Understanding How Pre-Existing Conditions Exclusions in Disability Policies Can Affect A Claim For Disability Benefits

Short- term disability and long-term disability insurance policies are designed to provide peace of mind about your future. If you are injured or become ill to such a degree that you are unable to do your job, disability insurance can help you maintain financial stability.

However, insurance companies commonly deny disability claims based on policy exclusions. After all, the insurance provider exists to make money as a business, and finding ways to avoid paying disability benefits helps their bottom line. Because of this, you may find your claim is denied for any number of reasons, including improper reasons and reasons that are allowable under your policy. One common exclusion found in most disability policies that may allow an insurance company to legitimately deny your claim is the pre-existing condition exclusion.

What Is A Pre-Existing Condition?

A pre-existing condition is defined in a disability policy and typically is defined as any injury, illness, or other health-related condition that was diagnosed and/or treated at a time prior to the policy issuance or the date disability coverage began which later caused you to become disabled. Insurance companies will often establish what is called a “look back period” to determine whether a pre-existing condition existed during that time period. Typically, the disability must occur within twelve months after coverage began in order for an insurer to rely on the exclusion.

For example, say a policy defines the look-back period as 90 days prior to the date coverage began under a disability policy. If the insured is treated for or diagnosed with any injury or illness during that 90-day period and that condition in some way caused a disability, it may be considered a pre-existing condition. It should be noted that the insurance company will interpret “treated” or “diagnosed” as broadly as possible to include even conditions discussed only in passing with your doctor during a visit.

Consider this hypothetical situation: Within the 90-day period before purchasing a disability insurance policy, you are treated by your medical providers three times. First, you are treated for an ongoing heart condition. Next, you are treated for a new complaint of back pain and diagnosed with a slipped disc. Finally, you are treated for strep throat.

Later, you make a disability claim due to a back pain issue that leaves you unable to work. Because you were diagnosed with that slipped disc during the look-back period, your claim might be denied due to a pre-existing condition.

Why Insurance Companies Include Pre-Existing Conditions

Insurance companies include pre-existing condition exclusions in their policies to alleviate risks that people will or may seek coverage under a policy soon after a disability policy is issued or coverage begins. Insurance is not designed to pay for things that have already happened, but to protect you from possible future losses.

How Disability Insurers Use Pre-Existing Condition Clauses Inappropriately

Insurance companies can misuse pre-existing condition exclusions to deny disability claims in a few ways:

• Stretching the definition of pre-existing condition: Sometimes, insurers might argue that a seemingly unrelated past condition is somehow connected to the current disability. For instance, if someone with a history of anxiety files a claim for back pain, the insurer might try to link the two, even if there is no medical basis for it.
• Misinterpreting the “look-back period”: This is the timeframe before your policy’s effective date that insurers examine to identify pre-existing conditions. They might extend this period beyond what is allowed by the policy.

• Exaggerating the severity of past conditions: Even if a relevant past condition existed, the insurer might downplay how well-controlled it was before the disability, exaggerating its role in the current situation.
• Failing to consider all evidence: Insurers might focus solely on medical records that support their denial and overlook evidence that suggests that the medical condition is not subject to the exclusion.

Here are some signs that an insurer might be improperly using the pre-existing condition exclusion:

• The denial letter is vague about why the condition is considered pre-existing.
• The insurer relies on weak evidence to connect a past condition to the current disability.
• The insurer ignores your doctor’s opinion on the limitations caused by your disability.

In a recent case our office handled and which was decided under the Employee Retirement Income Security Act (“ERISA”), the Central District of California concluded that a long-term disability (“LTD”) policy’s pre-existing condition exclusion did not apply after the insurer initially denied a claim for benefits based on the exclusion. The insurance company determined that the claimant was disabled but that his disability was caused by pre-existing conditions. The claimant had previously been treated for anxiety and depression and had been able to continue working with those conditions. He had not been treated for his existing anxiety and depression for some time and at the time he made his LTD claim his condition had become substantially more severe than the common anxiety and depression he had previously experienced; he had developed a new onset of psychosis that left him unable to work.

The court determined that the claim was not excluded from coverage because the insurance company could not sufficiently demonstrate that the claimant’s pre-existing condition substantially contributed to his disability. This case highlights the notion that insurance companies improperly invoke exclusions, including a pre-existing condition exclusion, to deny claims. An insurance company telling you that your claim is barred because of an exclusion does not necessarily make it true.

Get Help From an Experienced Legal Team to Fight Insurance Companies

Fighting insurance companies to protect your rights and assert your valid disability claim can be daunting. It may feel like it is you against a giant corporation—and it often is. However, the right legal team can mean the difference between being paid your claim and not being paid.

At the McKennon Law Group PC, we work with clients to understand their needs and insurance policies, especially disability insurance policies. Then we fight to overcome challenges in your claims process, dispute bad-faith insurance claims decisions, and negotiate settlements with insurance companies. If you or someone you love is dealing with a disability insurance denial or claims holdup, call us for a free consultation.