Disability claims filed by physicians, dentists, CEOs, lawyers — any professionals in specialty or high-end occupations — are often the targets of denial.
High income earners buy individual disability insurance, or IDI, to protect their salaries, their families and lifestyles from financial crisis. Many seek to keep a thriving practice or business from falling apart should disability strike. These individuals pay top dollar in premiums, and trust the insurance company to deal with them fairly.
Selling private disability insurance to professionals and executives is big business for insurers. Although costly premiums coming in are assets, steep monthly benefit checks paid out are liabilities. Unfortunately, this often inspires unfair claim handling, wrongful denials, and disability insurance bad faith.
Insurers are old hands at devising ways to deny high payout disability claims. Their tactics often take place behind the scenes, using company-paid doctors, deceptive surveillance, biased medical exams, or simply ignoring credible evidence.
While these expertly planned traps exist, they can be legally defeated.
Our Litigators Help Clients Recover Disability Insurance Benefits Nationwide
If you’re dealing with a denied claim, you should not have to face the insurance company alone. The disability attorneys at Marc Whitehead & Associates work directly with professional individuals throughout the United States to protect their private disability benefits from wrongful denial.
Let us help you create a legal plan of action to get you the benefits you have paid for and deserve. Our attorneys are determined advocates who fight for full and fair benefits and potential damages. We will see your claim through appeal, settlement negotiations, resolution of disputes through mediation, or litigation in court.
We are mindful that our clients put their trust in us when their financial survival is at stake. We know the surest way to resolve IDI claim denials without litigation is to prepare each case as though disability insurance bad faith litigation will be required.
Your disability insurance policy is a legally binding contract. When an insurer wrongly denies your initial claim or terminates benefits with time left on the claim, a breach of contact occurs.
The insurance company may have also breached its duty of good faith and fair dealing that is owed to you as the purchaser of the contract. In this case, the insurer has acted in “bad faith” which may allow you to file suit to recover significant damages beyond the contract.
You need attorneys on your side experienced in federal and state insurance and contract laws, tort law and consumer protection laws.
We fight for the benefits of high-earning professionals who personally protect their substantial salaries should disability force them to stop working.
IDI policyholders are diverse individuals, and we assist them at all stages of the disability claims process. Our clients are doctors, dentists, chiropractors, nurse practitioners and other medical professionals. They are architects, attorneys, bankers, CEOs, tech workers, corporate officers, and investment advisors. They are professional athletes and consultants, small business owners and entrepreneurs.
Many of our high income clients are completely self-protected. Others have purchased IDI policies to supplement their existing association or group disability coverage – because without IDI, the group plan would replace only a very small portion of the income they would lose if they stopped working.
IDI Policies Go By Many Names
Individual policies are referred to as disability income insurance, income protection insurance, and private disability insurance. It is the solution for many professionals, executives and entrepreneurs who need to safeguard their income, their quality of life, and often their businesses’ overhead and equity, should disability interrupt or bring an end to their personal careers.
The following information illustrates what is involved in overturning individual disability claim denials — and how we dig in and help our clients.
We also talk about IDI claims as being non-ERISA, because unlike group disability insurance plans, federal ERISA law does not govern your private claim.
Examine Your Disability Policy’s Terms Carefully
The decisive issue of disability — how disability is defined, how that definition is applied, and how disability is decided — is controlled by the policy definitions and terms.
You are entitled to all insurance contract protections and remedies available to you in your state — much like you would be under your privately purchased homeowner’s or life insurance policies.
One of the first things we do is make sure our clients comply with every step in the insurer’s claim process. We perform an exhaustive review of the policy language. The key is to proceed swiftly and with caution, as your insurance policy may contain traps before you ever make a move.
For example, your policy may have the provision that if you fail to respond to the insurer’s decision by a certain time, you automatically concede to the denial.
Or, the policy may contain an arbitration clause, requiring arbitration before taking civil action. While arbitration may often streamline proceedings, the process can often be biased in favor of the insurance company that wrote the provision.
Terms and phrases used in a policy are never accidental and are just one more way for insurance adjusters to limit or deny coverage. One misstep can result in lost compensation, delays, and unnecessary and costly litigation.
“Own Occupation” Definition of Total Disability
The key feature of individual disability insurance policies is an “Own Occupation” definition of disability.
“Own Occupation” means that disability is defined as your inability to do the material and substantial duties of your occupation—the position you held before disability— not just the inability to perform any job, in or out of your profession.
There are “true” own-occupation disability insurance policies, and there are lesser variations.
The Various Types of Own Occupation Coverage
With private policies, you can purchase anything you want, from a true own-occupation policy to a lesser hybrid own-occupation/any occupation contract.
And while they may be labeled as such, not all “own-occupation” policies are equal. Definitions can contain subtle variations between companies and between policies within companies. What follows are common examples.
- True Own Occupation policies are written to pay full benefits if you are disabled from returning to the occupation / position you held before you became disabled. Ideally, the insurance policy will define your chosen occupation as your specialty, and you may choose to work in a different occupation while you collect full disability benefits. These policies are also known as Specialty Own Occupation.
- Transitional Own Occupation is a form of own-occ coverage that is adjusted to account for any earnings you receive from a job you take while disabled. You will be paid benefits if you are totally disabled in your occupation but are working in another occupation. Limits on monthly earnings are capped usually to not exceed or to match the earnings from your former occupation.
- Modified Own Occupation policies pay total disability benefits when an injury or illness prevents you from performing the substantial and material duties of your occupation AND you are not gainfully employed in another occupation. You may still have gainful work capacity in another occupation, but an insurer cannot deny your claim if you do not elect to return to work. This form of coverage is also referred to as Regular Own Occupation and Own-Occupation, Not-Engaged.
- Hybrid Own-Occupation/Any-Occupation policies are the least expensive and least protective own-occupation policies. They use a combination of Own-occupation and Any-occupation definitions. These policies generally begin as some form of own occupation, and after a set period of time (usually 24 months) the language changes to the any occupation definition, much like group disability policies do.
A favorite tactic of insurers is to grant benefits under the own-occupation period, and then use the shift in definition to any-occupation as their chance to say you are “able” to work in other jobs, and therefore terminate monthly benefits.
- Any Occupation definitions of total disability veer away from your occupation altogether, and thus are rarely issued stand alone as IDI coverage. Any Occupation policies define Total Disability as when your medical condition is so severe as to prevent you from working in any occupation, based on your education, training, and experience. If your insurance company finds that you have any amount of gainful work capacity, they will seek to terminate or deny your claim.
Before any disability benefits are approved, all contractual conditions must be met. It’s not what the marketing material said that governs how your policy defines total disability. It’s what your policy definition says now.
So carefully review your policy’s definition, as it will control how the insurance company administers your claim. On top of that, insurers are always looking for openings in the language through which they might refuse the claim.
IDI Claims Are Controlled by State Contract Law
Individual disability insurance claims are legally treated as private contracts. Claim disputes are governed by your state’s insurance code, contract common law, and the implied covenant of good faith and fair dealing.
This is actually good news. The remedies and protections available to you under your state’s laws are much more claimant-friendly than anything available under an ERISA-regulated group disability claim.
Your self-paid policy is underwritten for you, the insured individual, under varying degrees of customization — as opposed to one plan covering an entire group of employees generally. You own it, and the coverage stays active as long as you pay the premiums.
Potential “Causes of Action” against the Insurance Company
To recover disability benefits under your policy, as a rule, you bring a cause of action for breach of contract.
In cases where the cause of action is based on the breach of the implied covenant of good faith and fair dealing, or bad faith, you may be allowed to recover compensatory and/or punitive damages in a bad faith insurance claim.
And unlike group disability claims under ERISA, breach of contract claims and additional damages for bad faith are decided by a jury if you choose. You have the right to discovery and to present evidence and your own witnesses. If the insurance company resorts to expert witnesses testifying on its behalf, you have the right to cross-examine them.
When Is Claim Denial a Breach of Contract?
When the insurance company does not honor the binding agreement of the policy, you may sue the insurer for breach of contract for failure to perform one or more of the terms of the disability contract. Generally, this means the insurance company failed to pay the benefits promised in the policy.
The lawsuit is based on the insurer’s contractual and legal duties. These duties are anchored in the insurance policy language, including the policy’s provisions, terms, and riders.
A breach of contract claim may involve other causes of action.
Breach of contract cases may also present grounds to sue for Deceptive Trade Practice Act violations and state Insurance Code violations. These actions can trigger eligibility to recover for punitive damages, lawyer fees, and other potential damages in addition to recovering disability benefits.
If your insurance company denied your claim for a simple yet inappropriate reason, that denial is likely a breach of the insurance contract and does not establish bad faith. But without an attorney’s detailed analysis of your claim and your policy, you stand to lose significant compensation and possible damages.
Even the most routine breach of contract cases can be compromised if not handled by experienced disability insurance lawyers. It is what the insurer hopes for and why legal counsel is critical in these cases.
Our disability lawyers can be invaluable in proving the insurer violated the terms of your policy. We cut through the contractual language and find the proper cause of action for an unreasonable denial.
What Constitutes Insurance Bad Faith?
Some insurance companies will push the boundaries. They often get away with bad faith behavior when the insured has no legal counsel. Below is a general idea of unethical practices, manipulation, intimidation and other unreasonable conduct amounting to bad faith actions that insurers may take part in:
Elements of a Bad Faith Insurance Claim Denial
- Intentionally or negligently not investigating claims as they should before denying the claim
- Misrepresenting or misconstruing medical or other records to create a false narrative
- Manipulating or misinterpreting policy terminology
- Failing to state proper cause of claim denial
- Withholding evidence of disability
- Unreasonably delaying the payment of a valid claim
- Unreasonably denying a valid claim
- Underpaying the disability insurance benefit
- Making unreasonable demands to establish Proof of Loss during the claims process
- Unreasonable delay of payments in ongoing claims within statutory guidelines
- Using aggression or coercion to force a settlement
- Applying a person’s prior claim history as basis to deny a claim
- Deceptive trade practices including fraud – such as intentional or negligent false advertising or an insurance agent’s negligence such as misleading someone into purchasing a policy.
- Unreasonably terminating coverage under the policy after a claim has been made
If you can prove certain requirements in these types of cases, depending on your state a bad faith denial of your claim can lead to the recovery of damages in excess of the policy limits. This can include attorneys’ fees, emotional distress damages, economic loss, contract damages, and potential punitive damages award.
Bad faith laws and litigation are the only things that compel some insurance companies to conduct business in good faith, handle claims fairly, and to pay claims promptly.
The following video tells the story of a recent client, a dentist. Her insurance company denied benefits based on deceptive video surveillance and by cherry picking evidence – both tactics intended to make her appear to be perfectly capable of working.
Watch to see how the insurer’s denial was based on violations of her state’s laws, and that the insurer engaged in:
- Breach of Duty of Good Faith and Fair Dealing,
- Breach of Contract,
- Violations of State Insurance Code, and
- Violations of Deceptive Trade Practices Act.
Most States Have Their Own Version of Bad Faith Law
What makes things interesting is that across the country, every state’s insurance laws are unique. What constitutes “insurance bad faith” differs from state to state.
Every state recognizes that an insured can sue an insurance company for failing to settle a disability insurance claim as set forth in the policy.
Many (not all) states further allow for recovery of damages resulting from these suits, including loss of business opportunity, harm to professional reputation, emotional hardship and economic damage beyond the limits stated in the policy.
- Many states have statutes designed to protect policyholders from unfair or deceptive practices by insurance companies. These statutes will detail the type of prohibited actions and the remedies available to the policyholder.
- Many state insurance codes provide the definition of “bad faith behavior” by an insurer and the rules for how insurers must treat policyholders.
- Not all states will allow a bad faith action to go forward.
- Just because you live in a state that allows bad faith claims, that does not mean that is the state law that will apply to your claim.
For a claim to rise to the level of bad faith, the insurance company must have delayed or denied benefits in a manner that is unreasonable, unjustified, vexatious, or done with malice, fraud or oppression, to name a few terms.
Additionally, you need to show:
- the insurance company unfairly interfered with your right to receive benefits under the policy, and
- the insurer’s conduct caused you harm.
You will need to prove the elements that are set forth in your state’s legislature. Certain damages are not available in all states.
In many states, an insured must show more than mere negligence by the insurer, and that insurer acted intentionally. Whether you must prove that the insurer had a malicious or spiteful intent may also vary by state and circumstance.
What Are Possible Legal Remedies for Bad Faith?
There are a wide variety of things that you can do to keep your insurer honest and fight back against illegal practices designed to keep you from getting the benefits you deserve.
Most states have multiple remedies against bad faith insurers that result in recoverable damages for insureds. Depending on your state, you may sue for damages greater than you would have received from the underlying breach of contract claim.
- Contract damages – These are the benefits due under the policy.
- Compensatory Damages – Also called extra-contractual, these damages go beyond the contractual damages, and may entitle you to additional payments to help make up for what the insurer put you through. It is money to compensate you for the actual harm caused by the insurer’s bad faith actions. This might include:
- infliction of emotional distress
- financial hardship
- lost income
- medical bills
- loss of professional reputation
- loss of credit, and
- attorney fees
- Punitive Damages – These damages are generally reserved for cases of oppression, fraud and malice, and other calculated and/or grievous behavior by an insurer. It is an additional monetary award that the insurance company must pay, over and above any contractual and compensatory damages. The purpose is to punish the insurance provider for withholding disability benefits through dishonest, deceptive or fraudulent actions. Amounts are determined by examining the severity and scope of the wrongful conduct.
Quiet obviously, punitive and compensatory damages can substantially increase the verdict amount.
Legal Review of the Insurer’s Conduct: Do You Have a Bad Faith Insurance Claim?
A bad faith action is meant to hold the insurance company accountable for its wrongful conduct. This is a powerful thing for consumers. But because an insurance company unreasonably denies your claim does not mean that you now have bad faith claim.
In every case, our attorneys conduct a detailed legal and factual analysis of the insurance company’s conduct before alleging bad faith conduct. We will help you know your rights in your specific case, what the laws in your state are regarding bad faith, and how to view the situation in an unbiased way. When merited, an attorney at our law firm can help you bring a well-developed bad-faith insurance claim against the insurance company.
It takes experienced analysis to determine whether or not you have the possibility of asserting a claim for bad faith. It is a process. To get the complete story of what the company did and why it took the actions it took, we often take depositions of key claims personnel. You really need to have a skilled insurance attorney help you determine whether bad faith exists.
Occasionally a bad faith action is an isolated case. Your adjuster may be one bad actor operating on his or her own judgement, disregarding the company’s directives and process. In these cases, a few words from our firm to the claims manager might resolve the issue.
In contrast, unreasonable and unfair delays and denials are coordinated and methodical. In cases of willful insurer misconduct, you will need to proactively pursue your legal remedies in court. You’ll also need an in-depth litigation strategy that will meet your specific needs and developments
If you think you were denied insurance benefits in bad faith, contact us as soon as possible.
Private Disability Claim Denials can Move to Bad Faith Litigation Immediately
Unlike group claims under federal ERISA law, your denied IDI claim has no mandatory appeal procedure. If your disability benefits were wrongfully denied or terminated, you are not required to file an internal appeal to the insurance company. You can straight into a lawsuit.
What applies to all state law claims is that you should strive to give the disability insurance carrier every opportunity to do the right thing. Most states require that you put your grievances in writing and establish a certain amount of time required for the insurance company to comply. Often the insurer has a window of time to “cure” and “make right” whatever conduct is alleged. If the insurer complies, the potential for a bad faith claim may be averted.
If the insurance company fails to comply with your requests by the statutory deadlines, or otherwise will not treat you fairly, then we proceed with disability insurance bad faith litigation when it is in your best interest to do so.
We value the most timely and effective methods of reaching a fair and just resolution of cases. Our attorneys maintain contact with your insurer to request a reconsideration or appeal of the decision. We actively work towards pre-litigation discussion or mediation with the insurer before going to trial.
Can I Appeal My IDI Claim Denial?
While private policies do not require an administrative appeal, your policy may give you the option to appeal.
By identifying certain facts and submitting additional evidence in the form of a fully developed appeal, we are often able to obtain favorable results without filing a lawsuit.
When handling your appeal to the insurance company, we develop your case as though bound for litigation. We submit essential forms of evidence that will document your condition and inability to return to your occupation.
This may include supplemental medical records, doctor’s opinions, letters from friends or employers, vocational evidence, expert opinions, photographs, and medical literature, as well as proving the economics of your disability claim. We rebut each reason for denial listed by the insurer in their denial letter to you, and refute any incorrect allegations.
Insurance companies often handle both group (ERISA-based) and individual (non-ERISA) disability insurance policies. To keep things simple, these companies try to apply the same internal appeals procedures for both types of claims. For example, the deadline to appeal your denial would be 180 days for both types. In truth, IDI policies are limited only by each state’s statute of limitations.
Again, it is only the company’s internal procedural steps that apply to both ERISA and non-ERISA appeals. That is where the similarities end.
Should I Appeal?
Often you can and should appeal. However, appealing sometimes can be damaging and not helpful, if the insurance company’s denial was in bad faith.
Here it is essential to contact a disability insurance attorney before making any fateful appeal or filing errors. It will require a bad faith assessment and disability policy analysis before you can understand whether you should file an appeal or a lawsuit in your specific situation.
Negotiating and Mediating IDI Bad Faith Cases
Insurers are often interested in mediation to avoid a lawsuit. We are very receptive to and proactive in scheduling formal mediation as well as pre-mediation settlement discussions.
We may send a written demand or mediation statement to the insurer. In cases where we prepare a demand letter, our attorneys provide a fully outlined case with exhibits that support our client’s claims.
Our attorneys excel in strategies and preparation necessary for a successful mediation. In our experience, thoughtful analysis and presentation of a valid case often gets the insurer to the table for productive settlement negotiations.
Settlements and Buyouts
Insurance carriers will often want to offer a settlement or buyout. Insurers are motivated on several levels to settle quickly, and one common tactic is to lowball the offer to unsuspecting claimants.
Insurers intend to pay much less than the claim’s full and fair value in their first offer — you can easily lose out on tremendous compensation if you accept.
This is when the value of negotiations becomes clear. Our attorneys will protect your rights and help you make proper decisions regarding when to take a lump sum buyout or settlement offer. Insurers especially become motivated to settle or buy out your policy once we indicate litigation or actually file a lawsuit.
We want to make sure you maximize these critical offers, and at the same time, meet your personal needs. Read more about how we help our clients maximize lump sum buyouts.
You want a lawyer who has gained the respect of the insurance industry fighting for you.
Even though the laws and protections are more supporting of consumers, be alert that IDI policies and claim denials are full of traps for the unwary—including lawyers who are not familiar dealing with the disability insurance industry in general, nor competent in the diversity of state insurance contract and bad faith laws and remedies.
You need disability insurance trial attorneys who are well-versed in the appropriate case law during the lawsuit. Bear in mind, you may have both a group plan and IDI coverage, in which case your attorney must have extensive experience in both forms of coverage and the complex state and federal ERISA laws that govern them.
We understand that people generally want to avoid disability insurance bad faith litigation, and our attorneys work to honor this whenever possible. Sometimes litigation is unavoidable and necessary. You want lawyers who are skilled negotiators who have developed good relations with these companies over many years, yet are 100% prepared to aggressively fight for your claim in court.
When you are properly represented by skilled legal counsel, you often find that you’ll be treated much better by your insurance provider. At Marc Whitehead & Associates, our reputation among insurance companies as successful litigators is an asset to our clients, as the insurers often seek favorable resolutions early in the process.
If you’d like more information about our disability claim services or would like to speak further about your case with our firm, we encourage you to call 800-562-9830 or submit an online form to connect with one of our individual disability insurance attorneys.
We represent disability claim denials on a contingency fee basis: no retainer is required, and you pay no fees until we win.