Chapter 5:  Claim Decision Issues

 

Pre-existing Conditions

 

A pre-existing condition is a medical condition for which you received treatment before you were covered under your disability policy, and that condition now causes or contributes to your disability. The exclusion avoids coverage for disability relating to that condition. There are time limits as to how far back in time the insurer will search for a pre-existing condition and then time limits on when the exclusion will not apply regardless.

 

This exclusion ceases to apply when insured for a set time limit, such as one year or two years after coverage became effective. After that time limit passes, disability claims that arise from a pre-existing condition are not excluded. Obviously the shorter the timeframe for this provision to apply, the better it is for you. This provision is common with private and group policies.

 

There are also time limits as to how far back in time the insurance company will look for contributing conditions before coverage took effect. The insurance company will look back at all medical visits during that timeframe, searching diligently to see if any treatment relates to your current disability. That timeframe could be three months, or it could be a year or more. The time period before your policy was in effect is called the “look back” time period. Many policies make clear that it does not matter if the condition was diagnosed, undiagnosed, or misdiagnosed. What matters is that the condition was treated and now it causes or contributes to your disability.

 

Here is an example of this provision:

 

You have a pre-existing condition if:

 

-        You received medical treatment, consultation, care or services including diagnostic measures, or took prescribed drugs or medicines in the 3 months prior to your effective date of coverage; and

-        The disability begins in the first 12 months after your effective date of coverage.

 

These provisions were intended to preclude you from obtaining disability policy coverage for a condition you knew or had reason to know could disable. For example, if you have a cancer diagnosis that will require treatment taking you out of work for a year, the insurance company may not insure you for disability from that risk, given it is a known condition.

 

In private policies, generally that medical condition had to be disclosed with the application, and if it was not, the pre-existing condition limitation may preclude coverage for disability arising from that condition for a time. However, if the condition did not disable within a time frame in the policy, such as two years, then that condition would not bar coverage. If the coverage would not have been issued that might still be a reason for the insurer to avoid the claim.

 

For group policies, most are drafted with a look back timeframe since an individual application generally is not required. The way these policies work is that if you go to work for an employer that offers long-term disability insurance, every employee that is within that same class of employees is eligible to participate in that coverage. However, to “weed out” those that may already have an existing medical problem, the insurance company will look back a certain amount of time, such as three months, six months, or one year, before coverage to ascertain if the treatment is related to the current disability. With the look back, it may not matter to the insurer if the claimant knew the condition is linked to the disability or not. All that matters to most insurers is to look to exclude coverage if there was treatment for a condition related to the disability.

 

One danger that arises here is knowing what constitutes treatment. For example, if the claimant goes to the doctor to receive treatment for a cold three months before obtaining a disability policy, but later became disabled due to the Covid-19 virus, the insurance company may contend that this treatment for the cold was misdiagnosed or undiagnosed but related to the disabling condition. Such contentions can create some debatable refusals to pay a claim.

 

There is another danger as to what constitutes treatment. For example, if a prescription is provided during the look back, which could be utilized for more than one condition, is it fair to attribute that prescription as treatment for the disabling condition if that was not mentioned or contemplated by the physician or claimant at the time? Claimants are wise to be aware of these pre-existing condition limitations. For some conditions, it would be wise to wait to file a claim until after the applicability of this exclusion lapses.

 

Prior Coverage Credit

 

This term refers to the circumstance where your employer may switch disability insurance from one insurance company to another insurance company, and a physical or mental problem existed before this change. If the pre-existing condition exclusion no longer applied to you with the first company, then it will not apply with the second company. Some policies will also permit this credit to prior coverage when switching employers.

 

Here is an example of this term:

 

EFFECT OF A PRE-EXISTING CONDITION WITH PRIOR COVERAGE

 

Prior Group Disability Plan Coverage Maintained by the Policyholder

 

If You become insured under the Policy on the Policy Effective Date and were covered under a prior group disability plan on the day before the Policy Effective Date, any benefits payable under the Policy for a Disability due to a Pre-existing Condition will be determined as follows:

 

a) If You cannot satisfy the Pre-existing Conditions provision of the Policy, but have satisfied the pre-existing condition provision under the prior group disability plan, giving consideration towards continuous time covered under both plans, We will pay the lesser of the benefit:

1. that would have been paid under the prior group disability plan; or

2. payable under the Policy.  

b) If You cannot satisfy the Pre-existing Conditions provision under the Policy or of the prior group disability plan, no benefit under the Policy will be payable.

 

Prior Group Disability Plan Coverage Not Maintained by the Policyholder

 

If You become insured under the Policy after the Policy Effective Date and were covered under an employer's group long-term disability plan provided by Your previous employer, and not maintained by the Policyholder, within 31 days prior to the day You become employed with the Policyholder or Affiliated Company, any benefits payable under the Policy for a Disability due to a Pre-existing Condition will be determined as follows:

 

a) If You cannot satisfy the Pre-existing Conditions provision of the Policy, but have satisfied the pre-existing condition provision under Your prior group disability plan, giving consideration towards continuous time covered under both plans, We will pay the lesser of the benefit:

1. that would have been paid under Your prior group long-term disability plan; or

2. payable under the Policy.

b) If You cannot satisfy the Pre-existing Conditions provision under the Policy or Your prior group long-term disability plan, no benefit under the Policy will be payable.

 

In order to qualify under this provision, You must provide the following supporting documentation within 31 days from the date We request this information:

 

a) a copy of Your prior employer's long-term disability plan; and

b) payroll records or other documentation verifying prior group long-term disability coverage under Your prior employer's plan.

 

This provision can be helpful in overcoming pre-existing condition problems. As to a pre-existing condition, if the exclusion did not apply to you under the first policy, then it would not apply to you under the second policy either. However, the amount paid may be fixed to what would have been paid under the prior policy if it is less. That allows your employer to have some peace of mind when transferring the coverage from one company to another company. It also allows an employee some level of peace of mind when changing jobs.

 

You will need to be watchful and make sure you bring this provision to the attention of your claim adjuster. The adjuster may be unaware of that prior coverage circumstance and may not inquire about that. This may be especially critical if you suffered a disability and have made a return-to-work attempt under your prior coverage. Perhaps your effort to work was successful for nine months, and now you have to file a claim again. With this provision you should simply serve a new elimination period, but the fact that your condition existed before this second policy should not bar the claim.

 

Actively at Work

 

This provision is often found in group disability policies and also in health policies. It is used to exclude coverage for an employee who is not at work because of an accident or sickness on the date the policy becomes effective. In other words, you should have already been engaged in a full-time working position when the coverage was made effective and before any claim arising would be paid. That does not necessarily mean that you must have worked 30 or 40 hours before the claim will be paid. It should be enough that your position required you to work full-time, and you were engaged in that job before the claim arose.

 

Here is an example of this term:

 

Actively at work means you are able to perform, and are performing, all of the regular duties of your work for the Employer on a full-time basis at one of the Employer's usual places of business or someplace where the Employer's business requires you to travel or any other place you and the Employer have agreed on for your work.

 

Obviously if you are not capable of performing a full-time position and are simply hired but never actually work in that position, then coverage will not likely be provided. For example, if the employer wants to provide disability benefits for someone very ill, but who cannot perform the job, that will obviously raise an objection from the insurer.

 

However, if you are capable of working in that full-time position and then unfortunately become disabled through an illness or accident, even if only after a few days of work, there should be coverage. The insurance company no doubt will not like paying a claim where you only worked a few days before becoming disabled, but the line is drawn with that actively at work definition. If you meet the definition, then the claim must not be denied for that reason. 

 

Meeting the actively at work definition does not cease if you go on vacation leave or have paid time off. You should not lose your coverage for those events. As long as you are still employed in your full-time occupation, and you are on authorized leave, the coverage should remain in place. 

 

Regular and Appropriate Care or Prudent Care

 

This term refers to the medical care that would be appropriate for the relevant disabling conditions. If medical care could potentially improve your ability to work, then certainly there must be an effort to seek and obtain that treatment. If the disabling condition is left untreated and the condition is worsened as a result, that points to a failure to receive regular and appropriate care and is grounds to either terminate or refuse to pay the claim.

 

 

 

An example of this provision is as follows:

 

To be totally disabled, the insured must be under the prudent care of a licensed physician. The physician must be someone other than the insured.

 

This provision generally requires a level of treatment for the disabling condition that meets acceptable medical standards. That will vary based on the condition causing disability. For example, suppose someone is having disabling pain arising from compression on nerves, which is referred to as a radicular symptom. If the individual does not seek treatment for this, the claim will be denied. If the individual seeks treatment infrequently, such that the condition worsens, again that claim may be denied. On the other hand, this provision does not necessarily require you to go to the doctor every week or every month either. Again, it depends on the conditions which disable. Your doctor will usually let you know how often is medically necessary, and you will need to follow your doctor's advice.

 

Obviously one danger that arises here is when the insurance company disagrees with your doctor on the frequency of treatment. Medical journal articles, medical books or peer review papers may demonstrate the level of care typical. Another danger that arises here is when the condition is not going to improve with treatment. You and your doctor may know frequent treatment is not helping. Your conditions are only being managed. Insurance companies of course may take the viewpoint that treatment must be more frequent to improve your condition. It is critical to show that the medical community generally accepts that nothing can be done to improve your condition, and that treatment is targeted more towards keeping you as comfortable as possible.

 

That is not to say you can cease going to the doctor. If you are not going to your physician as often as is needed to have prescriptions refilled and manage your condition, the insurance company will likely take that as an opportunity to terminate the claim. If you cannot afford medical visits or prescriptions, the insurer may still enforce the contract. In those instances, it is important to look for community resources for assistance.

 

Also, infrequent use or nonuse of medications may be viewed as failure to meet this policy term. For example, some people have chronic pain that they live with on a daily basis, but they do not wish to take pain medication. They do not like the effects of opioid pain medications and prefer to deal with the pain. That pain is nonetheless still distracting from the performance of work duties. Insurance companies may seize upon the infrequent or complete lack of use of opioid pain medication as a reason to deny the claim. The reasons for nonuse or infrequent use should be well documented in medical records to counter this possibility of claim termination. To do this, discuss with your physician your concerns with medication, and what you do each day to alleviate pain.

 

Objective Medical Evidence

 

This is frequently taken to mean medical evidence such as diagnostic tests, laboratory findings, and clinical examination findings. It does not include only symptoms or a diagnosis. For example, if a claimant asserts severe pain and has a diagnosis of fibromyalgia, that report of pain alone will not likely be taken as objective evidence. There will need to be a clinical examination by a physician with objective findings documenting the diagnosis, as well as restrictions and limitations.

 

An example of this provision in the policy is as follows:

 

You must provide objective medical evidence from a doctor who is not yourself or a relative by blood or marriage or a business associate. Objective medical evidence requires that you must provide evidence from a physician that includes but is not limited to: diagnostic testing; laboratory reports; and medical records of a doctor's examination documenting clinical signs, presence of symptoms, and test results consistent with general accepted medical standards supported by nationally recognized authorities in the healthcare field.

 

This provision is intended to limit the disability benefits that will be paid. In policies with such a term, you may be in severe pain and unable to work, but unless that pain is supported by objective medical evidence, the claim will be denied or limited to a year or two of benefits. Some policies provide that benefits will be paid based on subjective medical evidence, but only for a limited time frame such as one year or two years. The effort is geared towards “weeding out” those claims that are not easily proven. However, there is a tendency to see more claims paid under this provision despite the presence of objective evidence.

 

It is undeniable that pain is a widely accepted basis supporting restrictions and limitations for the inability to work. The problem is that pain can vary widely between individuals. For example, a disc bulge in the lower back can cause one person excruciating pain, and another person may feel only minor discomfort. What is critical and key, however, is to demonstrate the cause of the pain, a medical condition that is known to cause restricting pain, treatment of that condition, and the overall credibility of the claimant.

 

The danger here is that many insurance company doctors disregard complaints of pain since diagnostic tools such as x-ray or MRI cannot objectively demonstrate the level of the pain. Diagnostics may demonstrate nerve impingement that is consistent with the reported complaints of pain, as well as the treatment and medications provided to limit that pain. Nonetheless, many insurance company doctors still simply ignore pain. Some feel that if you are capable of watching television you are capable of working a sedentary job.

 

Further, there can be differences of opinion with doctors. I have seen three different doctors provide three different findings on the degree of impingement on nerves evident in the same MRI. One said impingement was mild, another moderate, and one severe. The insurance company will likely side with the reading that supports refusal to pay the claim. Some diagnostic tests also may not be properly performed, and this will not provide an accurate report. An abundance of support to show pain from a condition is needed when differences arise from diagnostic film or test readings.

 

Some conditions such as migraine headaches, can also be very difficult as to their cause, but are nonetheless quite disabling. Anyone who has experienced a severe migraine headache which required strict bed rest in a very dark room is very aware of its disabling effects. As a result of the difficulties with proof, some courts have accepted a combination of evidence such as clinical findings by an examining physician, headache diaries, and observations by individuals as to the credibility of the claimant during a migraine headache to demonstrate objective evidence.

 

Watch for policies that outright exclude certain conditions.  Some insurers have gone so far as to outright exclude some conditions.

 

Exclusions

 

Exclusions are circumstances or situations which will bar coverage and payment of benefits regardless of disabling conditions. Common exclusions in disability policies are disabilities that are caused by or related to war, armed aggression, service in the Armed Forces, taking part in a riot or civil disorder, intentional or voluntary inhalation of a substance not intended for consumption, intentionally self-inflicted injuries whether sane or not, or commission of a felony. Some policies might be drafted to outright exclude certain claims for disabilities such as those demonstrated only by subjective evidence.

 

Here is an example of a typical Exclusion provision:

 

EXCLUSIONS

The Insurance Company will not pay any Disability Benefits for a Disability that results directly from:

1. suicide, attempted suicide, or intentionally self-inflicted injury while sane or insane.

2. war or any act of war, whether or not declared.

3. active participation in a riot.

4. commission of a felony.

5. the revocation, restriction or non-renewal of an Employee's license, permit or certification necessary to perform the duties of his or her occupation unless due solely to Injury or Sickness otherwise covered by the Policy.

 

In addition, the Insurance Company will not pay Disability Benefits for any period of Disability during which the Employee is incarcerated in a penal or corrections institution.

 

Insurance companies reduce risk with exclusions. Some may exclude or at least limit conditions causing disability by pain, such as musculoskeletal conditions or migraines or other headaches. It is more understandable if the insurance company does not want to pay for claims where there is a good chance the disability will occur due to the engaged activity.

 

There is always danger that can occur with exclusions as to interpretation of some of the provisions, such as participation in a riot or commission of a felony. An adjuster not familiar with case law and interpretation of similar provisions might decide to give a different interpretation to exclusions than was given in another claim. For example, if someone falsely accuses the insured of a felony is that enough to show “commission of a felony” or is a conviction required to meet the exclusion?

 

It is best to be aware of exclusions before filing a claim. Certainly, after a sickness or injury occurs that could potentially disable you, you want to be mindful of exclusions that might exist. Once an insurance company denies a claim, it can become defensive and continue to support that decision regardless of explanations or further proof.

 

Reasonable Accommodation

 

This term usually relates to one of the reasons why your disability benefit is not paid or as to when the payment can be stopped. The policy may state that benefits will stop on the date you are able to perform the major duties of any occupation on a full-time basis with “Reasonable Accommodation.” Often those words are capitalized which means that there should be a definition in the policy defining that capitalized word or term.

 

One common definition of reasonable accommodation is:

 

Any modification or adjustment that the employer willingly provides to a job, an employment practice, a work process, or the workplace.

 

The modification or adjustment must make it possible for a disabled person to:

 

Reach the same level of performance as a similarly situated nondisabled person; or

 

Enjoy equal benefits and privileges of employment as are available to a similarly situated nondisabled person.

 

The modification or adjustment must not place an undue hardship on the employer.

 

Some of the difficulties with this definition pertain to whether it is talking about your employer or an employer in the national economy. Often it will refer to what an employer in the national economy is willing to do. Also, there is typically no precise definition as to what constitutes an undue hardship on the employer.

 

The above common definition appears to track the Americans with Disabilities Act, 42 U.S.C. § 12102, which followed language found in Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e. Thus, it is helpful to consult statutes, regulations, and even case law in analyzing what is a reasonable accommodation, and what is an undue hardship.

 

The difficulty that arises here, of course, is whether an insurance company is analyzing a job in the national economy as opposed to the insured's actual occupational duties. You and the employer may be led to believe that accommodation for your occupation is what the policy is addressing.  However, paying close attention to how the policy handles that matter is important. An accommodation or modification of a “national economy” job may do nothing for you.

 

Most insureds have already engaged in an effort to keep working through physical problems, and due to either physical restrictions or pain arising from physical conditions, have come to the conclusion that they cannot keep working. It is wise to be aware of other jobs like yours if you have a national economy definition, and whether a modification or accommodation for your job or some “national economy” job is possible or not. You may have to doubly prove your case and the case concerning some other job supposedly like yours.

 

Examination by Our Doctor

 

This provision means that the insurance company has a right to require you to make yourself available for an examination by a doctor that the insurance company has selected. An example of this provision reads along these lines:

 

We have the right to have a doctor of our choice examine the person for whom a claim is being made under this policy as often as we feel necessary. We will pay for all such examinations.

 

Many claimants feel they have nothing to hide, and so they are perfectly willing to attend such an examination. However, after having seen these type examinations for a few decades, there are a number of unfair issues that arise. First of all, rarely is the physician unbiased. The doctor knows who is paying for the exam, and usually has performed many of these exams for the same insurer.  There is also usually data kept as to how often the physician provides information the insurance company can use to deny the claim. Those doctors, of course, are the ones more likely to be selected again. Thus, the exam is not truly independent.

 

Second, there can be significant inconvenience and pain imposed on the insured. For example, if the doctor selected is three hours away from your home, the travel may be difficult if you have limitations sitting that long due to pain. Some insurers will take note if you attend and claim you are able to sit for several hours given you rode to the exam. There is also expense with driving to the examination. Also, during the examination, the manipulation of arms, legs, or your back or neck may cause further significant pain. I have seen clients brought to tears. Complaints to the insurer or a medical board for unnecessary pain or harm have been ignored.

 

Third, a one-time examination does not provide as much information as the repeated examinations over several years by your treating physician. The insurance companies contend that the treating physician may be biased in favor of the claimant. However, few if any doctors are willing to misrepresent a patient's condition. Further, in my experience, the reimbursement rate of most doctors for treating patients is not anything close to the amount of money that the physician's employed by insurance companies receive. A one-time exam by an insurer's doctor may pay several thousands of dollars. Treating doctors may not receive that amount from one patient, even after several years of care.

 

Fourth, after paying a significant sum toward the doctor of the insurance company's choosing, the insurance company is more inclined to deny or terminate the claim. This is so even if the examination is not entirely unfavorable for the claimant. Insurance companies are driven by profit and when they have invested that money in the independent examination, they have a greater incentive to protect that investment by denying the claim to justify the money paid. More than a few doctors for insurers, have stated matters much differently in a report than when talking to the claimant during and after the exam. There may be more than one draft of a report, with changes suggested by the insurer.

 

I could go on with other concerns, but suffice it to say, that typically it is important to take a witness to one of these examinations. It also is wise to take a video camera and to videotape the examination. Many insurers will unfairly refuse this since that might interfere with fairness and objectives for the exam.

 

Ongoing Proof of Loss

 

As noted above, “proof of loss”, sometimes called proof of disability, means written proof that you meet the definition of disability in your disability policy. Ongoing proof of loss then means that you must continue to provide that proof of disability throughout the length of the claim. Your policy likely contains a provision that states it ends when you are no longer disabled, or you fail to furnish proof of loss that you are disabled.

 

Many people have the mistaken belief that once they are approved for a disability benefit under their policy this will continue until they reach retirement age. That overlooks a policy requirement that mandates ongoing proof of loss. In other words, once you are approved that approval only lasts as long as you continue to demonstrate that you remain disabled. You may be disabled but failing to furnish that proof to your insurance company within the time limits allowed, may cause your claim to be terminated.

 

Here is an example of a provision from a policy:

 

Proof of continued Disability, including Regular and Appropriate Care and Treatment of a Physician and any Other Income Sources must be given to The Company, upon request. This proof must be received within 45 days of Our request. If it is not, benefits may be denied or suspended.

 

This requirement contractually permits the insurance company to terminate your claim if you fail to provide proof demonstrating ongoing disability. That may be medical records and a form called an attending physician statement. Also, proof about your Social Security disability benefit and other potential offsets may be required as well.

 

Many people are very sick or too ill to attend to ongoing requests, which can be as often as the insurance company deems to be reasonable. Such requests may come only one time per year or every six months, but in some instances more often than that. It is wise for people who are sick or too injured to attend to such matters, to have someone assisting on this. A delay, or even some perceived inconsistency in the forms or medical records submitted, can result in a claim termination.

 

Adverse Benefit Determination

 

This term is important in group policies. Under certain federal laws, this action by the insurance company can trigger when an appeal is due and permit the insured to obtain failure to pay information from the insurance company. An adverse benefit determination then is any failure to pay a benefit, the correct amount of the benefit, or failure to timely pay the benefit. For example, if the insurance company uses the wrong wage or salary and underpays the benefit, that is an adverse benefit determination.

 

Here is an example from the policy of this term defined:

 

Adverse Benefit Determination means a denial, reduction, or termination of a benefit or a failure to provide or make payment (in whole or in part) for a benefit. This includes, without limitation, any such denial, reduction or termination of a benefit, or failure to provide or make payment, that is based upon ineligibility for insurance under the Policy. 

 

The problem here is typically the insurance company might only advise the insured of the right to appeal or challenge a claim that has been terminated or denied. It will not notify the insured of the right to challenge some adverse matters such as the amount of a benefit or payment of the benefit pursuant to a limitation.

 

For example, if an insurance company determines that you are eligible to receive a benefit due to a mental nervous condition, and the policy limits benefit payments for a mental nervous condition to only one year, that may be an adverse determination if you have physical conditions which disable as well. You may have a right to challenge that determination by asserting those physical conditions that disable you rather than only a mental nervous condition. If the insurance company does not provide notice of the right to appeal or challenge that determination, you may not think to challenge that as you are receiving a benefit. That can result in a number of months or years going by before a challenge is made. Better to challenge that while still receiving benefits.

 

Appeal or Request for Review

 

Most group policies define “appeal” or “request for review” as the insured's right to challenge an adverse benefit determination. Policies typically provide a time limit for that challenge.

 

Here is a typical provision relating to this term:

 

If a claim is wholly or partially denied, the claimant will have up to 180 days to make an appeal. Our company will conduct a full and fair review of an appeal which includes providing to claimants the opportunity to submit written comments, documents, records and other information relating to the claim; the opportunity upon request and free of charge for reasonable access to and copies of all documents, records or other information relevant to the claim, and a review that takes into account all comments, documents, records, and other information submitted by the claimant relating to the claim, without regard to whether such information was submitted or considered with the initial benefit determination.

 

In most group policies, which are governed by federal laws, those time limits may be required to furnish a minimum number of days to be compliant with the law. If they are not compliant, this should be brought to the attention of the insurance company right away. A failure to follow the policy, laws or the regulations can be a problem for the insurer and can be a reason to see the claim paid. Procedure is important for both you and the insurer.

 

Many people covered by a group policy fail to recognize that when an adverse benefit determination is made, they should immediately request the entire claim record, which furnishes a basis for that decision. A letter may not provide enough detail and may use “boiler plate” language failing to clearly advise of this right. The “real” reason the claim is denied may not be evident in the letter refusing your benefit, but it must be in the claim record. An insured should always obtain the complete claim record before asserting an appeal. A review of that record is critical before appealing.

 

After reviewing the claim record, the claimant should immediately set about to obtain the information that would demonstrate that the adverse benefit determination is wrong. Those time limits may be strictly enforced and preclude the right to file suit under many group policies governed by federal law. Failure to follow those time limits is often called failure to exhaust claim remedies or failure to exhaust administrative remedies by courts.

 

With a private policy, the letter informing of the adverse benefit determination may provide a time limit, but the insured should check to make certain that that time limit is also mandated by the policy. The letter may simply assert a short time limit not mandated by the policy. Clarification may be needed if the time provided is too short. The policy controls over a letter. Policies are not so easily amended with just a mere letter from an adjustor.