We often are retained once a claim has been denied. All too often, the denial is based on a breakdown in communication between the patient’s doctors and the administrator evaluating the claim because the nature and extent of a patient’s disability is not communicated clearly by the claimant’s treating physicians to the insurance company.

Insurance companies periodically request treatment notes or claim forms to be completed by the claimant’s physicians. Even seemingly straightforward questions by the insurance company can be construed to raise questions about the patient’s disability. Oftentimes, with limited time to spend per patient, a physician will not list all the symptoms present in the diagnosis, or fails to mention the significance pain has on a patient’s abilities.

Physicians constantly express their frustration — that their priority is spending time treating the patient– not gearing their notes to please the insurance companies. Unfortunately, insurance companies latch onto any small indication by treating physicians that the patient is doing well enough to return-to-work, or is no longer disabled. A recent New York Times article states, “A doctor’s note turns into a cut-and-paste collage instead of an accurate and personalized narrative of illness; and documentation becomes an electronic and potentially dangerous version of the game ‘Telephone.'”

Many of our clients suffer from Chronic fatigue syndrome. Several years ago, the Centers for Disease Control and Prevention issued some protocols for establishing that a patient has the condition. Nevertheless insurance companies regularly deny disability claims based on CFS, often using the excuse that there is “no objective evidence” to substantiate the medical condition. There is no diagnostic test, no blood test and no scan, so diagnosis is made by excluding other conditions. The common symptoms, such as severe fatigue, muscle pain and weakness, rely on a patient’s perception and are hard to measure. In addition, many of the symptoms are also present in other conditions.

Courts are increasingly recognizing that a medical condition can be disabling even if it is difficult to diagnose and treat.

The Wall Street Journal Reports in “The Puzzle of Chronic Fatigue” notes that patients with chronic fatigue syndrome are focusing on new research. In 2009, researchers published a paper in the journal Science announcing that in 67% of the samples of 101 chronic fatigue syndrome patients, they had found a retrovirus called XMRV. The article notes exciting research by Dr. Bellis and others who believe there is a link to retroviruses. These studies on the link between the family of retroviruses and the disorder are likely to carry significant weight in the scientific community. This will prove quite useful in pending disability cases grounded on CFS.

A recent article in the Wall Street Journal reports that “loopholes in a federal law intended to protect worker benefits” make it easy for insurers to make erroneous arguments with near impunity. On March 11, 2010, “Death of a loved one can be beginning of hard fight with life insurer”provided a sampling of recent cases where Metropolitan Life Insurance Company, the nations largest insurer, and Prudential, who advertises that it provides disability insurance to the most Americans, play hardball particularly with cases governed by ERISA, because the penalties for erroneous decision making is simply a slap on the wrist. The article reports “since 2008 federal judges have concluded that some insurers cheated survivors by twisting facts, fabricating excuses and ignoring autopsy findings to withhold death benefits.”
Unfortunately, under ERISA, employees have no rights to a jury trial and no rights to compensatory or punitive damages. The most the insurer can be forced to pay if they lose, is the benefits they should have paid in the first place and sometimes the counsel fees of the unfortunate claimant who had to hire legal counsel to fight the insurance company. Often the cases take up to two years or more to get to judgment in Federal Court. Meantime, the claimant suffers financial struggles they never imagined would occur when they were convinced to buy the policies from the insurers eager to take the premiums but so reluctant to pay, even bona fide claims without a long battle.

The law firm of Bonny G. Rafel

A Congressional investigation released last month found that the four largest U.S. for-profit health insurers denied policies to one in every seven applicants based on prior medical history. The Wall Street Journal reported the companies – Aetna, Inc., Humana, Inc., UnitedHealth Group, Inc., and WellPoint, Inc. – denied coverage to more than 651,000 people over the three-year period from 2007 to 2009 based on pre-existing medical conditions. The numbers indicated a 49% rise in the number of people who were denied coverage based on a pre-existing condition over the last two years.

Bloomberg reported that while most Americans have health coverage through their employer or Medicare, there is an estimated 15.7 million adults under age 65 who receive coverage through an individual health insurance policy. These are the customers directly affected by pre-existing condition coverage denials. During the same three-year period of 2007 to 2009, the four carriers combined to deny 212,800 medical claims based on the companies’ claims that these claims resulted from a pre-existing condition.

While this number is alarming, it is important to note that under the newly passed health-care legislation, insurers will no longer be able to deny coverage because of a pre-existing health condition beginning in 2014.

When a disabled employee is denied benefits by an insurance company, Federal Regulations, ERISA law requires that they submit a “mandatory” appeal of that denial to the insurance company. The insurance company will typically review the appeal and decide whether to reverse or uphold their decision. Only after the appeal is denied does the claimant have the right to initiate litigation in federal court.

Sometimes a second level “voluntary” appeal is offered to the claimant. When deciding whether to file a second voluntary appeal, claimants must weigh the benefits of this process. If the denial lacks evidential support, it may be worthwhile to skip the voluntary appeal, especially if the same reviewer who already denied your case would get another chance to fortify his denial.

ERISA requires an insurer who offers voluntary appeals to provide “sufficient information relating to the voluntary level of appeal to enable the claimant to make an informed judgment about whether to submit a benefit dispute to the voluntary level of appeal.” 29 C.F.R 2560.503-1(c)(3)(iv). This information should “includ[e] a statement that the decision of a claimant as to whether or not to submit a benefit dispute to the voluntary level of appeal will have no effect on the claimant’s rights to any other benefits under the plan and information about the applicable rules, the claimant’s right to representation, the process for selecting the decisionmaker, and the circumstances, if any, that may affect the impartiality of the decisionmaker, such as any financial or personal interests in the result or any past or present relationship with any party to review process.” Id.

Disabled consumers filing bankruptcy face a dilemma; they need to continue to receive their disability benefits, but are legally obligated to disclose all “assets” on the bankruptcy petition. Consumers should note that by acknowledging this asset to the Bankruptcy court, the trustee in bankruptcy may be able to preserve this benefit from the creditor’s reach, and protect the claimant’s right to continue to receive this monthly benefit. If the consumer does not disclose this disability benefit on his petition, the insurance company paying the benefit may later claim they hid an asset.

Courts have used “judicial estoppel” to prevent a consumer from hiding the asset in bankruptcy court while seeking continued disability benefits in later litigation against the insurance company. See Acuna v. Conn. Gen. Life. Ins. Co.. Judicial estoppel means that a decision on the matter has already been made by a court and thus, the individual is prevented from bringing up the matter again in litigation.

Some courts draw an inference that the consumer had a motive to conceal the disability claim from the reaches of bankruptcy creditors, so a careful review of this interplay is vital. Bonny G. Rafel LLC can assist you with this difficult assessment.

On September 28, 2010 the United States Senate Finance Committee held a full committee hearing titled, “Do Private Long-Term Disability Policies Provide the Protection They Promise?” The Hearing featured testimony from Chicago-based attorney Mark DeBofsky, a disability law expert, as well as The Honorable William M. Acker, Jr., Senior United States District Judge for the Northern District of Alabama.

At the hearing, members of the finance committee as well as expert witnesses discussed the sometimes abusive practices of insurance companies when handling a legitimate long-term disability claim. Mr. Debofsky spoke of the advantages that the current system provides to insurance companies such as the lack of jury trials, the deferential standard of review provided to insurance companies, and the inability of the claimant to present witnesses and evidence in open court. Judge Acker decried the continuation of the “discretionary clause” which creates this favorable playing field for the insurance companies and allows them to at times succeed in refusing to pay legitimate claims.

Senate Finance Committee Chairman Max Baucus (D-MT) seemed to take up the cause of the wrongfully denied claimant in calling for an end to abusive insurance company practices and legislation that ensures that rightful claimants are paid what is owed to them. Mr. Baucus wrote in his statement that, “[a]n insurance policy is only good if the insurance company actually compensates the consumer, when there’s a loss. And insurance law is only good if it helps to make that happen. It’s time to make sure that the law does that.” It will be interesting to see if any legislative changes will be made in the near future now that Congress has obviously taken notice of the problems that can affect the disabled when fighting for their rightful benefits.