How Do I Know Whether To Make A Disability Insurance Claim?

Many people understand that they have disability insurance coverage, but aren’t sure whether, when, or how to make a claim.  This confusion often results in people delaying in submitting a claim, which can potentially jeopardize their right to coverage.  Below is a guide to some of the issues you might consider in determining whether to make a disability insurance claim.

First, remember that the specific insurance policy language will determine whether you have a claim for disability benefits.  Always be sure to double check the actual insurance policy language – or have a lawyer do so for you – before making any decisions.  Also be mindful that the insurance policy may be comprised of many separate documents.  For instance, there may be an insurance policy contract, declarations pages, riders, amendments, and endorsements, all contained in what might appear to be separate documents.  And if your disability coverage is subject to ERISA, other employee benefit plan documents such as a Summary Plan Description may also affect your rights.

In particular, you will want to be familiar with how the policy defines “disability.”  Most disability insurance policies define “disability” to mean, basically, you can’t work because you are ill or injured.  But the devil is often in the details.  For example, does the policy require you to be unable to do your current job, or any job within your skillset, or any job at all?  Is a software engineer with cognitive impairment from a brain injury disabled if they can still flip burgers? Slight differences in the definition of “disability” can be critical.

Second, have a clear understanding of the medical basis for your disability – i.e., the injuries, illnesses, or other conditions that affect your life and prevent you from working.  You don’t need to be a doctor to make a disability claim, but having a clear picture of the diagnoses and limitations relevant to your disability will help you submit your claim clearly.  Absent clarity, some unscrupulous insurance adjuster may try to take advantage of the confusion to mischaracterize your claim as falling within one of the policy’s exclusions.

Third, be mindful of whether you have discussed with your employer any potential accommodations that could help you perform your job despite your disability.  Most of the time, employers are legally obligated to make minor changes to your job to enable you to continue working despite your disability.  If you can keep working with a reasonable accommodation, you may not be entitled to disability insurance benefits – and may not need them in the first place!

Fourth, be mindful of any applicable time limits to make a claim.  Be sure you are submitting your claim to the right people, using the right documentation, and meeting the right deadlines.  Don’t put yourself in a position of losing out on coverage through technicalities.

These are just a few of the many things you may want to consider when deciding whether to claim disability insurance benefits.  Please keep in mind that many other issues can come into play – and the best way to protect your legal rights is to talk to a lawyer!

Court Emphasizes Importance of Making Insurance Claims Promptly in ERISA Disability Dispute

A recent decision from our neighbors in the Portland, Oregon federal courts emphasizes that insurance policyholders should always strive to submit claims as soon as possible – especially where the insurance policy is covered by ERISA.

Often, it’s not practical to submit insurance claims as soon as the loss occurs.  When your house burns down, you’re critically injured, or have to stop working due to a disability, you’re often overwhelmed as it is without worrying about submitting insurance claims.  For this reason, many legal rules apply that can entitle an insured to benefits under an insurance policy even if the insured delays in submitting their claim.  These rules protect insureds from the otherwise-draconian result of losing insurance benefits they paid for due to a technicality.

However, the Oregon federal court’s recent decision in Gary v. Unum Life Insurance Company of America emphasizes that, sometimes, a delay in submitting insurance claims can completely eliminate the policyholder’s right to benefits, especially under ERISA.

Ms. Gary applied for Long-Term Disability benefits under an ERISA-governed disability insurance policy issued by Unum.  Plaintiff, an attorney, had become disabled and been ordered by her doctor to stop practicing law as of December 1, 2013.  But Ms. Gary waited until September 1, 2016 to make a claim for disability insurance benefits from Unum.

Unum ultimately determined Ms. Gary was disabled, but only from November 27, 2013 through April 6, 2015.  Ms. Gary filed a lawsuit under ERISA, seeking disability benefits post-April 6, 2015.  The dispute focused on Unum’s conclusion that Ms. Gary was essentially recovered from her disability following surgery in 2014.

The court upheld Unum’s denial of benefits after April 6, 2015.  The court focused on the absence of medical information regarding Ms. Gary’s condition as of April 6, 2015.  Critically, the court noted that it was impossible for a doctor to examine Ms. Gary in person and give an opinion about her medical condition that would be retroactive to April 6, 2015.  The court emphasized:

because Plaintiff’s claim was not filed until September 1, 2016, there was no opportunity for an [examination] or other evaluation of [Ms. Gary] by [Unum] in the nearly three years from the date of alleged disability. And while the Supplemental Record submitted by [Ms. Gary] provided some new medical evidence, it did not clarify [Ms Gary]’s limitations in the months following her surgery and around April 6, 2015.

Of course, there’s no way to tell if the court would have reached a different result had Ms. Gary applied for benefits immediately after becoming disabled.  But allowing a prompt medical evaluation following her surgery that could have armed her with additional medical information supporting her disability.

The Gary decision is an important reminder that it is always in the insured’s best interest to claim benefits promptly following a loss.

Does ERISA Apply to COBRA Coverage?

ERISA applies to most insurance obtained through an employer. “COBRA” coverage is insurance coverage you get after your employment ends.  So it’s understandable if you assume that COBRA coverage isn’t ERISA-governed.

Surprisingly, many courts have held that ERISA governs COBRA coverage after all.

ERISA generally applies to any insurance procured by an employer for the purpose of providing insurance benefits for its employees.  When an employee’s employment ends under the right circumstances, the employee is eligible to purchase COBRA coverage to replace the lost employer-sponsored coverage. Congress enacted COBRA (the “Consolidated Omnibus Budget Reconciliation Act”) in 1986 to make sure people changing jobs don’t have a gap in their insurance coverage.  COBRA requires that certain employer-sponsored insurance benefits plan allow employees changing jobs to continue coverage under the right circumstances.  COBRA coverage must generally be identical to the coverage the former employer provides.  And if the employer modifies coverage, the modifications must generally apply to the former employee’s COBRA coverage.

Thus, even though COBRA coverage would appear to be distinct from the employer’s ERISA plan, a former employee with COBRA coverage is effectively continuing to participate in their former employer’s ERISA plan by paying the premiums themselves.

For that reason, courts typically treat COBRA coverage as ERISA-governed – a result that might be counterintuitive for many employees.

Know Your Rights – Long Term Care Insurance

Many people have long term care insurance, especially when they get older, because the cost of prolonged individual care due to an injury or illness can be significant.  For that reason, Long Term Care insurance is often part of people’s estate plan.

Long Term Care insurance can be subject to problems because the premiums get paid for years and years before coverage is needed, and, once it is needed, the policyholder is potentially to infirm to proactively protect their rights and make sure the insurer follows the policy.

Fortunately, Washington State’s insurance regulations give policyholders specific rights under Long Term Care insurance.

Long Term Care insurance policies must clearly explain the eligibility criteria and triggers for benefits, and advise the policyholder what circumstances give rise to a claim for benefits under the policy.  This includes specifying what medical findings a doctor must make to trigger coverage.  Further, eligibility requirements cannot be overly restrictive and cannot require an insured be precluded from performing more than three “Activities of Daily Living” (e.g., bathing and dressing).  Importantly, the Long Term Care policy must provide that the insured cannot perform an Activity of Daily living if the insured requires another person’s significant assistance.

Similarly, Long Term Care policies cannot limit benefits to unreasonable time periods or dollar amounts.  And, if the Long Term Care insurance policy replaces prior coverage, the insurer cannot apply an exclusion for pre-existing conditions.

Washington State law also limits what insurers can exclude from Long Term Care policies.  Long Term Care policies can only exclude coverage for things like acts of war, criminal acts, chemical dependency, etc.

Additionally, insurers cannot cancel Long Term Care policies unless they obtain for the policyholder equivalent coverage with another insurer.

Lastly, Long Term Care insurance must provide a grace period for the insured to make up missed premium payments.  This right is particularly significant because the beneficiaries of Long Term Care insurance are often elderly and rely on their children or others to handle their financial affairs and pay premiums.

Can the Insurance Company Retroactively Deny Your Claim On A New Basis After You File A Lawsuit?

Let’s say you make an insurance claim, and the insurance company denies the claim for reason A.  You think they’re wrong, so you take them to court and argue reason A is invalid and the company should have paid your claim.  In response, the insurance company admits reason A didn’t apply but now argues your claim should have been denied for reason B.  Can they do that?

Like most insurance law questions, the answer is “it depends.”

An insurer can waive or give up a basis for denying a claim if it does so knowingly and voluntarily.  For instance, if the adjuster tells the policyholder “I know the policy says you have to give us all the repair estimates by Tuesday, but don’t worry about it,” the insurer probably can’t deny your claim if you give them the estimates after Tuesday.

On the other hand, if the insurer doesn’t know about a basis for denying your claim despite a diligent investigation, the insurer probably hasn’t waived its right to assert that basis as a reason for denying your claim.  For instance, if a boat insurance policy provides the boat will stay within Puget Sound and the insurer only learns the boat was damaged in the open ocean after the fact, despite diligently investigating, the insurer may not have waived its right to deny the claim because the boat left Puget Sound.

Similarly, the insurer’s failure to deny coverage on a specific basis may bar the insurer from asserting that basis retroactively if the insured relies on the insurer’s failure to deny the claim on that basis.  In the boat insurance example above, if the insurer knew that the boat was being sailed outside Puget Sound in violation of the insurance policy, but continued to accept the insured’s premiums anyway, the insurer may not be able to deny coverage later if the boat is damaged.  Or, if the insurer denies coverage for an erroneous reason, and the insured pays an insurance expert to investigate the claim and fight the insurance company in court, the insurer may not be able to switch its reason for denying coverage and assert a new reason for denying coverage in court.

Similarly, for insurance polices issued through an employer that are subject to ERISA, courts will often find that the insurer or plan administrator must list all its reasons for denying a claim up front.  This is because federal regulations require full and fair review of ERISA claims, and specifically require the claim denial notice provide a detailed explanation of the reasons the claim was denied.  If the insurer or administrator hides a reason for denying benefits, they often lose the right to rely on that reason in a lawsuit.