Common Deceptive Disability Insurance Company Claim Tactics
Disability insurance company claim denials are often subtle and not readily apparent. The communications you receive may give you the impression that your claim has been approved, yet weeks or months might elapse with no disability payments. When you call the company for an update on the status of your claim, you will probably be put on hold or referred to a client service representative who has limited or no information about your claim.
Delays in claims processing are one of the more common deceptive tactics that keep you from getting the benefits you deserve.
Other common tactics include the following:
- Multiple requests for additional documentation and referrals to physicians for alternate medical evaluations.
- References to the definition of “disability” in your policy and convoluted arguments that refute whether your disability matches that policy definition.
- Questions over whether your disability predates the effective date of your policy.
- Challenges to whether your disability prevents you from performing your job tasks and duties, as well as different interpretations of your job definition, imply you can still perform those tasks.
- Arguments that you failed to submit required or requested documentation to substantiate your claim.
- Charges that you are covered by other group disability insurance that provides coverage that supersedes your private disability plan (e.g., when veterans of the armed forces file a benefits claim under a private plan, the insurer might argue that VA benefits are primary).
- Investigations and surveillance videos that suggest your disability is not preventing you from performing other tasks.
Understandably, disability insurance claims adjusters are obligated to verify an insured party’s claims. However, there is a clear distinction between verifying a claim and acting in bad faith to delay disability benefits payments or deny a claim altogether. Disability insurers that handle thousands of claims annually might use their institutional experience to push back as far as they can before they finally approve a claim.
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An insured party facing delay and denial tactics can overcome the insurer’s experience by retaining a disability insurance denial attorney. They will have equal or greater knowledge and expertise in identifying these tactics. They will challenge all of them and, if the insurer continues to delay or deny payments, file a lawsuit to enforce the disability insurance policy.
In sum, if you have complied faithfully with all your obligations under a private disability insurance policy, including making payments when due and submitting all required information to verify your claim, you deserve to recover your contractual disability benefits.
If you’ve been denied disability benefits or are in the process of battling for your rights to a claim, you’ll probably agree with a recent senate hearing debate that centered on the effectiveness of Employee Retirement Income Security Act (ERISA). The act, which regulates minimum standards for employee benefits, reached the ears of the United States Senate Committee on Finance last September.
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As you may know firsthand, deceptive and misleading tactics are used by many long-term disability insurance companies to deny their policyholders the benefits they deserve. According to hearing committee testimony this problem could be partially caused by regulations put in place through the Employee Retirement Income Security Act (ERISA).
“Abusive insurance company tactics start with having doctors with conflicts of interest review claims,” said Senator Max Baucus, chairman of the Senate Committee, in his opening statement.
“Many of these doctors are employed either by the insurance company or by companies that do a lot of business with the insurance company. These arrangements make it far too easy for the doctors to deny claims, terminate claims, or reject appeals,” he added.
A number of expert witnesses before the committee agreed that the system had indeed gone awry. Ronald Leebove, CRC, DABFC gave written and oral testimony saying his knowledge and findings in the area of vocational rehabilitation indicate serious problems.
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“Do private long-term disability group policies provide the protection they promise?” asked Leebove. “The answer is ‘No.’ There are many tricks and tactics used by the insurance companies to deny claims. Private long-term disability insurance for groups of employees of an employer is covered under ERISA. It is evident that ERISA limits due process, and that legal remedies under it are extremely limited. For example, the claimant is not entitled to a jury trial,” Leebove added.
In other words, the deck is not stacked in your favor; rather the law works in favor of protecting long-term disability insurance companies.
William M. Acker Jr., Senior United States District Judge for the Northern District of Alabama who has been dealing with ERISA for almost three decades said he felt ERISA needed to be fixed, reporting that the situation is getting worse every day.
In his testimony, Attorney Mark D. DeBofsky, an adjunct professor of Law at John Marshall Law School, said “Contrary to the clearly expressed legislative intent, the courts have transformed ERISA into a shield that protects insurance companies from having to face the consequences of unprincipled benefit denials and other breaches of fiduciary duty.”
According to DeBofsky, long term disability insurance companies have little to lose if they don’t pay claims to their policyholders, since they don’t have to pay additional costs or penalties if in the end a court of law rules against them telling them to pay the claim. Often a court will rule the case needs to go back to the insurance company again (as opposed to order payment) since the reason they denied the claim was not a valid reason. In those situations, the insurance company often comes up with another reason to not pay the claim, DeBofsky reports.
Paul Graham, senior vice president, Insurance Regulation and chief actuary, American Council of Life Insurers, represented the disability insurance companies. Graham gave an overview of how disability insurance works, the value of this coverage to consumers, the basics of disability insurance, definition of some terms and his view of the federal and state regulations for disability claims.
He concluded his testimony with the following: “The current framework of federal and state consumer protections affords the all important balance of providing a reasonable cost of coverage and appropriate handling of claims.”
Others hotly contested this claim including Senator Baucus who said, “Abuses like these are not uncommon. Thousands of cases clog the district courts. Many claimants end up in desperate straits. Some lose their homes, their savings, and even their spouses or custody of their children. How do insurance companies get away with these abuses? Unfortunately, loopholes in the law permit them.”
For more information about this issue a videotape and written testimony of the September 2010 Senate committee hearings titled “Do Private Long-Term Disability Policies Provide the Protection They Promise?” is available on the Senate Web site. To set up your free consult, call 800-562-9830.
Client services are provided nationwide by ERISA claim attorney, Marc Whitehead.
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