards his well being by returning to work against his doctor's recommendations (as Dr. Lasser did) return to work should not affect his benefits determination...This is particularly true where a claimant is forced to work by economic considerations."
The Court also rejected the attempt made by the insurance company to minimize the importance of on call and emergency room duties to an orthopedic surgeon in holding, "the materiality of a given occupational duty depends upon the importance of that duty to the claimant's professional endeavors, measured as a combination of the amount of time the activity consumes, and its qualitative importance to the professional mission. A duty is material when it is sufficiently significant in either a qualitative or quantitative sense that an inability to perform it means that one is no longer practicing the regular occupation."
The Lasser decision was much needed good news and guidance for physicians and their attorneys litigating long-term disability claims in the ERISA context.
In summary, physicians filing for "own occupation" long-term disability benefits must delineate all duties material to their specialty on the claim form. You must also determine whether the claim falls under an ERISA group plan or an individual policy. It is critical that restrictions or limitations not be exaggerated, and that there is abundant medical support for the claim prior to litigation. Always be aware of surveillance and other efforts by private investigators searching for evidence to contradict the functional capacity limitations included on the claim form.
Should you have any questions or problems with long-term disability, or other related matters, I can be contacted at my law firm at 201-444-4493. The initial consultation is free. Good Luck!