New Jersey Disability Lawyer Blog

Unum Pre-existing Condition Exclusion Does Not Apply To Disability Claim

March 29, 2012 | By Bonny Rafel

The Supreme Court is hearing oral arguments on the Patient Protection and Affordable Care Act (commonly known as “Obamacare”) this week, and one of the tenets of the act contains new standards governing the application of pre-existing condition exclusions in insurance policies (see See Report of Congressional Research Service). Against the backdrop of the current legal debate in Washington, the Middle District of Pennsylvania in Lafferty v. Unum Life Ins. Co. of Am. recently addressed the meaning of a pre-existing condition in an insurance contract, and the extent to which an insurance company could apply such a limitation against its insured.

Mr. Lafferty became disabled due to congestive heart failure. He applied for disability benefits to Unum, who denied the claim on the basis that Mr. Lafferty had a pre-existing condition for which he had treatment during the three month look back period in the policy. Mr. Lafferty had a long-standing heart condition and was taking medication (aspirin) as a preventative measure against further cardiac events.

The pre-existing provision in the policy excluded medical conditions for which the insured “received medical treatment, consultation, care or services including diagnostic measures, or took prescribed drugs or medicines” three months before the policy’s effective date. Unum argued that, since hypertension, hypercholesterolemia, and coronary artery disease could lead to congestive heart failure and the need for a pacemaker, Lafferty’s congestive heart failure was a pre-existing condition.

Dangers of Posting on Facebook

March 25, 2012 | By Bonny Rafel

Litigants should beware of posting information on social networking sites such as Facebook and MySpace. Not only can your public pages be viewed and possibly used against you in court, judges are now sometimes ordering litigants to reveal their usernames and passwords to opposing parties in litigation.

A Pennsylvania court in McMillen v. Hummingbird Speedway, Inc. recently did just that in a personal injury case. After the defendants reviewed the public portions of the plaintiff’s Facebook account, discovering comments regarding his trip when the alleged injury in question took place, they asked the court to compel production of his passwords to these accounts. The court ordered the plaintiff to produce his usernames and passwords, finding that no privilege exists for information posted on social networking sites.

In November 2011, another Pennsylvania court ordered a plaintiff in a personal injury auto accident case to disclose her Facebook password. Largent v. Reed. The defendant sought this information, claiming that the plaintiff posted photographs and status updates showing that she was not permanently disabled, as she claimed. The court found that the Stored Communications Act, which prevents the government from compelling Internet Service Providers and Facebook from providing passwords, does not stop the court from compelling the plaintiff in a civil action from releasing her password. The order was entered despite the fact that exchanging passwords violates Facebook’s terms of service. The court concluded that Facebook posts are not “truly private” and producing her password will result in little harm or burden. Also in November, a Connecticut court ordered that a divorcing couple exchange their Facebook and dating website passwords. Forbes, November 7, 2011.

Revised Diagnostic Criteria May Affect Autism Patients

February 18, 2012 | By Bonny Rafel

For the approximately one million Americans living with Autism, proving their rights to insurance proceeds and coverage as well as SSDI may soon become even more difficult.

The American Psychiatric Association has appointed a panel that is reviewing the current definition of Autism as a prelude to publishing the newest version of the D.S.M. Currently, “a person can qualify for the diagnosis by exhibiting six or more of 12 behaviors; under the proposed definition, the person would have to exhibit three deficits in social interaction and communication and at least two repetitive behaviors – a much narrower menu.” New York Times Article, January 19, 2012. Additionally, the proposed definition would unite all Autism spectrum disorders – including Asperger’s Syndrome and Pervasive Developmental Disorder-under a single heading. The result, say some experts, will be a large drop in those who qualify for the diagnosis. The result of losing an Autism Diagnosis may be a loss of medical benefits, Social Security Disability, support groups and housing. Similar implications are likely for private insurance benefits.

We at Bonny G. Rafel are experienced in helping those with difficult-to-diagnose conditions prove their disability and obtain the benefits they deserve.

Insureds Must Avoid Fraud in Pursuing Claims

February 16, 2012 | By Bonny Rafel

Insurance fraud is a major offense that can carry with it serious repercussions. In order to combat this problem, New Jersey instituted the Insurance Fraud Prevention Act, N.J. Stat. §§ 17:33A-1 to 30. The goal of the act is to prevent insurance fraud in the state of NJ by amongst other things, better fraud detection, developing fraud prevention programs, and requiring repayment for fraudulent insurance benefits received. N.J. Stat. § 17:33A-2.

It is extremely important that when providing information about a claim that you are accurate and honest. According to the act, knowingly making or providing false or misleading statements concerning any fact or thing material to a claim constitutes fraud. N.J. Stat. § 17:33A-4(a). Not only can insurance fraud lead to criminal charges but a person committing insurance fraud can face severe civil penalties as well. If the insurance commissioner has deemed someone to be in violation of the act, the commissioner may seek a civil action, place an administrative penalty on the person, and/or order restitution including but not limited to attorney fees and cost of prosecution. If the commissioner orders an administrative penalty or restitution be paid, a person may request a hearing within 20 days of receipt of the violation. Additionally, if criminal charges are not already brought against you, the commissioner may request that the Attorney General do so.

In addition to facing state imposed penalties and fines, anyone who violates this act may be sued by any insurance company damaged by the fraudulent act. The insurance company can recover compensatory damages that can include surveillance and investigation costs, attorney fees, and any costs related to the lawsuit. If successful the court may award treble damages (three times the amount of the damages) if it is determined that the person has engaged in a pattern of violating the act. N.J. Stat. § 17:33A-7(b). “Pattern” means five or more related violations of the Fraud Act. . Allstate Ins. Co. v. Greenberg, 376 N.J. Super. 623, 640 (Law Div. 2004).

ERISA Plan Required to Distribute $1.5 million Judgment to Employee

January 9, 2012 | By Bonny Rafel

An error made by the fiduciary to a defined contribution pension plan had to abide by a judgment requiring it to reimburse the plan participant whose funds were incorrectly distributed. In the recent Second Circuit case of Milgram v. The Orthopedic Assoc. Defined Contribution Pension Plan, even if the plan could not recoup the money it had wrongfully paid out, it must still honor its legal obligation to pay the pension participant.

The pension at issue was a Defined Contribution Plan. The plaintiff divorced his wife, and based on a property settlement agreement, the plan administrator erroneously transferred half of the plan funds to her, resulting in an overpayment to her of $763,847.93. The husband sued the plan under ERISA to recoup this money.

The plan argued, it could not distribute the money without first being repaid by the ex-wife, since doing otherwise would reduce the plan assets, which they refer to as alienating the benefits of other plan members.

States React to Unfair Discretionary Clauses

January 7, 2012 | By Bonny Rafel

Many health and disability group insurance contracts contain discretionary clauses—clauses that provide the company writing the contract with the discretion to determine the meaning of contractual terms or to determine the insured’s eligibility for benefits. If your disability insurance policy is subject to ERISA, meaning it was purchased by your employer as part of a group plan, it most likely includes a discretionary clause. In order to prevail in court against an insurer, the claimant must demonstrate not just that the insurer’s decision was wrong, but that the insurer abused its discretion in making that decision. Insurers use these clauses to deny claims, with knowledge of the added difficulty these clauses provide for their customers to succeed in court.

State legislators are reacting to these unfair clauses. California recently enacted a law, making discretionary clauses in disability and life insurance policies

Out-of-Network Health Benefits-New Jersey Courts Take A Stand

January 5, 2012 | By Bonny Rafel

Medical providers often serve as intermediaries between their patients and insurance carriers in order to secure payment for their services. This spares the patient the burden of negotiating the waters of insurer red-tape. The recent District of New Jersey case of Cohen v. Independence Blue Cross makes clear that, in the case of an out-of- network provider, the language in an insurance policy can make all the difference in determining the efficacy of this intermediary role.

In Cohen, the insured underwent spinal surgery by an out-of-network physician, and then issued the surgeon an assignment of benefits under his health insurance plan. The defendants (the insurer, the plan and the plan administrator) paid a fraction of the doctor’s bill directly to the insured, but refused to pay the rest of the doctor’s bill, which was $143,626.00. This fractional amount represented a substantially higher patient obligation for out-of-network services. The defendants grounded their non-payment on an anti-assignment clause in the insured’s policy, which read, in pertinent part, “The right of a Covered Person to receive benefit payments under this coverage is personal to the Covered Person and is not assignable in whole or in part to any person, Hospital, or other entity nor may benefits of this coverage be transferred.”

The Court found that the clause was not preempted by ERISA, and distinguished Neuner v. Horizon Blue Cross Blue Shield of New Jersey, 301 B.R. 662 (Bankr D.N.J. 2003) (providers have standing to demand payment in the absence of an anti-assignment clause), and Ambulatory Surgical Center of New Jersey v. Horizon Healthcare Services, 2008 U.S. Dist. LEXIS 13370 (D.N.J. Feb. 21, 2008) (finding that providers could be valid assignees, without addressing whether ERISA permits anti-assignment clauses in insurance contracts). Additionally, the defendants had not waived their right to enforce the anti-assignment clause by corresponding with the doctor directly during the claim process, because Pennsylvania State law, which governed that issue, required a “clear, unequivocal and decisive act” of waiver, which the defendants had not shown.

Fact: Chronic Pain is Real and Disabling

August 28, 2011 | By Bonny Rafel

Many of our clients have chronic pain and suffer greatly. The Wall Street Journal recently reported that chronic pain affects approximately 116 million Americans (about 1/3 of the total population).

The Institute of Medicine has stated that “pain is all too often undertreated in the U.S.” The article goes on to explain the difference between acute pain and chronic pain. Acute pain is generally a warning signal to stop doing something that is harmful to your body. Chronic pain is described in the article as an alarm that “keeps sounding and producing pain long after the original cause is gone, probably due to a malfunction in the central nervous system.”

Chronic pain is a terrible condition. Having to wake up each day with no medical improvement is so difficult for our clients to endure. But in order to prove that your pain is severe and restricts and limits you constantly, it is very important to be careful when filling out disability forms and medical forms. Do not overstate your limitations.

New Jersey Disability Case Establishes Important Standards in 3rd Circuit

August 21, 2011 | By Bonny Rafel

The Third Circuit is finally catching up to other Circuits in recognizing the importance that a conflict of interest plays in an insurer’s decision to accept or deny a disability claim. The Third Circuit in Miller v. American Airlines noted that the claim administrator acted unreasonably by imposing additional requirements under the Plan; failing to include in its denial letter exactly what the claimant needed to provide in order to satisfy the plan requirements, failing to adequately consider all medical diagnoses and even the occupation in evaluating the case.

On the heels of Miller, our New Jersey Courts have issued another well considered opinion. Connor v. Sedgwick Claims Mgmt. Servs., 2011 U.S. Dist. LEXIS 67988 (D.N.J. June 24, 2011) The court in Connor embraced the reasoning of Miller, requiring that the termination letter provide the “precise information necessary to advise” a plaintiff “how to perfect his claim.”

The denial letter must detail how the claimant “could achieve a favorable disability determination.”

Increasing Inaccuracy in Health Insurance Claims Payment

August 15, 2011 | By Bonny Rafel

A report from The American Medical Association released in June found an increased inaccuracy in the payment of health claims. This means an astounding 3.6 million claims are being handled incorrectly.

The error rate is 19.3%, an increase of 2% over the last year. The one in five claims is being handled erroneously leads to waste in money spent on health care and administrative costs, as well as frustration for patients and health care providers. AMA Board Member Barbara McAneny, MD stated that these errors wasted an stonishing $17 billion. McAneny goes on to say that “Health insurers must put more effort into paying claims correctly the first time to save precious health care dollars and reduce unnecessary administrative tasks that take time and resources away from patient care.”

At Bonny G. Rafel LLC we can help you fight these erroneous denials.