Contributed by Disability Insurance Bad Faith Lawyer, Eric J. Ratinoff

So let’s take a few minutes to talk about what happens when you become disabled.

Here you are somebody who’s purchased a long term disability policy to protect you and your family, and calamity strikes – either an accident or an illness – and you can no longer work.  What you should do is immediately make a claim with the insurance company.  There’s a claim form that you can easily obtain – call your agent, call your broker, call the insurance company directly.  Let them know that you’ve been injured, or that you’re sick, and you’re making a claim under your policy.  And you should start to fill out the claim form right away.  Get it back to them promptly.  There will be statements that will need to be filled out by your physician, so make sure to get the form to your doctor as soon as possible.

Now, every disability policy has a provision stating that you need to be under the regular attendance of a physician for the disabling condition to be valid under the policy.  What “regular attendance” means is up for interpretation, and, really, that’s a medical issue to determine what’s regular and what’s reasonable according to the condition that you’re suffering.  It must be established that this is a condition that’s affecting your life to the point that you can’t do the job you’ve trained to do for so many years.
It’s also important to start gathering documentation that will help you put your best foot forward with the insurance company.  Get your medical records together if you are able.  Gather whatever films may have been taken.  Let your insurance company know that they can have it all.  Now the insurance company has forms that allow them to get your medical records themselves – and they should do that.  It’s their obligation to do that.  But they don’t always do it. And whenever possible, you as the claimant need to force their hand.  It’s understandable that you may not be able to gather everything – that perhaps because of your condition you simply cannot manage to pursue the necessary documents or even keep them organized.

That’s one of the sad things about how these insurance companies treat people, because often it’s a disabled person who’s down and out and lacks resources and is sick, disabled, that the insurance companies take advantage of.  And they have you jump through hoops.  They’re not supposed to make you jump through hoops, but sometimes they do.

So get your documentation – your medical records, your earning information.  Get your W2’s. or if you’re self employed, get your 1099’s.  Gather together your tax returns.  All of this information comes together and may provide support for your claim.  Every policy contains something pertaining to earnings, and almost every policy calls it “proof of loss,” or some version of that phrase.  In essence it’s the proof that your claim is valid and falls under the provisions of the policy.  This is the type of information that helps prove that.

If you were injured on the job and you have a vocational rehabilitation counselor that’s been working with you through the worker’s compensation system, get that documentation together.  If you’ve applied for social security disability and have been deemed disabled according to social security, get that documentation together.  But don’t be misled – the definition of disability under most insurance policies is far more favorable to you as the insurance policy holder than the definition of disability under the social security guidelines.  So if social security says you’re not disabled, that doesn’t mean that you are not disabled under your insurance policy.  They are two different worlds.  But certainly, if the social security has said that you are disabled, that’s very powerful evidence to get in front of your insurance company to support the proof of your claim.

It’s important to get as much documentation as possible to make it difficult for the insurance company to deny your claim.

Stay tuned to part three of this 4-part Disability Claim series.  To subscribe to this series via podcast, visit the KCRLegal Personal Injury Podcast.

Contributed by Insurance Bad Faith Attorney and KCR Partner, Eric J. Ratinoff

Most people who purchased disability insurance policies did it because for decades insurance companies were engaged in a huge marketing effort, and they were making a lot of promises.  Essentially, they said that if you paid your premiums month after month and year after year – and these were expensive premiums – they would protect you, your family, your earnings and your lifestyle.  For example, doctors go to school for years, investing hundreds of thousands of dollars of time, money and energy into their education.  It makes sense that they would turn to insurance companies to protect them in the event that they can no longer practice medicine.

In the early 1970’s through the mid 1990’s there was intense competition among the insurance companies, where they started offering what is known as “own-occupation policies.”  Now the concept of offering an own-occupation benefit within a long term disability policy has been around since disability insurance’s inception.  But as a marketing tool in the 1970’s and 80’s, insurance companies figured out that they could charge huge premiums and go after the highest earning individuals – doctors, lawyers, stock brokers, and other professionals – offering to protect the livelihoods from their high earning jobs.

But there was a targeted effort to get doctors to buy these policies, and in the competition among insurance companies to sell the most policies, they ended up overselling and making promises that they could not fulfill.  The heaviest promise they made to California doctors was basically that in the event they could no longer practice their own occupation – regardless if they obtained a new occupation earning money elsewhere – they would still receive the full benefit from their policy.

So jump ahead several decades, and a number of physicians who paid tens of thousands of dollars in premiums over the years have become disabled.  And now the insurance companies’ promises have come back to haunt them.

But their promises really shouldn’t haunt them, because they’d been paid millions of dollars in premiums over thirty or more years.  But with the fall in investment returns, poor investment decisions made by these companies and the fall in the economy, insurance companies figured the easiest way to save money would be to find ways to reject claims.

Meanwhile, as the insurance companies were finding ways to cheat the claims of honest, hard working people, they created a new animal to sell.  It’s called the “residual income” disability policy.  And the brokers went out selling these policies, saying, “this is an own-occupation policy; if you can’t do your own occupation you’re covered.”  But what they didn’t make clear is that almost every new own-occupation disability policy contains a residual income clause, stating that if you are “gainfully employed” anywhere else, the benefit you receive from your policy will be reduced.  This is a big difference from the policies they’d been selling all those years that promised full benefits to age 65 (and sometimes beyond), no matter what the employment or earning situation was, as long as the policyholder could no longer practice his or her own occupation.

If you are shopping for a disability insurance policy, be on the lookout for terms like “gainfully employed” or “residual income.” It may be worth a look at your current policy to make sure you know what you purchased.

In part two of this four-part series, Eric Ratinoff will discuss what should be done when a disability claim needs to be filed.

Contributed by California Insurance Bad Faith Attorney, Eric Ratinoff

Insurance companies routinely roll out new marketing strategies to make their services more appealing to certain high income segments of society.  Too often, these strategies prove to be heavy on marketing and light on value.

One such example lies in disability insurance policies as marketed to doctors, especially physicians practicing in California.

In the 1980’s and early 1990’s, “own-occupation” insurance policies seemed to be the most effective at achieving solid total disability coverage for the medical profession.  At that time, all insurance carriers who offered own-occupation disability policies maintained their policies under the same working outline, and defined total disability as being unable to perform the “substantial and material duties” of one’s regular occupation while under the care of a physician.  The definition made it clear that if the doctor could not do his job, he would be entitled to full benefits.  The “regular occupation” referred to the one he was engaged in at the time of the disability, meaning the doctor could pursue a different profession and his benefits would not change.  Additionally, if being under regular doctor’s care would not improve the policyholder’s condition, most companies would waive the “under care of a physician” requirement.

However, due to lack in regulation of individual long term disability insurance terms, many carriers have since modified their policies (or eliminated own-occupation policies altogether), creating in essence their own definitions of the term.  Now we have a situation where what may be a good own-occupation policy with one carrier is essentially an entirely different policy disguised as an own-occupation policy with another carrier. Some of the policies now marketed as own-occupation policies are actually income replacement contracts (or “loss of earnings” policies), as they have inserted a clause restricting the physician’s ability to pursue any other occupation while receiving the total disability benefits awarded due to their inability to engage in their primary profession.

Other insurance carriers have begun marketing a new type of policy named “Medical Occupation.”  These policies redefine the occupation of a physician as encompassing a variety of duties, and they define total disability as being unable to perform all of those duties.  They base the policyholder’s benefit on a percentage of what job functions they regularly fulfilled prior to the disability, and what percentage they are able to fulfill after the disability.  This means if the physician chose to continue working in some capacity after the disability, this would decrease or possibly eliminate his benefits.

One major insurance company that discontinued their own-occupation policies in the late 1990’s has re-entered the market with the new medical occupation model.  They are now heavily marketing these policies to physicians.

Insurance companies across the board routinely attempt to reduce or eliminate benefits in order to cut costs and increase profits.  For physicians who purchased own-occupation policies in the 1980’s and 1990’s, however, this has resulted in numerous unpaid and under-paid insurance claims.  Fortunately, the law in these cases typically favors the insured.

Physicians should choose wisely when shopping for a long term disability insurance policy.  Certainly there are some specialties that may not require a pure own-occupation policy.  But surgeons, obstetricians, ophthalmologists, urologists and others who would greatly benefit from pure own-occupation policies should double check their existing policies, and thoroughly review any new proposals prior to signing the dotted line.

When seeking a pure own-occupation disability policy, look for words like “any other occupation” or “gainful occupation.”  Keep in mind that there may also be time limits implemented, i.e. the policy may be written so that the pure own-occupation benefits exist only for the first 5 years, with restrictions taking place thereafter.  If you see these or similar terms, do some comparison shopping.  There are still a few carriers who offer pure own-occupation policies.  As always, reading the fine print is critical with insurance policies to make sure you are getting the appropriate value in exchange for the high price of your premium.