Now that tri-state area residents are into the third week of Hurricane Sandy’s aftermath, and immediate issues such as power restoration and supply shortages begin to resolve, the attention for many will now turn to recompensing their losses caused by damage to their property. As the New York Times reports, this process will inevitably prove to be more difficult and complex than homeowners might expect.

In the first instance, many homeowners do not have flood insurance, and most homeowner’s policies do not cover damage caused by flooding. It is not uncommon in storms of Sandy’s magnitude for a structure to suffer damage from multiple causes such as water, wind, or objects such as trees falling on a home. However, many insurance policies contain what is known as an “anti-concurrent causation clause,” which will deny coverage for damage caused by a covered loss if an excluded loss also contributed to the same damage. This is likely to pose a problem for many residents, particularly in coastal areas such as the Jersey Shore or the Rockaways, which experienced flooding and damage by winds blowing trees onto homeowners’ properties.

The Times points out that homeowners should also be careful to maximize their recovery on items that are covered. Some policies contain “law and ordinance” coverage in order to assist owners of older homes to ensure that they comply with current building codes. Insurers may dispute the necessity of certain improvements to older structures. It is also essential that homeowners insist on comparable materials to replace damaged structures, as the cost of these materials tends to rise after a natural disaster.

When Hurricane Sandy swept through New Jersey and the tri-state area, its winds and rains wrought unprecedented property damage on the region. In the wake of the storm, the New York Times reports that insurers are expecting property damage claims in excess of ten billion dollars. Homeowners and businesses filing claims must be careful, because exclusions in policies will apply to limit or exclude claims. There are also limits in policies issued under the National Flood Insurance Program. There will likely be disagreements as to the “cause” of the loss, such as, did “wind” cause the damage as opposed to “rain” or “overflow of water.” Exclusions on homeowner policies for damage caused by power outages or for trees down but not striking homes, will also impact your ability to collect on your loss. We suggest that you consult with experienced lawyers or public adjusters to assist you in the filing of your claim.

Property insurance and umbrella policies often contain confusing and seemingly contradictory exclusions and limitations that could jeopardize your claim if not properly addressed. You should not compromise your access to the maximum recovery possible, and public adjusters, while well-intentioned, should also consult with counsel, to ensure that the advice they are providing to clients as to how to gather and submit insurance claims will result in the best outcome. The first step in the process following a disaster is to prepare an insurance inventory. The inventory should include a description of the property and the type (i.e. houseware, linens, furniture, clothing, toys, electronics, appliances, jewelry, and office items), where it was located in the house, its approximate age, and approximate cost.

Bonny G. Rafel is experienced in handling property insurance claims, having helped many clients following Tropical Storm Floyd. Contact us for a consultation to discuss how we can help you pick up the pieces after Hurricane Sandy.

The attorney-client privilege provides confidentiality for all communications between attorneys and clients pertaining to legal advice. However, the courts have carved out an exception for fiduciaries–including insurance claims administrators–under principles of trust law, which requires the furnishing of information to trust beneficiaries in order to protect their rights, and which holds that a trust attorney’s real clients are the beneficiaries rather than the trustees.

Thus far, the Third Circuit has declined to extend the fiduciary exception to communications between an insurance company and its in-house attorneys where the insurance company funds the disability plan and pays benefits out of its own assets. In Wachtel v. Health Net, Inc., the Court reasoned that the exception did not apply in the case of a fully-insured health plan. It rationalized that in such a case, the insurance company–not the beneficiaries–is the attorney’s real client, as the insurance company maintains ownership over the plan funds, pays its attorneys from its own assets, and owes fiduciary duties to multiple classes of customers rather than the beneficiaries of any one plan. Further, the Court concluded that while ERISA expanded certain trustee obligations to insurance companies, Congress did not intend to apply the entire scope of trust law obligations to ERISA fiduciaries.

In contrast, the Ninth Circuit in Stephan v. Unum Life Ins. Co. of Am. held that memoranda between Unum’s claims department and its in-house counsel regarding interpretation of the plaintiff’s disability insurance contract could be subject to disclosure. Mark Stephan filed for disability benefits after becoming a quadriplegic in a bicycling accident. Stephan disputed Unum’s calculation of his pre-disability earnings, as Unum interpreted the contract to exclude the plaintiff’s annual bonus from the earnings. Since the disability policy provided a monthly benefit of 60% of a claimant’s earnings, the exclusion of the bonus left the plaintiff with a considerably lower benefit figure.

Surveillance is a common practice among disability insurers. Insurance companies often enter into lucrative deals with security and surveillance firms in an endeavor to “catch” individuals performing activities that conflict with their claimed limitations. While this usually involves observing an insured outside of the home running errands or performing basic activities of daily living, the British security firm G4S has taken the tactic one step further.

G4S has now come under fire for using deceptive tactics to film disability claimants inside their own homes. Daily Mail, September 16, 2012. The UK’s Daily Mail reports that G4S regularly sends its surveillance agents to a claimant’s front door posed as a delivery person, and wearing a miniature hidden camera in what is known as the “parcel pretext.”

One “parcel pretext” victim–Tanya Joiner, who suffers from arthritis and fibromyalgia, among other conditions–has now brought suit against G4S, alleging that one of the company’s agents entered her home purporting to deliver a catalogue. When her husband advised that she was too ill to come to the door and sign for the delivery, the agent went into her living room and insisted that she sign for the package herself. In doing so, the agent obtained footage of the inside of Ms. Joiner’s home. Ms. Joiner’s insurer, Zurich, ultimately denied her disability benefits. Though G4S insists it followed legal procedures, it appears that it never obtained the government authorization necessary to film the inside of Ms. Joiner’s home.

A recent Seventh Circuit decision illustrates that pursuing a claim for disability benefits is not as straightforward as claimants would hope, and that claimants must follow ERISA’s requirements to the letter in order to obtain the benefits they deserve. In Schorsch v. Reliance Standard Life Ins. Co., No. 10-3524 (7th Cir. Aug. 28, 2012), Reliance paid Schorsch’s disability benefits for almost 14 years before it denied her claim based on an independent medical evaluation (“IME”). Schorsch’s attorney sent Reliance a letter indicating his intent to appeal the denial, but never submitted a formal appeal. Reliance subsequently sent Schorsch a letter stating that its decision to deny the plaintiff’s benefits was final as she had not filed her appeal within ERISA’s prescribed time frame. Schorsch sued and Reliance revealed during discovery that it had lost the administrative record, including the surveillance that it had conducted of Schorsch. Discovery also revealed that Reliance’s denial letter misrepresented that a particular vocational specialist who in fact never looked at Schorsch’s file issued a report supporting termination of benefits.

The Court ruled in favor of Reliance, holding that Reliance’s loss of the plaintiff’s claim file (and other errors in its claim handling) did not excuse the plaintiff’s failure to file her claim within the required time period. See ERISA Regulations, 29 C.F.R. 2560.503-1(h)(3)(i). The Court stated “Schorsch cannot circumvent ERISA’s administrative remedies by simply pointing to errors in Reliance’s claims termination process. Flaws in Reliance’s termination notice and other errors become relevant only if Schorsch reasonably relied on them in failing to request a review of its decision to terminate her disability benefits…or if Reliance’s missteps denied her meaningful access to a review.” The court ruled that Reliance’s errors were unrelated to Schorsch’s own failure to file a timely appeal.

The Schorsch case illustrates that ERISA can be difficult to navigate, with numerous traps for the unwary and protections favoring insurers. Do not jeapordize the benefits you deserve by venturing into these waters on you own. We at Bonny G. Rafel are experts in this ever-developing area of the law, and will zealously guard your rights as an insured under your ERISA policy.

Over 2.7 million Americans suffer from Epilepsy. Its disabling affects are well known, from petit mall seizures which incapacitate patients for brief periods to grand mal seizures which can lead to physical injuries, coma, and death. While some epilepsy patients benefit from medication which allows them to function in their daily lives, others suffer from “refractory epilepsy” which does not respond to treatment.

For those with refractory epilepsy, new research suggests there may be hope on the horizon. See New York Times, June 4, 2012. Scientists have uncovered what may be a correlation between epilepsy and inflammation–the defensive response of the immune system to injuries or foreign bodies– in the brain. While inflammation has been previously linked to seizures resulting from encephalitis, and to infantile spasms in children, the new studies suggest that inflammation may be a component of seizure disorders in general. Scientists have hypothesized that seizures are either caused by an immune response triggering neurons in the brain, or by the distracting effects of a brain injury on glial cells, which regulate brain activity.

Scientists have now developed a molecule known as VX-765, which is designed to work on inflammatory processes. While the drug trial is in its early stages, it appears that the drug reduces the number of seizures in those with refractory epilepsy over time.

Prudential is facing a class action suit for fraud in the United States District Court for the District of New Jersey for selling Buy-Up Long Term Disability Insurance, Supplemental Term Life Insurance, and Supplemental Accidental Death & Dismemberment policies to employees of defense contractors working overseas without disclosing the presence of a wartime exclusion in the policies. New Jersey Law Journal, May 21, 2012. Specifically, the policies state that Prudential will not cover losses “due to war, declared or undeclared, or any act of war.” As Prudential was allegedly aware that it was selling these policies to individuals supporting military operations in Iraq or Afghanistan, the Complaint alleges that Prudential wrongfully profited from selling policies, as it “knew that the [policies containing the exclusion] would be of negligible value and/or of no value to” plaintiffs who became disabled, dismembered, or died while working in Iraq of Afghanistan. (Complaint, paragraphs 23, 49, and 74).

The Complaint alleges losses based on plaintiffs’ payments of premiums to Prudential, and Prudential’s denial of claims based on the wartime exclusion. Highlighting the case are the claims of the class representatives. Stephen Wolfe was offered a benefits package when he accepted employment with a defense contractor at the Kirkuk airbase in Iraq, and he additionally selected buy-up coverage and supplemental term life insurance, which combined cost him nearly 30 dollars a month. Alexander Menkes, a retired Major from the United States Army Reserves, worked as an aviation Physician’s Assistant/Flight Surgeon in Kirkuk, and purchased both buy-up long term disability and accidental death and dismemberment insurance. While serving in Iraq, he became disabled due to a lumbar spine injury, exposure to tuberculosis requiring a long-term course of medication, and post-traumatic stress disorder stemming from his exposure to the fighting. Prudential refused to pay his disability claim under the wartime exclusion in the policy. The plaintiffs brought suit under the New Jersey Consumer Fraud Act; New Jersey Truth in Consumer Contract, Warranty and Notice Act; state deceptive practices acts; and common law fraud.

While it remains to be seen how this case will play out in the District Court, a victory for the plaintiffs would send a message to insurance companies that the courts will heavily scrutinize insurance transactions and will not allow insurers to profit off of illusory deals.

Sleep apnea has been known to be a disabling and potentially life-threatening condition. According to two new studies recently presented to the American Thoracic Society, patients should add cancer to the list of the disease’s potential complications. See New York Times, May 20, 2012.

The results are startling. Researchers in Spain found that patients who experienced a blood oxygen level below 90 percent at night for up to 12 percent of the time they slept were 68 percent more likely to develop cancer than those who did not experience breathing problems at night. Researchers at the University of Wisconsin School of Medicine and Public Health–who had been running sleep studies since 1989–determined that patients with moderate sleep apnea were twice as likely, and those with severe apnea were 4.8 times more likely, to die of cancer over the course of the study.

The results of these new studies are especially telling, since researchers controlled for common variables such as age, smoking, alcohol use, weight, and lack of exercise. The researchers determined that the connection between sleep apnea and cancer remained even in the absence of these variables.