Articles Posted in Disability Policies

Disability claims filed under an ERISA plan are different than disability claims that are not governed by ERISA.  The United State District Court, Northern District, Dallas Division, issued an opinion in 2018, that discusses these types of cases.  The case is styled, Aaron Rome v. HCC Life Insurance Company.

This is a dispute between a former professional hockey player (Aaron) and his insurer (HCC).

Aaron suffered a career ending injury.  He sough benefits under the HCC policy and was denied.  Aaron filed suit in State Court including claims for violations of State law and the case was removed to Federal Court where HCC filed motions to have have the State law claims dismissed under Rule 12(b)(6) or in the alternative a motion for summary judgment.

The language in a disability policy is important to read and understand.  The Courts will do so very closely.

This is illustrated in a 2017, opinion from the U.S. 5th Circuit.  It is styled, David M. Cox v. Provident Life & Accident Insurance Company.  It is a summary judgement case that was decided by the lower court in favor of Provident.  This Court reversed the lower court finding.

Cox had a disability policy with Provident.  The Policies provided coverage for disability caused by injury or sickness and contain provisions tying the period of benefit payments to the cause of the insured’s disability.  If the insured is rendered disabled at the age of 60 as a result of an accident or injury, the Policies provide for lifetime benefit payments.  By contrast, if the insured is rendered disabled at the age of 60 as a result of sickness, the Policies provide that benefit payments will be paid only until age 65.  The greater of the two applicable benefits periods applies when the disability results from a combination of the two.

Weatherford insurance lawyers who handle insurance related matters need to understand that an anticipatory breach of the insurance contract has remedies under the law.   This is best illustrated in disability policies where the insurance company is obligated to make monthly payments to the insured.

According to the 1937, Texas Supreme Court opinion styled, Universal Life & Accident Insurance Co. v. Sanders, when an insurance company 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.”  Repudiation is conduct that shows a fixed intention to abandon, renounce, and refuse to perform the contract.

Another Texas Supreme Court is opinion is from 1976, and styled, Republic Bankers Life Insurance Company v. B.L. Jaeger.

Abilene Texas lawyers who handle accidental death and dismemberment policy claims that are governed by ERISA, need to read this 2017, 5th Circuit Court of Appeals opinion.  It is styled, Robert Ramirez v. United Of Omaha Life Insurance Company.

Ramirez traveled to West Texas and contracted a fungal infection that resulted in the removal of one of his eyes.  He made a claim through the accidental death and dismemberment plan he had through his employer.  The plan is governed as an ERISA plan.  United of Omaha denied the claim, stating the infection that caused the removal of Ramirez’s eye was not the result of an “Accident” as that term is defined in the policy.  United of Omaha was granted summary judgment by the District Court and this appeal followed.

The facts are undisputed.  Following a trip to West Texas, Ramirez came in contact  with a fungus and eventually was diagnosed with a condition known as coccidioidomycosis.

Lawyers who handle disability insurance claims know that the policy has to be read.

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, according to the Texas Administrative Code, Section 3.3012(b)

The 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.

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.  This is found in the 28 Texas Administrative Code, Section 3.3012(b).

The 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.

As in all insurance policies, the language used in the policy will be used in enforcing and interpreting the policy.

In the 2003, Texas Supreme Court opinion, Provident Life and Accident Insurance 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 then held that the trial court’s granting of summary judgment in favor of the insurance company 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.

A long term disability policy that defined 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.  This was in the 2002, U.S. 5th Circuit opinion, Lain v. UNUM Life Insurance Co. of America.  No concrete evidence disability insurer’s determination of non-disability 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.

It needs to be noted at the beginning here.  Private disability claims are different from government disability claims and also from disability claims that are governed by ERISA.

This posting deals those disability claims that are from private policies or policies other than government or ERISA.

Disability policies will usually specify an amount that will be paid in the event a claimant becomes disabled (as that term is defined in the policy) and a maximum length of time for which such benefits will be paid.  As an example the policy may pay $500 per month for up to 10 years.

Attorneys who litigate disability claims need to read this case from the Southern District of Texas, Houston Division. It is styled, Larry Frederick v. American Heritage Life Insurance Company. This case will help an attorney understand some of the burdens put on the insurance company.

In October 2012, Frederick was severely injured in a vehicular accident. One month later, he submitted a claim for benefits under an accident insurance policy he purchased from AHLIC several months earlier. AHLIC initially denied payment under the policy, but later paid the claim after reversal on administrative appeal. Frederick now sues claiming that AHLIC violated the Texas Insurance Code by unreasonably delaying payment of the benefits.

In its answer to Frederick’s first amended complaint, AHLIC raises several affirmative defenses, including a pre-existing condition exclusion in the policy, ratification by Frederick, nonpayment of the policy premium, and failure to prove loss.

This 5th Circuit Court of Appeals opinion is a must read for ERISA attorneys. The case is styled, Burell v. Prudential Insurance. The facts will be given here. The case needs to be read to understand how the Court affirmed the findings of the lower Court in denying benefits to Burell.

In 1985, Burell began working as an entry-level technician for Methodist Healthcare Systems (“MHS”). After 26 years, he ended his career as Director of Biomedical Services for all San Antonio MHS facilities. As an employee of MHS, Burell participated in the company’s insurance plan (“the Plan”), which is provided through HCA Management Services, L.P. Prudential acts as both administrator and insurer of the Plan. In order to qualify for long-term disability benefits, a claimant must meet the following definition of “disabled”: the claimant must (1) be “unable to perform the material and substantial duties of [his or her] regular occupation due to [his or her] sickness or injury “; (2) be “under the regular care of a doctor “; and (3) suffer “a 20% or more loss in [his or her] monthly earnings due to that sickness or injury.”

Burell was diagnosed with multiple sclerosis (“MS”) in 2008. Citing worsening symptoms of MS, in September 2011, Burell went on medical leave and filed for long-term disability benefits with Prudential, claiming that he qualified for benefits under the Plan due to MS, headaches, depression, and anxiety. In January 2012, he stopped working altogether, ending his employment with MHS. In support of his claim, Burell submitted medical records from his treating physicians and a psychiatrist. Prudential hired Heidi Garcia, a registered nurse, and Dr. Alan Neuren, who is board certified in neurology, to review Burell’s claim. Dr. Neuren found that Burell’s diagnosis of MS was unsupported by his medical records. He also found it unlikely that Burell suffered any cognitive impairments, opining that job stress is “likely the source of his complaints as opposed to a neurological disorder.” Garcia focused her review on Burell’s claim of depression and anxiety, ultimately finding that any cognitive symptoms he was experiencing were not sufficient to prevent him from working. Based on their reports and the medical records submitted, Prudential denied Burell’s claim for long-term disability benefits.