Firm News Archives - Page 26 of 76

Insurance Company Investigations of ERISA and Non-ERISA Disability Insurance Claims: How Facebook, Twitter and Instagram May Impact Your Claim (But Not in 140 Characters or Less!)

The McKennon Law Group PC periodically publishes articles on its California Insurance Litigation Blog that deal with frequently asked questions in insurance bad faith, life insurance, long-term disability and short-term disability insurance, annuities, accidental death insurance, ERISA, and other areas of the law. To speak with a highly skilled Los Angeles long-term disability insurance lawyer at the McKennon Law Group PC, call(949)387-9595for a free consultation or visit our website atwww.mckennonlawgroup.comand complete a free consultation form.

Are you active on social media? Do you have a Facebook? Snapchat? Twitter? Instagram? LinkedIn? Do you track your daily activity in fitness or health apps? Do you post to a blog hosted by Tumblr or WordPress? If you answered yes to any of these questions, you are not alone. As of September 2016, Facebook reported 1.18 billion daily active users on average. 150 million people use Snapchat a day, while Twitter has 140 million daily active users (Often including our current President, Donald Trump). Further, many people post daily activity on various other social media platforms and each second on the internet sees 6,000 tweets, 40,000 google searches and over 2,000,000 emails.

But, what does this have to do with disability insurance?

This article explains how social media may impact a disability insurance claim. First, we briefly explain some disability insurance basics: what disability insurance is and what insurance companies may typically require for “proof of claim.” Next, we discuss how investigations conducted by insurance companies may include a search and catalog of the insured’s activity on social media. Last, we provide a list of general best practices to follow should the insured choose to be active on social media. The reason this is important: we have seen numerous disability insurance claims denied by an insured’s use of social media.

What is disability insurance?

Disability insurance provides substitute income when, because of an injury or illness, the insured becomes disabled and unable to earn a living. Typically, disability insurance policies cover a portion of the insured’s earnings when he or she becomes “totally disabled.” Under most policies, the insured is totally disabled when he or she is unable to perform the substantial and material duties of the insured’s own occupation. Just like health insurance, you can enroll in disability insurance through an individual policy or, if your employer offers, through an employer-sponsored group plan. Some plans, usually employer-sponsored group plans, will provide income coverage for the insured’s own occupation for one or two years. After one or two years of coverage, the policy’s definition of total disability may change, requiring that the insured be unable to perform the substantial and material duties of any occupation at your level of education and experience.

What is typically required for proof of claim?

When an insured becomes disabled, he or she must submit proof of claim (sometimes called “proof of loss”) under his or her long-term or short-term disability insurance policy to the insurer. What this entails varies, but the proof of claim requirements for a specific plan or policy are usually located in either the plan/policy’s “Definition” section or in the section that outlines the claim process. For example, the following may be proof of claim requirements in a long-term disability insurance policy:

Regular care by a physician;
Proof of monthly earnings;
Date of disability;
Documentation of the disability;
The extent that your disability prevents you from performing your regular occupation; and,
Medical evidence supporting the disability, including the name and address of any treating hospital, institution, or physician.

The insured should always comply with the proof of claim requirements. Failure to comply with the proof of claim provisions may result in the denial of an otherwise valid claim.

How can social media impact the success of a disability insurance claim?

Once you file a “proof of claim,” the insurer begins gathering information, typically referred to as an “investigation” pursuant to its duty to fully investigate all insurance claims. The information collected may include medical records from attending physicians, medication records from pharmacies, a job description from the employer and occasionally a review of the insured’s social media and even surveillance. Surveillance may include what may be considered more traditional “Sherlockian” investigation (i.e., an undercover video recording of the insured’s daily activities for a certain period of time). The insurer may then use this footage to attempt to show that the insured is not actually disabled to the extent that he or she claims. However, given the increase in activity on social media noted above, many insurers are looking to social media as a cheap and easy way to investigate the validity of a claim.

This can harm an insured’s claim for a variety of reasons, including the fact that almost anything can be taken out of context and twisted to look worse than the reality of the situation. What do we mean by this? Imagine that you are a marketing strategist for a large Silicon Valley company. You received a top-notch education and work hard. As a result, you have progressed through the company’s ranks to a senior level position. Because your work requires intense concentration and sitting for long periods of time staring at a computer screen, a debilitating back problem could mean the end of your career. Suddenly, an illness or injury results in your inability to sit or stand for more than fifteen minutes without incapacitating pain. Because of your injury, spending eight-to-ten hours in front of a computer screen, five-to-six days a week, is no longer feasible without pain medication. However, the pain medication makes you incapable of concentrating and you cannot handle the same workload because of it. Further, the usual stress of your job is only heightened by your inability to perform, which in turn, heightens your pain.

Once you file your disability claim, the insurer may order surveillance of your activities. To continue the above example, imagine the social media search shows an image of you attending a holiday event with your former colleagues. In the image, you have a glass of champagne and you are smiling, sometimes sitting and sometimes standing. To you, this image may show that you went out to an event with your old colleagues because you miss them. To the insurer, this looks like someone who can sit and stand for long periods when it suits him. Sitting clearly does not cause you pain because you are smiling. Further, you may not be taking your pain medications.

Best Practices on Social Media

The above hypothetical is representative of similar analogous situations that frequently occur, but illustrates what just one picture on social media can do to a disability insurance claim, and best practices on social media can go a long way. Best practices may include removing, canceling or suspending all social media accounts. However, if the insured wants to stay active on social media we recommend using the strictest privacy settings. We also recommend that the insured be mindful of the potential that his or her personal information, including photographs, posted videos and words, are accessible to the public and the insurer.

The following are precautions to take while filing a claim:

Up the privacy settings on all social media.
Do not post photos, videos or other depictions of yourself.
Refrain from describing activities, especially those outside the home.
Do not connect or “friend” unknown people.
Do not talk about the claim on social media.
Do not make comments about the condition on social media, as these can be used to show inconsistency.
Do not discuss meetings with your lawyers on social media, as this can be used to challenge attorney-client privilege.
Be mindful that any photo posted can be misconstrued and potentially damaging to the claim, including “party” photos like the one in the example above that may be used to show the insured engaging in reckless or irresponsible behavior.
Avoid participating on any blog, chat room, or message board concerning the insurance company or your claim.

In the future, you may have to be cautious regarding a broader spectrum of information released to third party platforms, such as health applications on your phone that track your daily activity or metadata collecting applications that reconstruct information based on all of the available social media sources. For example, the iPhone has an app called “Health” that is preinstalled when you purchase your phone. People use the Health app to track their daily activity, including steps, nutrition, sleep and more. You can also sync the Health app with other products that track daily activity and vitals, like the FitBit. One example of a metadata app is the “Trial Drone” app, which works as a social media aggregator. The Trial Drone app allows you to pick a location and a date, and then Trial Drone aggregates all the social media data tagged to that moment to reconstruct that date and time. Sean McDonald, a trial lawyer and former private investigator, launched Trial Drone in May of 2016 and lawyers are already talking about the implications for insurance disability claims. To see an article discussing Trial Drone in detail, and the potential implications, see http://abovethelaw.com/2016/05/the-view-from-up-north-new-legal-app-trolls-social-media-for-evidence/.

Again, it is generally good to be aware of the above while filing a claim for disability insurance, particularly given the relative ease of access of information online and how much of it is posted voluntarily. Of course, do not be afraid to socialize, but do be aware of how it may be twisted and used against you when you decide to post it to a public forum like Facebook.

Demystifying an ERISA Disability Insurance Claim: A Timeline for a Misunderstood Employee Benefit

The McKennon Law Group PC periodically publishes articles on its California Insurance Litigation Blog that deal with frequently asked questions in the insurance bad faith, life insurance, long term disability insurance, annuities, accidental death insurance, ERISA and other areas of the law. To speak with a highly skilled Los Angeles long-term disability insurance lawyer at the McKennon Law Group PC, call (949) 387-9595 for a free consultation or go to our website at mslawllp.com and complete the free consultation form.

Disability insurance provides you with income in the unfortunate circumstance that your earnings are halted by disability. Employers often offer disability insurance in the benefits packages they provide to their employees, but many employees fail to take advantage of the benefit. The Employment Retirement Income Security Act of 1974, otherwise known as ERISA, governs most employer-sponsored benefit plans, including disability insurance plans. The legislature enacted ERISA to protect employees from abuse of their employer-sponsored benefits. As such, ERISA requires that the plan administrator, which is usually the insurance company, employer, or both, adhere to a strict standards and deadlines. This blog post demystifies the general timeline of a disability insurance claim under ERISA. First, we briefly explain the basics of a disability benefits plan and when a disability benefits plan will be governed by ERISA. Next, we cover the life of a disability insurance claim under ERISA, including some of the important deadlines that apply.

What is a disability insurance plan and when is it governed by ERISA?

First, what is a disability insurance plan? Generally, long-term disability insurance covers a portion of your income when a disability permanently halts your ability to work. Long-term disability insurance pays a portion of your previous monthly salary, subject to certain offsets for state and federal disability benefits. Before the provider pays the benefits, disabled employees must satisfy certain eligibility requirements. For many disabled employees, the following requirements typically apply:

a minimum length of service;
a minimum waiting period before benefits begin; and,
qualifies under the plan’s definition of total disability.

The next question to address is whether the disability insurance plan is governed by ERISA? When making a disability claim, you will first want to determine whether ERISA applies to your claim. Just like health insurance, employers often provide disability insurance as part of an employee’s benefits package. Unlike purchasing an individual plan directly from the insurance company, ERISA usually governs such employer-sponsored benefit plans. However, it is important to keep in mind that ERISA does not apply to some employers, such as government entities or a churches.

Some of the Important Dates and Deadlines in an ERISA Case.

If ERISA applies to your long-term disability or short-term disability insurance plan, the following timeline is generally applicable after you file your initial claim.

The Initial Claim

Within forty-five days of receipt, a claim should be approved or denied. 29 C.F.R. § 2560.503-1 (f)(3).
But, the plan may extend the forty-five-day time frame by up to thirty days. The insurer must inform the insured of its request for an extension within the initial forty-five-day period. That request for an extension must also explain why the insurer needs additional time, what additional time or information is necessary, whether there are unresolved matters, and when a final decision will be made. 29 C.F.R. § 2560.503-1 (f)(3).
If the insurer requests new or additional information, the insured has forty-five days to respond to the request. 29 C.F.R. § 2560.503-1 (f)(3).
Once the insured has provided the requested information, the claim should be decided no later than thirty days or as required by the plan, whichever date comes first. See 29 C.F.R. § 2560.503-1 (f)(3).

Appeal of the Initial Claim

If the insurer rejects your request for disability benefits, you have 180 days following receipt of a notification of an adverse benefit determination to file an appeal. 29 C.F.R. § 2560.503-1 (h)(3)(i). If you fail to adhere to this time limit, you may have no avenue to further pursue your claim.
An appeal should be decided within forty-five days of receipt by the insurer. 29 C.F.R. § 2560.503-1 (i)(3).
In special cases, review of the appeal request may require additional time. The plan may request up to an additional forty-five days, but must provide an explanation of the circumstances and an expected date when the decision will be rendered. 29 C.F.R.§ 2560.503-1 (i)(3). Additionally, some plans may allow for a second appeal.

The Statute of Limitations to File Suit

If your appeal is denied and once you have exhausted all available administrative remedies, you may file suit in court. However, your ability to file suit is also subject to a separate time limit that is important to keep in mind. If you fail to adhere to this time limit, you may have no avenue to pursue your claim.

Prior to the Supreme Court’s decision in Heimeshoff v. Hartford Life & Accident Insurance Co., 134 S. Ct. 604 (2013), California ERISA lawsuits could be brought up to four years after the denial on appeal. After the Supreme Court’s ruling, an ERISA plan may impose a shorter time frame on an ERISA claim so long as the time frame is reasonable and no controlling statute prevents the limitations period from taking effect. For disability insurance claims in California, it is likely that California Insurance Code Section 10350.11’s three-year time limit will apply and override any shorter limitations period. Section 10350.11 applies a statute of limitations of three years after you are required to provide written proof of loss to the insurer.

How the Department of Labor’s New Regulations may affect the timeline

The Department of Labor (the “Department”) regulates disability and health insurance claims subject to ERISA. Recently, the Department finalized new regulations codified at 29 C.F.R. § 2560.503-1 and discussed at 81 Fed. Reg. 92316. The regulations hope to reduce the potential for a conflict of interest in managing an ERISA plan and better inform the insured as to why their disability benefits were denied. As far as the timeline goes, the following four points are important to remember.

The regulations only apply to claims for disability benefits filed on or after January 1, 2018.
Per the new regulations, the insured may file suit when a claim is “deemed denied” even if the administrative remedies have not been exhausted. The regulations outline that a claim is “deemed denied” once the plan fails to comply with the appropriate regulations.
The regulations also outline the insured’s ability to request the administrator’s written rationale for the alleged violation. The administrator must respond to such a request within ten days, including a written explanation addressing the alleged violation.
Finally, the new regulations require that the final denial adequately describe any applicable contractual limitations period, including the specific date that the statute of limitations to file ends.

For a full discussion of the Department’s new regulations, see our article in the Daily Journal, available at https://mslawllp.com/robert-mckennon-and-scott-calvert-publish-article-in-the-los-angeles-daily-journal-new-regulations-will-benefit-claimants-in-disability-insurance-cases/.

Robert McKennon and Scott Calvert Publish Article in the Los Angeles Daily Journal: “New Regulations Will Benefit Claimants in Disability Insurance Cases”

In the January 12, 2017 edition of the Los Angeles Daily Journal, Robert McKennon and Scott Calvert of the McKennon Law Group PC published an article summarizing the new U.S. Department of Labor disability insurance claims regulations aimed at reducing the inherent conflicts of interest present when ERISA plan administrators review long-term disability and short-term disability insurance benefit claims. In the article entitled “New Regulations Will Benefit Claimants in Disability Insurance Cases,” Mr. McKennon and Mr. Calvert explain that the new regulations require that insurance companies and ERISA plan administrators keep individual claimants much more informed throughout the claim process, which the Department of Labor believed was necessary to ensure a full and fair review of short-term disability and long-term disability claims.

The article is posted below with the permission of the Los Angeles Daily Journal.

New Regulations Will Benefit Claimants in Disability Insurance Cases

By Robert J. McKennon and Scott E. Calvert

Disability insurance cases dominate the Employee Retirement Income Security Act litigation landscape today. According to the U.S. Department of Labor, ERISA employee benefits litigation from 2006 to 2010 involving long-term disability claims accounted for 64.5 percent of benefits litigation, whereas lawsuits involving health care plans and pension plans accounted for only 14.4 and 9.3 percent, respectively. It is no secret that insurers and plans looking to contain disability benefit costs are motivated to aggressively dispute disability claims. Indeed, the DOL estimates that roughly 75 percent of long-term disability claims are denied.

The DOL is charged with promulgating new regulations governing disability insurance and health insurance benefit claims that are governed by ERISA. In late December 2016, the DOL finalized new regulations, codified at 29 C.F.R. Section 2560.503-1 and discussed at 81 Fed. Reg. 92316, aimed at minimizing the conflicts of interest inherent in the administration of ERISA plans and providing individual claimants with additional information regarding the reasons why their disability claim was denied. The DOL indicated that the regulations were “necessary to ensure that disability claimants receive a full and fair review of their claims, as required by ERISA section 503.”

The new regulations must be followed by plan and claim administrators when reviewing disability insurance benefit claims submitted by plan participants and their beneficiaries. The regulations take effect on Jan. 18, 2017, but only apply to claims for disability benefits that are filed on or after Jan. 1, 2018.

The primary change is to reinforce and strengthen the rules designed to avoid conflicts of interest. Paragraph (b)(7) of the rule is designed to “ensure that all claims and appeals for disability benefits are adjudicated in a manner designed to ensure the independence and impartiality of the persons involved in making the decision.” The rule requires that decisions regarding hiring, compensation, termination and promotion must not be made based upon the likelihood that a person will support the denial of disability benefits. For example, a plan is not permitted to hire an “independent” medical expert based on that expert’s reputation for providing administrator-favored reports.

The biggest change is the expansion of what information must be disclosed and included in any denial letter.

First, a denial letter must specially include the bases for disagreeing with any disability determination by the Social Security administration. It requires that a denial letter explain why the plan agreed or disagreed with the conclusions reached by the Social Security administration after it evaluated the same disabling conditions, medical evidence, and job duties.

Similarly, a denial letter must now also include a discussion as to why the denial decision differs from the opinions offered by a claimant’s treating physician. This is important because, typically, a claimant’s treating physicians support the claim for disability benefits. By forcing the administrator to specifically address the contrary positions offered by the treating physicians, the administrator will be forced to confront and refute this significant evidence supporting the claim.

Additionally, the denial letter must include the internal rules, guidelines, protocols, standards, or other similar criteria that were relied upon in denying the claim. Providing a claimant with this information will allow him or her to specially address those rules and standards in seeking to overturn a claim denial.

The final disclosure requirement imposed by the new regulations is that the plan administrator must explain its basis for disagreeing with any experts whose advice was initially sought but not followed. This requirement was added to prevent “intentional expert shopping” by a claims administrator. That is, when an insurance company “may consult several experts and deny a claim based on the view of one expert when advice from other experts who were consulted supported a decision to grant the claim.” By forcing the administrator to acknowledge and explain why it did not follow the recommendation of its hired experts, the DOL seeks to prevent the hiring of multiple experts until an administrator-favorable opinion is secured.

Another significant change to the regulations, codified at paragraph (h)(4), requires the plan administrator to provide claimants, free of charge, any new or additional evidence considered or relied upon when making the benefit determination, thus giving the claimant the right to review and respond to new information even before the final claim decision is made. The new evidence must be provided to a claimant as soon as possible and sufficiently in advance of the date on which the notice of adverse benefit determination is required, thus giving the claimant a reasonable opportunity to address the new evidence or rationale prior to the denial decision being made. This important new rule will allow claimants to augment the Administrative Record because they will have another opportunity to present evidence in support of their claim.

Other changes relate to when a claim is “deemed denied,” freeing a claimant to initiate litigation despite the fact that his or her administrative remedies were not yet exhausted. If a claim for benefits is denied, the claimant is required to appeal that decision before initiating litigation.

Under the new regulations, if a plan fails to adhere to all the requirements in the claims procedure regulations, the claim is “deemed denied” without the exercise of discretionary authority. This gives the claimant the right to file a lawsuit without further delay and will allow a court to decide the merits of the claim de novo, without any deference to the fiduciary who violated the rules. Thus, the claimant would be deemed to have exhausted administrative remedies, with a limited exception where the violation was (i) de minimis; (ii) non-prejudicial; (iii) attributable to good cause or matters beyond the plan’s control; (iv) in the context of an ongoing good-faith exchange of information; and (v) not reflective of a pattern or practice of non-compliance.

The regulations also include a provision that allows a claimant to request a written explanation of any asserted violation. The administrator is required to respond to such a request within 10 days and include a specific description as to why the violation should not render the claim “deemed denied.” However, if a court finds the violation to be “de minimis,” then the matter would be remanded back to the plan administrator for further review.

Importantly, the regulations require a final denial to describe “any applicable contractual limitations period that applies to the claimant’s right to bring … an action [under ERISA], including the calendar date on which the contractual limitations period expires for the claim.” The DOL clearly states in the preamble to the new regulations its belief that any contractual limitations period that expires before the final denial is issued (or even less than a reasonable amount of time thereafter) is per se impermissible.

Finally, the claims procedures apply to any “adverse benefit determination,” which now specifically includes any rescission of disability coverage (unless it was caused by a failure to pay required premiums or contributions on time).

With these regulations, the DOL has acted to protect claimants from ERISA administrators by attempting to minimize their conflicts of interest, promoting an open and robust discussion of the claim, and ensuring that administrators strictly comply with the regulations. These are positive steps for ERISA claimants who file claims for short-term and long-term disability benefits.

As a whole, these changes will greatly benefit claimants and should make it easier to understand the claim review process and the reasons for denial, as well as make it easier to provide documents to support their claims. Indeed, the regulations finally “give some teeth” to the long-standing requirement that administrators engage in a “meaningful dialogue” with disability claimants.

Major Differences in California Long-Term Disability and Individual Disability Insurance Plans

Summary: A Los Angeles disability insurance attorney discusses the differences between long-term disability insurance (typically governed by ERISA) and individual disability insurance plans in California. Contact McKennon Law Group PC today if your long-term or individual disability insurance claim has been denied.

Long-term disability (“LTD”) insurance is a form of private insurance that provides individuals with a financial safety net in the event that they suffer a work-affecting, disabling injury. LTD insurance – as the name implies – covers disabilities that affect a person’s ability to work over a fairly lengthy period of time, typically in the range of three to five years (or more, depending on the details of your insurance plan).

Injured persons in California may be able to qualify for public long-term disability benefits (e.g., Social Security disability benefits or California state disability benefits through the Employment Development Department (EDD)), but it can be difficult to meet the requirements and remain qualified for such benefits over a long period of time. (Indeed, disability benefits paid through the EDD are typically only available for one year.) Most LTD policies will require individuals to file for Social Security and state disability benefits, as they will offset such benefits against their payment to the individual. Workers’ compensation and other income replacement payments will also be offset against the person’s LTD benefits.

Individuals may be able to access LTD insurance through an employee-sponsored plan, though bear in mind that employee-sponsored LTD coverage (which is typically governed by a federal law called ERISA) is still not available to many workers in both California and the United States at-large. Those who do not enjoy the privilege of such access will have to sign up directly for an individual policy.

According to the most recent data from the U.S. Bureau of Labor Statistics, 39 percent of private industry workers participate in short-term disability insurance programs and 33 percent participate in LTD insurance programs. See “Workers with Disability Insurance Plans,” The Economics Daily, U.S. Bureau of Labor Statistics, March, 4, 2015, accessed at: http://www.bls.gov/opub/ted/2015/disability-insurance-plans-for-workers.htm.

When deciding on an LTD insurance policy – whether an individual is choosing from a range of employee-sponsored or individual plans – he or she is likely to encounter a few key differences that can significantly affect one’s coverage.

The following is a short list of such differences.

Benefit Payments and Length of Payment

The amount, type, and distribution of disability benefit payments varies quite significantly between LTD plans.

Effective Coverage Date
Individuals will not be eligible to receive benefits until the effective coverage date has passed. Depending on the plan, the effective coverage date can start as soon as one month (or as late as six months) after the benefit claim application has been submitted. Generally speaking, the sooner an individual’s effective coverage date is, the higher the premium tends to be.

Benefit Payment
When comparing plans, individuals will likely find that some plans have significantly different methods for calculating benefit payments. Whereas some plans will pay out a set value (typically individual disability insurance policies), others will pay out a portion of a person’s total pre-tax employment income (typically LTD insurance policies).

Length of Benefits
Plans vary substantially with regard to how long benefits are paid out, so pay particularly close attention to such terms in the insurance agreement. Some LTD plans will pay out benefits for only two or three years, while others will pay out until retirement age (e.g., 65 years old). As an individual’s injuries may result in a very long-term disability – even lifelong – he or she should carefully consider the benefit payment period of a plan before signing on. The lengthier, the better.

Renewable vs. Non-Cancelable vs. Non-Renewable

Those signing up for an individual LTD insurance plan (as opposed to accessing LTD insurance through an employer-sponsored plan) are encouraged to consider several options: guaranteed renewable, non-renewable and non-cancelable.

Guaranteed Renewable
Guaranteed renewable LTD plans give individuals the option of renewing, but gives the insurance provider the power to raise premiums across the board.

Non-Renewable
Limited renewable or non-renewable LTD plans do not give individuals the option of renewing (or have particularly stringent renewal requirements), but as a result, initial premiums tend to be much lower.

Non-Cancelable
Non-cancelable LTD plans ensure that premiums cannot be raised and that the plan cannot be canceled (assuming that the individual meets the basic requirements for continued coverage). Unfortunately, insurance providers tend to charge higher premiums for non-cancelable policies.

What Constitutes a “Disability” Under Your LTD Plan?

LTD plans can have different interpretations of what constitutes a “disability” such that the policyholder is entitled to benefits. The broader the definition of “disability,” the more likely it is that an individual will qualify for benefits. The benefits may also be somewhat different, depending on the definition.

Some LTD plans define “disability” as the inability to work at a person’s existing job or occupation. This is called an “own occupation” definition of disability. This is a fairly narrow definition that is more favorable to the insured. Under these types of plans, and insured may be able to collect benefits, even if they are working at a different job. For example, if a surgeon has an “own occupation” policy, they would be able to collect benefits if they cannot perform the duties of a surgeon, even if they are able to work as a general practitioner. While sometimes these plans pay out benefits for a limited number of years (i.e., up to five years) if the disability simply prevents the individual from pursuing an existing job or similar jobs, there is typically the option of have the benefits continue until retirement age. If there is a time limitation on the benefits, the policy is intended to give the policyholder enough time to pursue an alternate occupation.

Some LTD plans define “disability” as the inability to work at any job. This is called an “any occupation” definition of disability. This is a broad definition, less favorable to the insured. These plans usually pay out benefits for an indefinite period of time until the plan ends in accordance with the default terms, or until the individual is able to find a different occupation.

Allowance of Part-Time Earnings

Disabilities vary significantly and in many cases, a disability may not result in a total inability to work, but instead may force an individual to work in short bursts. Whereas before the individual may have been capable of working full-time, he or she may only be capable of working part-time after suffering the disability. Certain LTD plans allow individuals to work part-time, but almost all such plans will offset part-time earnings against benefit payments.

Whether an individual is making an ERISA LTD claim under an employer-sponsored LTD plan, or a claim under his or her individual disability insurance plan, the application for disability insurance benefits is very likely to be evaluated by a claim administrator employed by the insurance company, also known as a claims administrator. As such, insurers often deny legitimate claims made under LTD or individual disability insurance policies. To fight the denial of an LTD claim or individual disability insurance claim, it is important that you work with an insurance litigation attorney who has had substantial experience handling denied disability insurance claims.

To speak with a highly skilled Los Angeles long-term disability insurance lawyer at the McKennon Law Group PC, call (949) 387-9595 for a free consultation or go to our website at mslawllp.com and complete the free consultation form.

Insureds May Still Have a Claim for Insurance Bad Faith Even If Their Insurer Offered to Pay the Policy Limits

Under California law, an insurer has an obligation to, among other things, make reasonable efforts to settle a third party’s lawsuit against an insured. As a recent decision rendered by the California Court of Appeals illustrates, “reasonable efforts” entail more than timely offering the policy limit to settle a claim from a third party. The insurer’s conduct must be reasonable given the circumstances and they must do everything reasonably within their power to effect a settlement. An insurer’s responsibilities are not necessarily complete when they offer to pay their policy limits or other amounts agreed-upon by the parties.

Barickman v. Mercury Casualty Company, 2 Cal. App. 5th 508 (2016), arose from a personal injury claim where an individual insured of Mercury struck two pedestrians with her automobile while intoxicated and then fled the scene. The individual then reported the claim to Mercury the following day as an accident. The insured was subsequently arrested, sentenced to prison, and ordered to pay restitution to the injured pedestrians. Mercury offered the policy limits of $15,000 to each of the injured pedestrians to settle their claims against Mercury. The injured pedestrians accepted the settlement, but insisted upon additional language in the release agreement assuring that the $15,000 payments did not cover court-ordered restitution.

Mercury failed to respond to the injured pedestrian’s demand to include the additional language in the settlement agreement by the deadline provided to them. Mercury was later informed by criminal counsel that the language requested by the injured individuals should not be accepted because it could be interpreted as waiving the insured’s right to offset the restitution she is required to pay with the $15,000 insurance payments from Mercury. However, the injured parties’ attorney had conversations with the Mercury agent assuring them that he was simply trying to preserve his client’s basic rights to restitution, and not attempting to eliminate the insured’s right to an offset. Mercury never attempted to revise the language requested by the injured pedestrian’s attorney to clarify that the right to offset the restitution owed was preserved. After the insured assigned her rights to sue Mercury, the injured pedestrians filed suit against Mercury for breach of contract and insurance bad faith which resulted in a $3 million judgment against Mercury.

Mercury appealed claiming that it acted in good faith by offering the policy limits to the injured pedestrians and the only reason the case did not settle was because the injured pedestrians’ attorney insisted upon unacceptable additional language in the settlement agreement. The Appellate Court disagreed with Mercury’s argument, reasoning that Mercury’s position would mean that just because an insurer acted in good faith at one point in a settlement negotiation, it discharged its obligations to act in good faith and had no further responsibility to make reasonable efforts to settle a third-party lawsuit. The Appellate Court upheld the $3 million judgment, determining that Mercury’s policy limits offer was not enough to defeat the insurance bad faith claim. The Court determined that Mercury unreasonably rejected the modified settlement instead of at least attempting to amend the release to clarify the parties’ mutual intent. The Court also noted that the language requested by the injured pedestrians should not have affected the settlement, because a release in a civil case would not release a defendant from the criminal court’s restitution order and did not disturb the insured’s right to offset under California law. Therefore, Mercury did not make reasonable efforts to settle the injured parties’ claim.

Our take: This decision is important because it correctly demonstrates that insurers must make reasonable efforts to settle third-party lawsuits beyond simply offering to pay for a claim based on a settlement offer at or within policy limits, and they cannot fail to engage in reasonable negotiations related to the terms of settlement or release agreements. All of an insurer’s conduct surrounding settlement of a claim must be reasonable given the circumstances. If a conflict arises regarding the terms of a settlement or release, an insurer must pursue all reasonable avenues to resolve a dispute in order to satisfy their obligation to act in good faith.

Have “Quack” Medical Reviewers Caused Denial of Your Long-Term Disability Claim? California Court of Appeal Berates Insurance Company for Controlling Medical Peer Reviews

During their Presidential election campaigns, Donald Trump and Hillary Clinton spotlighted for America flaws in our criminal justice system. They raised questions about whether the criminal probe into Ms. Clinton’s private email server was handled honestly or politically. Conservatives bitterly complained that FBI director Jim Comey’s recommendation not to prosecute Ms. Clinton was inconsistent with the FBI’s fact findings (that she carelessly mishandled classified emails) and influenced by the left-leaning Justice Department rather than justice. On the flip side, Liberals vehemently complained that on the eve of the election Director Comey made an unprecedented announcement that the FBI had reopened its criminal investigation into Ms. Clinton’s private emails, attempting to influence the election.

Whatever your political leanings are, most Americans would probably agree that politics has no business in a court of law, where a person’s freedom or livelihood is at stake. Lady Justice is supposed to be blind.

Like politics, “quack” physicians have inappropriately crept into our judicial process through the insurance industry. This has endangered blind justice for indigent policyholders. Wealthy life, health and disability insurers appear adept at getting a doctor to say just about anything for the right price. Some doctors are willing to sell the truth and abandon science for a steady stream of business from an insurance company. They have increasingly become willing to allow their high-paying insurance company clients to dictate what they can and cannot consider in reaching their professional medical opinions, often limiting them to a review of the insured’s medical records without the opportunity to examine or speak with the insured or his treating physicians. Some insurers seemingly have made this part of their business model to help them deny even legitimate claims made by their disabled or sick policyholders.

The California Court of Appeal recently criticized one such insurance company’s practice in the case of Nickerson v. Stonebridge Life Insurance Company, 5 Cal. App. 5th 1 (2016). While the bulk of the lengthy opinion focuses on the constitutionality of punitive damage awards – it held that a 10:1 ratio of punitive to compensatory damages in an insurance bad faith case passes muster – we have blogged on that topic and the Nickerson case before. See https://mslawllp.com/california-court-of-appeal-finds-that-a-101-ratio-between-punitive-damages-and-compensatory-damages/ (discussing Nickerson v. Stonebridge Life Insurance Company, 219 Cal. App. 4th 188 (2013)) and https://mslawllp.com/in-an-insurance-bad-faith-case-attorneys-fees-are-compensatory-damages-that-can-increase-a-punitive-damages-award/ (discussing Nickerson v. Stonebridge Life Insurance Company, 63 Cal. 4th 363 (2016). What is more interesting as it relates to ERISA and bad faith long-term disability insurance and health claims is that the Nickerson court berates the practice, systemic to the health and disability insurance industry, of hiring doctors to perform “pure paper reviews” of the insured’s medical records and, more accurately, of controlling the process to dictate results favorable to the insurance company.

The Nickerson case concerned a disabled veteran, Tom Nickerson, paralyzed from the chest down with no income other than a very small military pension. He bought a policy from Stonebridge providing coverage for hospital confinement. After suffering a broken leg from falling out of his wheelchair onto the asphalt, Nickerson was hospitalized for 109 days on the advice of his attending primary care physician. He submitted a claim to Stonebridge for his hospital stay. Stonebridge contended only 18 days was “Necessary Treatment” under its policy. On that basis, it denied him policy benefits for the rest of the time he was hospitalized. Nickerson sued Stonebridge for breach of the insurance contract and the implied covenant of good faith and fair dealing (i.e. “bad faith”) seeking his unpaid policy benefits, emotional distress, attorneys’ fees and punitive damages.

As health and disability insurers often to, Stonebridge had hired a medical consultant during the claim to review Nickerson’s medical records and render an opinion on whether 109 days of hospitalization was medically necessary. The insurance company’s doctor:

never spoke with the insured, Nickerson;
never spoke with Nickerson’s attending physicians; and
never examined Nickerson.

Based purely on a “paper review” of his medical records, Stonebridge’s doctor concluded that Nickerson should have been released from the hospital after eighteen days (which became the rationale for Stonebridge denying the claim).

Nickerson’s primary care physician disagreed and even wrote a three-paragraph letter to Stonebridge explaining in detail why hospitalization was required for 109 days, including that “the fracture was complicated by extensive swelling, infection, blistering, and muscle damage that required acute hospitalization, intravenous fluids and antibiotics, and full staff support including consultation with an orthopedic surgeon.” He further explained that because Nickerson was paraplegic and confined to a wheelchair, he could not have managed at home any earlier. Stonebridge never gave that information to its “paper reviewing” physician consultant and never asked him to speak with Nickerson’s treating doctor about his conflicting opinion. It withheld the obviously pertinent information and maintained its claim denial.

The court berated Stonebridge for what it found was a systemic company-wide practice: “Stonebridge’s practice was never to authorize peer reviewers to communicate with treating physicians, thus intentionally concealing material information from the claims’ functional decision-maker so as to limit the amount Stonebridge would have to pay out on its policies.” It held Stonebridge’s conduct in ignoring the opinion of the insured’s treating physician and withholding it from its peer reviewer essentially controlled the peer reviewer’s opinion and supported a finding that the insurer committed fraud warranting punitive damages, not just bad faith. The court held that the insurer’s conduct was “particularly reprehensible” warranting a higher constitutional ratio of compensatory to punitive damages. Finally, the court stated that, “Insurers may not ignore the opinion of treating physicians absent a showing the physician’s judgment is either ‘plainly unreasonable, or contrary to good medical practice.’ ”

Our take: Unfortunately, as the Nickerson case and our recent Presidential Election illustrate, Lady Justice is not always blind. It certainly isn’t for poor, out-of-work claimants fighting against billion-dollar life, health and long-term disability insurers with systemic corporate practices to the highest level of management aimed at denying even legitimate claims to line their own pockets with your hard-earned policy premiums. Justice is not blind for indigent claimants struggling against insurers’ handsomely paid “paper-reviewing” physicians complicit in the insurance industry’s often unfair claims handling practices.

If you have a long-term disability, life or health insurance claim, to equal the scales of justice, you need an experienced attorney to fight hard for you. At McKennon Law Group PC, our lawyers have decades of experience litigating these types of claims, both under ERISA and state insurance bad faith laws. Most of our lawyers previously spent years defending insurance companies against long-term disability, life and health insurance claims. That will give you a distinct advantage because our lawyers know how insurance companies operate and the arguments they are likely to raise from first-hand experience. We will review your claim free of charge. Your matter will be handled on a contingency basis, which means you pay nothing and we receive nothing unless you win a recovery by way of a settlement, claim reinstatement, verdict or award. Let us try to equal the scales of justice for you.