Articles Posted in Disability Policies

Here is yet another ERISA claim being denied by the Federal Courts.  This case is from the United States Fifth Circuit Court of Appeals and is styled, Deo G. Shanker v. United Omaha Life Insurance Company.

The District Court granted United’s summary judgment motion and this appeal followed.

Shanker was President of a company called Intracare and United was the insurer under an ERISA plan which provided for long-term-disability (LTD) benefits.  To qualify for LTD benefits, Shanker had to become “Disabled due to an Injury or Sickness, while insured under the Policy.”  Disabled is defined to mean: “Because of Injury or Sickness, a significant change in Your mental or physical functional capacity has occurred in which you are prevented from performing at least one of the Material Duties of Your Regular Occupation on a part-time or full-time basis ….”  Material Duties is defined as “the essential tasks, functions, and operations relating to an occupation that cannot reasonably omitted or modified” and includes “the ability to work for an employer on a full-time bases.”  Regular Occupation is defined as “the occupation You are routinely performing when Your Disability begins.”  The definition in the policy also notes:

The law office of Mark S. Humphreys, P.C. is pleased to announce a settlement in a case involving a disability policy.

In this case the insured lady had purchased a disability policy through an advertisement she had received in the mail.  The lady paid on the policy for a number of years when one day she was involved in a one vehicle automobile accident.  This lady was severely injured and was in a hospital for about a week.  Her injuries among other things included paralysis to one side of her body.  This paralysis to one side of the body is called hemiplegia.  Another term used to describe this condition is hemiparesis.  However, from a medical perspective, these two terms have distinct meanings.

Hemiplegia is total paralysis to one side of the body, while hemiparesis is a partial paralysis to one side of the body.

Insurance attorney who handle denied claims and in particular insurance attorneys who are willing to take on an insurance claim governed by ERISA claim which has been denied, needs to read this opinion from the Eastern District of Texas, Sherman Division.  The case is styled, Gina Pike v. Hartford Life And Accident Insurance Company.

Pike had received long term disability (LTD) benefits from Hartford from April 24, 2008 through December 14, 2016, the period of time when Hartford determined Pike met the definition of disability in the LTD policy.  Later, after determining Pike was unable to prove she continued to be disabled under the policy, the benefits ceased on December 15, 2016.

This case resulted in a 51 page opinion which is not going to be discussed at any length here.  What is relevant is that it is rare for beneficiaries of these employer sponsored benefit plans and as a result needs to be carefully read to determine what the Court saw that separated this case from other ERISA cases.

Mark Humphreys law offices announce a recent settlement in two ERISA (Employee Retirement Income Security Act) cases in favor of clients.  The laws of ERISA are governed by Federal Law rather than State Insurance Law.  The laws are drastically in favor of the insurers.

One case involved a claim for Short Term Disability (STD) benefits and the other was for Long Term Disability (LTD) benefits.

The disability benefits were purchased by the employees through payroll deduction.  These benefits, part of employee benefits packages, can also include health coverage and life insurance coverage.

Here is a rare win in an ERISA case.  Unfortunately the win is the the 7th Circuit Court of Appeals rather than the 5th Circuit which controls most ERISA plans for readers of this blog.

The ERISA case is styled, Susan Hennen v. Metropolitan Life Insurance Company.  The case does illustrate how to win an ERISA case.

Hennen had received short term disability (STD) benefits for two years as the result of a back injury.  Hennen then applied for long term disability (LTD) benefits.  The disability plan that Hennen had contained a two year limit for neuromusculoskeletal disorder, subject to exceptions, including one for radiculopathy, a “Desease of the peripheral nerve roots supported by objective clinical findings of nerve pathology.”  After Metlife terminated Hennen’s benefits, she sued under ERISA, arguing that Metlife’s determination that she did not have radiculopathy was arbitrary and capricious.  The court hearing the case had granted summary judgment in favor or Metlife.  This appeals court reversed the ruling saying Metlife acted arbitrarily when it discounted the opinions of four doctors who diagnosed Hennen with radiculopathy in favor of one physician who ultimately disagreed, but only while recommending additional testing that Metlife declined to pursue.

For lawyers who handle claims related to the denial of disability policies, there is some law that they have to know to effectively represent their clients.

Probably 90 percent of disability policies involve payments spread out over a period of time.  When a claim for disability benefits is denied it can be anticipated that all future benefits are denied also.

When a insurance company who is obligated by contract to make monthly payments of money to another absolutely repudiates the obligation without just excuse, the obligee is “entitled to maintain his action in damages at once for the entire breach, and is entitled in one suit to receive in damages the present value of all that he would have received if the contract had been performed, and he is not compelled to resort to repeated suits to recover the monthly payments.  This was discussed as early as the 1937, Texas Supreme Court opinion styled, Universal Life & Accident Insurance Company v. Sanders.  As seen in the 1981, Dallas Court of Appeals opinion, Group Life and Health Insurance Company v. Turner, Repudiation is conduct that shows a fixed intention to abandon, renounce, and refuse to perform the contract.

Insurance lawyers who handle disability cases need to know these coverage issues.

Disability policies normally require that any claimed disability occur while the policy is in effect or within a specified time after any claimed accident or injury.  As an example, the policy may provide coverage for an illness or injury that “totally and continuously disables the insured within 30 days of the date of the accident so as to prevent him from performing each and every duty pertaining to his occupation.”

Disability insurance policies usually distinguish between disabilities caused by illness and those resulting from accidental injury.  This is seen in the 1978, Beaumont Court of Appeals opinion, Lone Star Life Ins. Co. v. Griffin.  In this case the policy provided that the insurer would pay the insured $1,000 per month for 60 months for an accidental injury resulting in total disability and that it would pay $1,000 per month for 24 months for total disability resulting from sickness.

According to the 28 Texas Administrative Code, Section 3.3012(b), in a definition of “total disability” in an individual accident and sickness policy or hospital, medical, and dental service corporation subscriber contract, the inability to perform duties may not be based solely on an individual’s inability to perform “any occupational duty,” but the insurer may specify the requirement of the inability of the insured to perform all of the substantial and material duties pertaining to his or her regular occupation, or words of similar import.

A policy may further provide coverage for “partial disability,” which is typically defined as the insured’s inability to perform one or more but not all of the essential duties of his or her employment or occupation.

Disability policies normally require that any claimed disability occur while the policy is in effect or within a specified time after any claimed accident or injury.

Here are a few examples of cases that have been litigated regarding disability policies and how the courts look at these cases.

In a 2003, Texas Supreme Court opinion, Provident Life and Ac. Ins. Co. v. Knott, the Court read the policies in question defining the term “total disability” to mean that the insured must, in order to be considered totally disabled under the policies, be unable to “perform all of the important daily duties of his occupation.”  The court then held that the trial court’s granting of summary judgment in favor of the insurer was appropriate given that the insured, a gynecologist seeking benefits for total disability under those policies was able to see patients, perform surgery, consult with other physicians and perform administrative duties.

In a 2002, United States 5th Circuit opinion, Lain v. UNUM Life Ins. Co. of America, a long-term disability policy that denied disability in part as the inability to perform “each of the material duties” of the insured’s regular occupation required only that the insured be unable to perform any single material duty of her occupation in order to be considered disabled, not that she be unable to perform all duties of that occupation.  In the case, no concrete evidence disability insurer’s determination of nondisability for insured who suffered recurring severe chest pains, while overwhelming evidence supported disability claim, warranting benefit award under ERISA civil enforcement provision: the insured’s time at home doing research on her medical condition did not equate to ability to practice law, as insurer contended; insurer focused on certain “normal” test results to support its finding, but test results were primarily abnormal and also could not clinically measure insured’s pain; and insurer’s reliance on insured’s failure to seek psychiatric care prior to ceasing employment was misguided since her disability was physical.

Insurance lawyers who handle disability income policies will see two types of policies.

One is the policy purchased through employment of provided by the employer.  The other type is the type purchased independent of employment, usually through an independent agent or in response to advertisements.

Those purchased through employment by the employee will often times be ERISA policies.  ERISA stands for Employee Retirement Income Security Act.  ERISA policies are governed by Federal law.  All other types of disability income policies are governed by State law.  ERISA policies are in a classification all their own.  This blog is not discussing ERISA policies and a person needs to know which type is at issue.