Health Insurance Archives - McKennon Law Group

Long-Term Care Insurers: Underpricing Policies and Denying Legitimate Claims (Part 1)

Introduction

Long-Term Care (LTC) insurance is designed to cover services and expenses that are not covered by regular health insurance when the insured suffers from a chronic medical condition, disability or disorder, like dementia. These policies typically pay a set daily benefit for reimbursement for needs such as nursing home care, assisted living facilities, home healthcare, home modifications, adult day care services, and care coordination. In California, LTC Insurance is defined in Insurance Code Section 10231.2.Under the statute, LTC insurance includes:

A. Any insurance policy, certificate, or rider advertised, marketed, offered, solicited, or designed to provide coverage for diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services that are provided in a setting other than an acute care unit of a hospital.
B. All products containing coverage for care in a nursing home, convalescent facility, extended care facility, custodial care facility, skilled nursing facility, or personal care home; home care coverage including home health care, personal care, homemaker services, hospice, or respite care; or community-based coverage including adult day care, hospice, or respite care.

Typical LTC policy terms provide for payment of a daily benefit amount and will pay an insured the amount incurred each day they are in a qualified care facility, up to this daily amount. There is often also a total maximum amount payable from which the benefits paid are deducted. A typical LTC policy will pay benefits if the insured is unable to perform a given number of Activities of Daily Living for a given period of time due to a loss of functional capacity, or if they demonstrate severe cognitive impairment.Many early LTC policies provide unlimited lifetime benefits. Most issued today contain a stated limit in lifetime benefits.

The Underpricing Dilemma

In the late 1990s and early 2000s, there was a trend in the insurance industry to issue LTC policies at attractive rates. Many who purchased these policies were middle-aged at the time and are now reaching the age at which they now need to receive the benefits they expect to be paid under the LTC policies. Insurers now realize that they may have issued policies with rich benefits at premiums that are too low to profitably underwrite them. In other words, insurers made erroneous pricing decisions and are now reaping the costs associated with these poor decisions.

The Denial of Legitimate Claims

As a result, insurance companies are denying legitimate claims, including using many of the same tactics that have led to substantial insurance bad faith and punitive damages awards in lawsuits over disability claim denials and LTC claim denials.

For example, LTC insurers deny claims based on illegal policy provisions. In California, insurance companies may not include policy definitions that conflict with statutory provisions as required pursuant to state law. A policy may require the insured to demonstrate “severe cognitive impairment” for a claim to be approved, and the insurer will insert its own definition of what constitutes “severe” impairment. But if “severe cognitive impairment” is defined by law, the insurer’s definition may not comply with the law. Under California law, “Severe cognitive impairment” means a loss or deterioration in intellectual capacity that is (1) comparable to (and includes) Alzheimer’s disease and similar forms of irreversible dementia; and (2) measured by clinical evidence and standardized tests that reliably measure impairment in the individual’s short-term or long-term memory; orientation as to people, places, or time; and deductive or abstract reasoning. See Ins. Code, § 10232.8(e); IRS Notice 97-31.

Insurers might also use deceptive language in their claim forms to wrongly deny claims. The covenant of good faith and fair dealing requires insurers to thoroughly inquire into all possible bases to pay a claim before denying it. See Egan v. Mutual of Omaha Ins. Co., 24 Cal.3d 809 (1979). Also, the insurer has the burden of seeking out information relevant to a claim, so it must communicate with the insured and his physicians in a manner calculated to elicit an informed response. See Hughes v. Blue Cross of Northern California, 215 Cal.App.3d 832 (1989). However, insurers still will strategically word forms to allow for ambiguities to justify denials, such as using varying degrees of cognitive impairment – “mild,” “moderate,” “severe” – then denying any claims not marked “severe.” But the form will use a different definition for “severe” than the statutory definition. Such a denial may not comply with the law.

Insurers also use abusive tactics designed to take advantage of vulnerable insureds, such as insisting on multiple forms to be regularly submitted by each insured, her physicians, and her guardian, then denying the claim for any error found in any of the forms, however minor. Or the insurer will require specific information from the insured in a confusing manner that prompts the insured to call to inquire about what information to provide, then the insurer will pass the insured around from one person to another without ever providing an answer. When the insured does not provide the information on time, the insurer may deny the claim.

Clearly, LTC insurers issuing these policies did not expect to receive so many claims under their LTC policies. And the insurers have now determined that they can expect the number of LTC claims to increase substantially in the future. Because insurers are currently using these tactics to deny legitimate claims, it is likely that insurers will become even more aggressive in denying LTC claims as more claims are filed in the future.

Protecting Your Interests

If you have made a claim under an LTC policy, or plan to make a claim soon, you can expect that your claim will likely be denied. If your LTC claim is denied, you should contact a knowledgeable and experienced insurance claims LTC attorney. The attorneys at McKennon Law Group PC have the knowledge and expertise needed to determine whether a claim denial is proper and we can ensure you are placed in the best position possible to receive the LTC benefits you are entitled to under to the LTC coverage you purchased.

How to Handle Termination of Your Disability Benefits

You have experienced an accident or medical condition that has caused you to be unable to continue working. Thankfully, because you had disability coverage, you were able to submit a claim for disability benefits and were approved, and you have been collecting disability benefits. Although the benefits are not as much as your salary was, receiving the benefits alleviates much of the stress that accompanied your unfortunate situation. While things could be better, you still breathe a sigh of relief that you carried disability insurance. However, one day you receive a letter from your disability insurer saying that it has determined that you no longer meet the policy definition of total or partial disability, and you will therefore not receive any further disability benefits. You panic because you know that you will not be able to survive without the disability benefits. This type of scenario can be incredibly stressful. And it is common.

If you receive, or plan on receiving, disability benefits, it is crucial to be prepared for your disability insurance company to terminate your disability benefits after you begin receiving them. Because paying your disability benefits are a significant cost to your insurer, it has a vested interest in finding a way to discontinue paying them to you. Thus, it is reasonable to believe that your insurer is always looking for a justification for terminating your benefits, even if the reason is improper. They do this by conducting ongoing surveillance of you, reviewing your medical records to look for inconsistencies and or lack of support for your disability, conducting so called “independent” medical examinations with biased medical personnel or by waiting for a change in definition of disability under your policy to assert you no longer qualify for disability benefits.

If you have been notified that your benefits have been terminated or are going to be terminated, it is vital for you to take certain steps to protect your benefits.

What to Do if Your Disability Benefits Have Been or Are Going to Be Terminated

First, you should do carefully read the insurance company’s reason for terminating your benefits so you can understand exactly what that reason is. If you do not understand why your benefits have been or are being terminated, you will have an extremely difficult time presenting an effective appeal to your insurance company. If you have read the insurance company’s rationale and do not understand it, you should immediately consult with an experienced disability insurance attorney. The knowledgeable and experienced disability insurance attorneys at McKennon Law Group PC will provide a free consultation regarding the termination of your benefits.

Second, review the policy language to see whether it supports the insurance company’s basis for termination. It may be that your benefit period under the policy has expired and you are no longer entitled to benefits. On the other hand, it may be that the insurance company has concocted an illegitimate reason that is not supported by the policy. Without reviewing your policy, you may not understand whether the insurance company’s determination was proper.

Third, you should review the medical and other evidence supporting your disability claim. If you submitted sufficient evidence and the insurance company approved your claim, then it reversed itself without presenting new evidence or pointing out what in the existing evidence changed to prompt its determination, it is likely that the insurance company’s decision was improper. Once you have been determined to be disabled under either an “own occupation” standard (under which you are considered disabled if you are unable to perform the duties of your own occupation) or an “any occupation” standard (under which you are considered disabled if you are unable to perform any occupation for which you are suited by education, training or experience), the insurance company may not then determine that you are no longer disabled under that same standard without presenting evidence that your condition has improved. Therefore, it is important to understand the evidence supporting your claim and how the insurance company interprets that evidence.

It may be a matter of your insurer expecting to see ongoing evidence of your disability, in which case it will request additional information from you. This is entirely normal and expected unless you have an undisputed permanent disability condition. If you fail to provide that information or provide insufficient information, the insurance company may be able to properly terminate your benefits under the policy. However, if you have provided sufficient information and your insurer still terminates your benefits, there is a good chance that the insurance company acted improperly. In such a case, you should seek experienced disability insurance lawyers to assist you. The award-winning team of attorneys at McKennon Law Group PC can help you avoid having your benefits terminated, or help you recover your benefits if they have been terminated. Reach out to McKennon Law Group immediately for a free consultation.

If the insurance company has enlisted a physician to certify that you are not disabled, you may need to get your treating physician or physicians to provide additional certification supporting your position that you are disabled. Not only that, but it will also likely be necessary to present evidence that calls into question the opinions of the insurance company’s physicians or nurses.

If you are receiving ongoing disability benefits, it is important to understand the very real possibility that your insurance company will terminate them at some point. When this happens, the best thing you can do is immediately contact the expert disability insurance lawyers at McKennon Law Group PC who specialize in all types of disability insurance issues.

Distress Over Health Insurance Claim Denials

Needless to say, our society is currently built upon a foundation where health insurance does not benefit everyone in all situations. In fact, health insurance companies are for profit at the end of the day, so they may prioritize their pocketbook and not fair coverage that a person needs. It is devastating to realize that in our culture health insurance is not just a given and fair for everyone. As someone who pays into health insurance, it can make the matter even more distressing if a health insurance claim denial also results in an exacerbation of a personal injury. Simply the stress of realizing that your insurance claim did not get covered can be enough to result in mental anguish and overwhelm about what happens next. Health insurance claim denials are incredibly frustrating, but there are steps that you can take to appeal or avoid them from happening.

Reasons For Denials

It may seem like there are limitless reasons why an insurer may deny payment for a certain healthcare service. Some reasons are simple and understandable, and others may be confusing and more difficult to believe. The most common reasons for denials include paperwork errors or mix-ups, questions about medical necessity, cost control, provider network issues, missing details, not following health plan rules, or the service just wasn’t covered by the plan. Unfortunately, this leaves a lot of room for potential bias or making a mistake when it comes to denying a fair claim. People are at the mercy of whoever decides whether coverage should be provided, or not. Because of all the ways that a person may have their claim wrongfully denied, it is not uncommon for people to speak with an injury lawyer for assistance. Having a lawyer’s representation to handle an insurance claim denial can make all the difference in the outcome of an appeal or litigation. An experience health insurance lawyer can walk you through the steps of appealing a denial and ensure your paperwork is strong for approval of your claim.

Byproducts of a Denial

Realizing that an expensive medical service will not be covered can affect a person’s mental health. A person may then have to wonder where they will get the money to afford this new bill. Will you have to work more hours? Will you have to find another job? What will be the consequences if you are unable to pay? These are all normal concerns that anyone facing a health service denial would probably feel. A claim denial does more than inconvenience someone, as they can become vulnerable to further injury simply because of the stress. Anyone who has ever been so distracted from a stressor can attest to how everything else may fall to the wayside. To make matters worse, someone may shortly thereafter be involved in an injury event, like a car crash or workplace accident (from overworking to afford the bill). As our friends at Cohen & Cohen can attest, dealing with more injury on top of an already difficult situation can become a byproduct of a health insurance claim denial.

If you have a denied health insurance claim and need an experienced California health insurance attorney to review your claim denial, please contact us for a free consultation.

McKennon Law Group, Irina Morris Takes on Aetna Life Insurance

In the case of Irina Morris v. Aetna Life Insurance Company, the Ninth Circuit Court of Appeals made a significant ruling that favors ERISA plan participants. The court’s decision in Bafford v. Northrup Grumman Corp. had previously established that a third-party administrator’s incorrect plan benefit calculation is not a fiduciary duty breach if it is within the framework of a preset policy set by another. Insurers and administrators relied on this ruling to avoid liability for miscalculating plan participants’ benefits.

However, the Morris case expanded the definition of fiduciary function and increased the potential liability for insurers and administrators. The court clarified that an ERISA insurer can still be held liable for fiduciary duty breaches if they exercise discretion in other misconduct related to ministerial benefit calculation errors that harm the plan participant.

Aetna argued that Bafford controlled the outcome of the case because their error was a ministerial calculation mistake. The court rejected this argument, emphasizing that Aetna’s subsequent actions, which were discretionary and central to Morris’s injury, qualified as fiduciary functions.

The court identified several instances where Aetna performed fiduciary functions involving discretion after its calculation error. They provided Morris with individualized consultations and engaged in extensive communication regarding her monthly plan benefit. Unlike the automated online mechanism in Bafford, Aetna’s benefits specialists consulted with Morris by phone, sent letters for her to share with lenders, and communicated with her financial institutions.

Aetna’s communication of the incorrect benefit amount to Morris and her lenders was deemed a fiduciary function due to the extent of Aetna’s involvement in her financial life. Despite Morris questioning the accuracy of the benefit calculation, Aetna affirmed the erroneous amount for nearly a decade, leading Morris to make significant financial decisions based on the misinformation.

The court also ruled that Aetna exercised discretion and performed a fiduciary function when gathering Morris’s earnings information and interpreting the plan’s terms to determine her monthly benefit amount. This was different from the ministerial calculations in Bafford, where a third-party administrator followed a preset online formula without discretion.

The Morris court restated the designated Ninth Circuit ERISA fiduciary duty law, emphasizing that a breach of fiduciary duty must occur in connection with the performance of a fiduciary function. The key question in fiduciary breach cases is whether the fiduciary was performing a fiduciary function when the complained action took place.

The ruling in the Morris case expands the potential liability for ERISA plan insurers and administrators, highlighting the importance of exercising their discretion properly to act in the best interests of plan participants. With the help of McKennon Law Group PC, an insurance and ERISA litigation law firm in Newport Beach, California, Irina Morris was able to get the justice she rightfully deserved for her case.

McKennon Law Group PC has a long track record of successfully representing and fighting on behalf of clients dealing with insurance and ERISA-related disputes. With a pay-if-you-win structure, there is hardly any risk to seeking out their help – no matter how big or small your insurance dispute is. Get in touch with McKennon Law Group PC today at 949-504-5381 to book an initial consultation.

SSDI Award Letter Helps Client Win ERISA Case

New Hope If Your Disability Insurance Claim is Denied

If you file a claim for long-term disability insurance benefits, and that claim is denied, arrange at once to meet with a California life and disability insurance claims attorney. That attorney will take the appropriate steps to fight for the disability insurance benefits you deserve and need.

If you have purchased long-term disability insurance through your employer, your policy is likely governed by ERISA, the Employee Retirement Income Security Act of 1974. ERISA sets minimum standards for the group insurance plans provided through private employers.

If your ERISA disability insurance claim is rejected, you will not be alone. Claims for disability benefits under ERISA are frequently rejected. If your own claim for disability benefits is denied, arrange at once to speak with a California life and disability insurance claims lawyer.

What Determines Your Eligibility for Disability Insurance Benefits?

Proving to an insurance company that you are disabled is a challenge. A doctor’s statement is usually not sufficient. Even disability claims that are approved by the Social Security Administration may be rejected by an insurance company if you are covered under a group disability policy through an employer.

It is the insurance company’s definition of a disability – and not the Social Security Administration’s definition – that will determine if you qualify for long-term disability insurance benefits.

However, in a recent California case, the Social Security Administration’s award of disability benefits played a key role in a judge’s decision in favor of the plaintiff. It is a precedent-setting decision that may help many more disability insurance applicants obtain their benefits.

What is an Administrative Record?

What is notable about Logan v. Prudential Insurance Company of America is the way the judge considered Mrs. Logan’s Social Security Disability Insurance (SSDI) award letter.

Her attorneys at McKennon Law Group PC filed a motion to include the SSDI award letter with the administrative record of the case because it was evidence that Mrs. Logan was in fact disabled and because the award letter was not available until after the case’s administrative record had already been prepared.

Generally speaking, new evidence may not be introduced in these cases. When a federal judge hears an ERISA case, the administrative record is typically the only evidence considered. It includes every document provided by the plaintiff or the plan administrator that is pertinent to the case.

Why Was Logan v. Prudential Insurance Company of America Important?

The motion to include the SSDI award letter with the administrative record of Mrs. Logan’s case was denied. However, the judge wrote that the “Social Security Administration’s decision . . . corroborates [Mrs.] Logan’s own and her doctors’ accounts of her disabling pain.”

While the SSDI award letter did not become part of the administrative record, the simple fact that the SSDI award letter was issued was considered supporting evidence for Mrs. Logan’s claim.

As a result of Logan, a court can now use the issuance of an SSDI award letter to support a disability insurance claim even if the award letter is not included in the administrative record of the case.

What if Your Own Disability Insurance Claim is Denied?

If your own ERISA-based disability insurance claim is denied, consult a California life and disability insurance claims attorney and appeal that denial. Your lawyer will help you prepare an appeal and ensure that you are compliant with ERISA guidelines.

U.S. District Courts have jurisdiction over ERISA-related cases. If you file an administrative appeal with the insurance company to no avail, your California life and disability insurance claims lawyer may then bring a lawsuit against the insurance company in federal court.

After Logan v. Prudential Insurance Company of America, if you have been awarded disability benefits by the Social Security Administration, your lawsuit against an insurance company that has denied your disability claim is now more likely to prevail.

If you need ERISA disability or life insurance benefits and your claim has been rejected, act now, and promptly schedule a consultation with a California life and disability insurance attorney such as the highly successful and experienced team for ERISA Claims at McKennon Law Group PC.

McKennon Law Group Wins Case Regarding The Abuse of Discretion Standard

Good News if Your Claim for Long-Term Disability Insurance Has Been Rejected

If your application for long-term disability insurance is denied, discuss your rights at once with a California life and disability insurance claims lawyer. That lawyer will take legal action to help you obtain the disability benefits you need and deserve.

In some cases, the denial of a claim for disability insurance may constitute an abuse of discretion by the insurance company, according to a recent ruling handed down by the U.S. District Court for the Central District of California entitled McGuire v. Life Insurance Company of North America, a case that McKennon Law Group PC handled for its client, Brenda McGuire.

The case was heard in federal rather than state court because the plaintiff’s insurance plan was purchased through her employer, and employer-provided group insurance plans are governed by ERISA, the federal Employee Retirement Income Security Act of 1974.

What Are the Two Standards of Review?

If you sue an insurance company that rejects your ERISA governed disability claim, and your California life and disability insurance claims attorney persuades the court that the company’s decision was wrong, even then, your lawsuit may not succeed, depending on the review standard.

Two review standards are used by the courts that hear these cases. A court may use the “abuse of discretion” standard of review or the “de novo” standard of review:

To win a lawsuit under the abuse of discretion review standard, a court must determine that an insurance company’s rejection of your claim abused that company’s discretion. This standard, in which courts must give some deference to disability insurers, is a more difficult standard for a disability insurance claimant to prove under ERISA.

Under the de novo standard of review, a judge only decides whether an insurance company’s rejection of your claim was wrong or right. The de novo standard provides neither side with an advantage going to trial.

What Was Decided in McGuire v. Life Insurance Company of North America?

The District Court determined that Life Insurance Company of North America (LINA) abused its discretion by denying long-term disability benefits to a former community relations manager at Republic Services, a firm that provides waste disposal services across the United States.

The case was decided under the abuse of discretion standard, which is uncommon in ERISA cases pending in California because of a California statute that makes most ERISA cases subject to the de novo standard of review. The court clarified under what circumstances an insurer who denies a disability insurance claim has abused its discretion.

When a court reviews a decision to reject benefits in an ERISA case, it often does so under the de novo standard, which gives no advantage to the insurance company.

Most policies, however, give an insurance company the discretion to determine eligibility for benefits and to construe the policy’s conditions and terms. In these types of cases, the abuse of discretion standard applies if the claimant is from a state that does not have an anti-discretion statute, such as California’s anti-discretion statute.

What Were the Issues in McGuire v. LINA and Why is this Decision Important?

LINA contended that ERISA did not require them to have particular specialists review McGuire’s medical records. The judge Carmac Carney disagreed and found LINA’s failure to use specialists was a procedural irregularity indicating an abuse of discretion.

LINA contended that ERISA does not require that an insurance company have a claimant examined in-person by one of its health professionals and that by not doing so, it did not matter and had no effect on whether it abused its discretion. However, in deciding whether LINA abused its discretion, Judge Carney ruled that this decision to do so does matter.

LINA additionally contended that McGuire’s medical records did not precisely explain how her medical condition prevented her from working. The judge noted that LINA never contacted the doctors to seek clarification and ignored other evidence that verified McGuire’s reports of pain.

LINA also insisted that because McGuire declined surgery and pain medication, she was not disabled. The judge stated that McGuire could not be faulted because pain medications and surgery both carry considerable risk.

The judge found no evidence that McGuire was a malingerer, but he determined that LINA had abused its discretion. The court ruled in McGuire’s favor and awarded her the long-term disability benefits.

Read from the full case file here.

What Should You Know About Disability Insurance Claims?

If you file a disability insurance claim and your claim has been denied – you need the advice that a California life and disability insurance claims lawyer can provide.

Your first legal consultation is provided without cost or obligation. It is your chance to receive the advice you may need and to find out more about how the law may apply to your own situation.

If you need ERISA disability or life insurance benefits and your claim has been rejected, act now, and promptly schedule a consultation with an ERISA claims lawyer such as highly successful and experienced team at McKennon Law Group PC.