Disability Policy Claim Denial

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.

The measure of damages in an action for breach of contract by repudiation is the total of all accrued payments plus interest, plus the present value of all accrued payments that the plaintiff would have received if the contract had been performed.  This was made in the State Court opinion, Republic Bankers Life Insurance Company v. Jaeger, a 1976, Texas Supreme Court case.  This was also made clear in the Federal Court opinion, Allbritton v. Colonial Life & Accident Insurance Co., which is a 2000, Northern District case.