Physicians News » Featured Writer: Mark F. Seltzer, Esq.

“Reservation Of Rights” In Disability Insurance Claims: Right Or Wrong?

Physicians News — Fri, 10 Jun 2011 15:02:56 +0000

By Mark F. Seltzer, Esq. You are a physician who has been suffering from a medical condition, for which you have asked your Disability Insurance Company to pay you benefits, under your Disability Insurance Policy. You have contacted your Company, you have provided it with all the pertinent information that it requested in a timely fashion; you have done “everything by the book”. You may have met with its Field Representative, or even been evaluated by one or more of your Company’s chosen Independent Medical Examination doctors. But, notwithstanding your compliance, the Company has methodically asked for endless amounts of additional information, or “dragged its heels” considering your claim. After months of requests for payment of your benefits, in your greatest time of need, the day finally comes when you receive your back-benefits check. But, to your surprise, it comes with a peculiar twist - Your benefits are being paid with “Reservation of Rights”. And, you ask yourself - what is this?; what does this mean? The short and simple answer is that the Company has not accepted liability for your claim, and it is not acknowledging responsibility to pay you under your policy for the claim that you have filed. Rather, it is paying you money for some “other” reason, often with the right to recapture the benefits should the Company ultimately fail to accept liability for your claim. “Reservation of Rights”, your Company would argue, allows it to satisfy pertinent insurance regulations, its own contractual obligations, avoid actionable Bad Faith, and not accept liability for your claim, simultaneously. It effectively allows the Company to attempt to “buy” more time, in order to further investigate and access your claim, with the intention to avoid the negative legal consequences, had it continued to do so without paying you benefits. However, in some claims, payment in this way can be a very useful and positive tool in order to assure receipt of badly needed benefits when the Company requires extended time to appropriately assess and consider complex or difficult claims. But, it can really be a “claim purgatory” - Neither accepting nor rejecting your claim, theoretically without any legal consequences, in return for “lending” you a little money, while specifically retaining the “right of return” of any money it has paid you, when it so chooses to call in your “loan”. Of course, claims manuals or other legal guidelines may “restrict” the time frame for use of this “tactic”. But, if your Company employs this strategy, it may define its own responsive duration rules along the way. For, you see, “the term of art” is all really a fiction created by your Company. We have seen, in our practice, especially as the economy has gone South, that the Companies have reacted to the new economic paradigm in their assessment and payment of claims. And, that’s usually not in a “charitable” way toward their policy holders: you the disabled physician. As the Companies have reacted to the economic realities by scrutinizing claims more carefully, with an even higher level of vigilance, they have continued to perfect the techniques and tools which they have employed, in order to either avoid payment of claims, or to reduce the amounts of benefits that they pay. “Reservation of Rights” is not a new technique, but it is being “effectively” used by your Company as part of this global strategy. But, even if you are being paid, and your Company has accepted liability for your claim, don’t think that you are “out of the woods” yet. For, the “vampire” may rear its ugly head at anytime during the claims process. Let me explain to you, the disabled physician, how the “vampire” potentially strikes. Your Company, after having accepted liability on your claim, and having paid you benefits, possibly for years, without warning, changes its position by denying or questioning liability for any further payment on your claim. However, it chooses to “tactfully” continue paying your claim, potentially hundreds of thousands of dollars of benefits, with “Reservation of Rights”. Then, it files a Federal Court action against you seeking termination of your claim, as of the date it began payment with “Reservation of Rights”, and in addition, seeking restitution or return of the hundreds of thousands of dollars it paid you in that regard. You would have effectively become a Defendant in a huge Federal Court case, requiring legal representation, potentially owing hundreds of thousands of dollars, and faced with the possibility of losing any future benefits on your claim. You would have become the victim of a calculated vulnerability, smitten by a strategy that only Bela Lugosi would love. So what is the “moral” of this “story”? You must understand your contract, and what you need to prove in order to obligate your Company to pay you benefits. You must cooperate with your Company in providing it with the pertinent information which it has requested. You must satisfy your contractual obligations. But, you must always accept the harsh reality that even if your Company has accepted liability for your claim, and paid you benefits, there is no guarantee that it will continue to do so. Never allow yourself to be lulled into a “false sense of security” during any step of the claims process. The more vulnerable you allow yourself to become, the greater the risk of your claim being challenged or terminated. Don’t let your Company sink its teeth into your benefits and use “Reservation of Rights” in the “wrong” way. ### The law offices of Mark F. Seltzer & Associates dedicates its practice to representing physicians, health care practitioners, and professionals in all aspects of disability insurance claims and cases, and professional licensure matters. The firm is located at 1515 Market Street, Suite 1100, Philadelphia, Pennsylvania, 19102. Mr. Seltzer can be reached at #215-735-4222 or 888-699-4222. Please access our website at www.seltzerlegal.com

“Refinancing” Your Disability Insurance Claim

Physicians News — Tue, 11 May 2010 14:30:13 +0000

By Mark F. Seltzer, Esquire Having Residual Disability (or Partial Disability) provisions in your policy can be the most important decision you (or your insurance consultant) make when you bought (or if you are considering buying) your Individual Disability Insurance policy. If you are eligible for Long Term Disability Insurance (Group) coverage from your employer, most probably, the definition of Disability includes a Residual component. However, having the coverage and getting paid under that coverage may cause you to be subjected to some creative “refinancing” of your financial information as assessed by your Disability Insurance Company. The beauty of Residual Disability coverage is that it provides partial benefits if you suffer a disabling condition that doesn’t entirely prevent you from performing your own occupation/your specialty. Most Residual Disability provisions include a loss of time or duties provision (for example: the inability to perform one or more of your material and substantial duties or you can perform all material and substantial duties but for less time than prior to the onset of your disabling condition) and a loss of income requirement, usually 20-25% compared to your pre-disability income. While each policy may contain different language, and each claim is unique and must be considered individually on its own merits, if you satisfy these Residual Disability requirements, you would be eligible to receive part of your monthly disability benefits even while you continue to work in your specialty. Conversely, the Residual Disability provision can serve as an important bridge as you return to work after being Totally Disabled, which can often compliment your recovery from your disabling medical condition by allowing you to gradually increase your work activities consistent with your medical restrictions and limitations, and remain eligible to receive partial benefits, while you are getting paid, subject to satisfying the same provisions above. As I have religiously said in multiple articles before, you must know and understand your contract, and the interrelationship between its various provisions, in order to insure your entitlement. “Life is good,” if you have Residual Disability Benefits at your time of need. Well, not so fast. Not if your Disability Insurance Company is in the way of you getting paid. While the satisfaction of the Residual Disability provision of your policy may seem pretty straight forward, you need to pay major attention to the “small print.” After you file your claim, your Company will do the usual “own-occ” work-up. It will assess all of your duties, and your work activity globally, and then determine, qualitatively and quantitatively, what it deems material and substantial/important/essential to the performance of your specialty. There is no hard and fast rule as to how the Company will determine materiality/ substantialness/importance, etc. It will look at and consider everything you do “work-wise” as part of its occupational evaluation. If you can navigate your way through the claims process in order to satisfy the Company that your medical condition prevents you from performing one or more of your material and substantial duties through the time or duties test (certainly much easier than establishing Total Disability) and you are receiving, what is most often, appropriate medical care, you would be entitled to Residual Disability Benefits. (Please refer to the articles in Physician’s News Digest, April 2006 for “Own-Occupation,” and in May 2004 for “Appropriate Medical Care”). The bottom line is that being able to receive your Residual Disability benefits may come down to satisfying one small sentence in the Residual Disability provision of your policy. And that satisfaction may come down to one simple calculation, the 20/25% loss of income threshold. Unfortunately, you may find that “simple” was never so complicated or so intensely contested by your Disability Insurance Company. Essentially, as per your policy, your Company is obligated to determine your highest “prior monthly income,” which it will use as a base month to which it will compare your after disability income. It is also obligated to perform an after disability monthly income calculation, also per the policy, often called “current monthly income.” Theoretically, when the current monthly income is compared to the prior monthly income and results in an earnings loss that satisfies or exceeds the loss threshold, a proportionate benefit should be paid under the Residual provision. If the income loss is so great, usually 75% or more, a 100% of the monthly benefit is commonly paid. The problem is that buried in your policy, is a “hidden treasure” of language, on a line-item basis, that can be employed by your Disability Insurance Company in order to possibly reduce your monthly entitlement or refute your benefits entirely. You have heard the saying that “money has mind of its own.” Well, that’s not if your Company can help it. After your Company receives your financial information, it will be methodically assessed by its financial department, including one or more of its team of CPAs. They will help “map” out a strategy which will more than likely categorize your income in a way most beneficial to the Company=s position. You may very well find that the Company=s assessment may be more “mythodical” than “methodical.” The longer the economy struggles, the more creative the Company’s maneuvering. Much of the recent economic press revolves around the depressed real estate market and whether or not one=s particular mortgage company is willing to offer “refinancing” of existing mortgages in order to help alleviate the housing problems. However, little attention is paid to your Company’s respective “refinancing” of your financial information, which is required in consideration of your claim, in order to help alleviate the Company’s liability. This is the new battleground. Even if you, your CPA, and the IRS accept the appropriateness of an income tax filing, that does not necessarily mean your Disability Insurance Company will agree with that determination, as it applies to your policy. Do your homework before you consider and file your claim. Keep a file of all pertinent information to substantiate your position. Always know and understand your policy and especially how the most relevant provisions interrelate with each other. Be prepared for a potential contentious claims process, and possibly whatever may follow. Your goal is to make sure that your financials can’t be reconfigured by your Company, to your disadvantage. Don’t let your Disability Insurance Company teach your dollars more cents! Mark F. Seltzer, Esquire is the founder of Mark F. Seltzer & Associates (www.seltzerlegal.com), a boutique law firm which dedicates its practice to representing physicians, health care practitioners, and professionals in all aspects of disability insurance claims and cases, and professional licensure matters. Mark can be reached at 888-699-4222.

Does loss of license disable your disability claim?

Physicians News — Wed, 12 Nov 2008 09:33:01 +0000

By Mark F. Seltzer, Esq.

If you are, or have been, involved in a disability insurance claim, you are keenly aware of the pitfalls and difficulties in prosecuting and maintaining your claim. But, if you think the claim’s process is difficult, try being involved in a professional licensure action at the same time.

In most disability insurance cases that involve either a psychiatric, and/or an addiction component, there is oftentimes a concurrent legal issue involving professional licensure. Both of these issues can be extremely complex in their own singular sense. The problem is that, in most cases, these issues can not be singularized and, in addition, your contractual requirements may often differ or even conflict with the regulatory and statutory mandates.

Your disability insurance policy requires that you establish that you are "factually disabled" in order to be entitled to either total or residual disability insurance benefits under your policy. It is more than likely that your policy will require substantiating that you are unable to perform the material and substantial; important; essential duties of your own occupation (specialty), along with satisfaction of the physician’s care requirement, as a result of a medical condition, in order to obligate your disability insurance company to pay you total disability benefits. In addition, it is also more than likely that your policy will require that you substantiate that you are unable to perform one or more of the material and substantial; important; essential duties of your own occupation (specialty), or that you can perform all such duties but for less time than prior to the onset of your disabling condition, satisfaction of a loss of income threshold (usually 20 percent or 25 percent) comparing your pre- and post-disability income, and satisfaction of the physician’s care requirement, as a result of a medical condition, in order to obligate your disability insurance company to pay you residual (partial) disability benefits.

The State Board of Medicine requires (amongst other things) that you establish that you are "fit to practice" medicine with reasonable skill and safety to your patients in order to maintain your license. While being medically "unfit to practice" from a regulatory standpoint can be consistent with the medical inability to perform the duties of your specialty from a contractual standpoint, this is not necessarily the case. In addition, there are a multitude of other issues other than "fitness" that require licensure action. Reconciling these concurrent issues is, in reality, not only complex, but can have debilitating consequences on your claim and also invariably involve your disability insurance company considering the "legal disability" defense.

In the licensure context, the State Board of Medicine may suspend, revoke or otherwise restrict a license to practice medicine when it determines that a physician is unable to practice the profession with reasonable skill and safety to patients by reason of illness, including psychiatric/ psychological and/or alcohol or drug abuse/dependency/addiction, or being convicted of certain crimes. Those crimes usually include violations of the drug laws, felonies and misdemeanors related to the practice of medicine. In addition, the State Board of Medicine may take action against a physician’s license because of the failure to adhere to, or otherwise satisfy, certain regulatory requirements, for example, failure to obtain/maintain medical malpractice insurance.

Also, the State Board of Medicine may be obligated to take reciprocal action as result of proceedings before an other State Board of Medicine.

There is a line of specific cases upon which your disability insurance carrier will rely in trying to use the "legal disability" defense whenever any licensure action is involved. "Legal Disability," as opposed to "factual disability," means the loss of entitlement to practice your specialty, or medicine altogether, as the result of an intentional act. "Factual Disability" generally means the inability to perform one or all essential duties of your specialty as a result of a medical condition.

The "legal disability" defense, as employed by all disability insurance companies, has morphed from its original specific holding in 1928 to now house a multitude of circumstances and applications to prevent the payment of disability insurance benefits, by establishing that the basis for the inability to practice is not medically-based. One of the continuum of more recent cases which clearly illustrates employment of the "legal disability" defense by a disability company is the case of Goomar v. Centenial Life Insurance Company, which was decided in 1996. Dr. Goomar practiced medicine until his license was revoked in 1987 as a result of accusations of sexually molesting some female patients. Apparently, the molestation ended in 1984, but Dr. Goomar continued to practice without any such accusations between 1984 and 1987. Subsequent to his license revocation, Dr. Goomar received psychiatric care and ultimately filed a claim for disability insurance benefits as a result of his psychiatric conditions. However, the Court held that Dr. Goomar was not entitled to disability insurance benefits because he was "legally disabled" instead of "factually disabled." In other words, the Court said that it was the criminal accusations and subsequent licensure action which caused Dr. Goomarinability to practice, as opposed to his medical condition.

Beside licensure issues and commission of a crime, there are a host of other "legal" scenarios, that may prevent you from practicing. When these circumstances exist, you need to spend considerable time and effort in becoming extremely knowledgeable with all aspects of both actions. Otherwise, you will not be able to negotiate the potential minefield of negative consequences and ramifications that may flow, to either or both cases, as a result of the ineffective or ill-prepared presentation of your cases.

So, does the loss of your license disable your claim? The answer is: it depends; and not necessarily. Firstly, it depends on the type and basis of the licensure action. It depends on the underlying medical condition, both from a factual and severity standpoint. It depends on a documented factual and symptomological history, and chronology of the other facts. And, it certainly depends on the opinions of your treating doctors and other doctors that will be involved in both processes, including those sitting on the State Board of Medicine.

Secondly, the loss of your license will not necessarily mean that you do not have a viable disability insurance claim if you have properly appreciated the "minefield." The bottom line is, make sure your medical condition is always driving your claim. Otherwise, you will probably not prevent your licensure action from becoming the legal disability defense that will be employed by your Company in order to defeat your disability insurance claim. Being impaired from practicing is a terrible truth to accept. Just don’t let the loss of your license also impair your claim.

Mark F. Seltzer, Esq., is the founder of the law firm of Mark F. Seltzer and Associates, representing physicians, health care practitioners, and professionals in all aspects of disability insurance claims and cases, and professional licensure matters. The firm is located in Philadelphia, Pennsylvania.

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Disability insurance claims: 12 ways of business

Physicians News — Thu, 13 Dec 2007 01:13:00 +0000

By Mark F. Seltzer, Esq.

If you thought Halloween was scary, then you haven’t been through the claims process with a disability insurance company. The Companies maintain an arsenal of well-paid, well-trained professionals and claims staff who sometimes seem like they are masquerading at a holiday costume ball. The reality is that the claims process may very well become the consummate "trick or treat" experience.

Your goal in filing your claim is to obtain your disability insurance benefits, and as quickly as possible, during a period in your life when you are disabled, most vulnerable, and in financial need. Although this process will never be a sleigh ride to Grandmother’s House, it is certainly worth thanksgiving when that goal is accomplished. The problem is that, when you go through the claims process you will be like a babe in the woods, often feeling lost and unable to find your way, and all the while subject to the multitude of strategies and defenses successfully employed to gobble-up your claim.

With the fact that obligating your disability insurance company to pay you benefits is no holiday, it is important that you don’t wing it through the claims process without a leg to stand on. This article is then to provide you, the disabled physician, with a helpful guide to the "Twelve ways of business" to better understand the disability insurance claims process.

1. As I have advised you on multiple occasions in past articles, your claim starts with your policy. Understand what obligates the Company to pay you benefits. The policy also sets forth claims filing procedures and appropriate response times.

2. Prior to filing your claim, make sure that you understand the material and substantial duties of your occupation, or occupations, at the time you became disabled. Also, make sure that your treating doctors have this understanding.

3. Throughout the claims process and for the duration of your claim, keep a file of all communication between you and your Company, including copies of any forms which the Company requires you to fill out and submit. Ask your doctor to provide you with copies of any communications with your Company. Also, make sure that your doctor has carefully read, considered and answered any forms or questionnaires requested by your Company. Maintain copies of any other information submitted, including financial or otherwise.

4. Beware of the information age. Any information about you, out there in Internet space, will most probably be discovered and compiled by your Company as part of its claims file.

5. After you have raised your claim with your Company, you will receive a claims form that needs to be filled out by you and your doctor and then forwarded to your Company. After your disability insurance carrier has received the claims form, they will request additional information. It is usual for them to initially request financial documentation along with CPT codes.

6. Your Company will begin the process of assessing your occupation after reviewing this information, with an eye toward to achieving an occupational assessment most advantageous to the Company.

7. The Company will also review the medical component of your claim which you ultimately must prove rises to the level of "disabling." The medical reviews often involve highly-skilled, forensically-trained medical experts looking to achieve a medical assessment also most advantageous to the Company. While this process begins with your treating doctor filling out an attending physician’s form, it usually does not end there. The Company most probably will additionally request other medical information which may include clinical notes or even direct conferences with your treatment providers.

8. If the Company has not received the information which it has requested, has not received the requested information in a timely fashion, or has any questions or issues regarding either the information received or any other aspect of your claim, the Company may engage in what seems to be a relentless quest to obtain never-ending amounts of information, often seemingly too burdensome to obtain. At best, these requests for information, and then information reviews by the Company, may significantly delay your receipt of benefits. At worst, you may never be able to satisfy the Company’s understanding of its proof of loss requirements in your policy or you may want to simply walk away from your claim because of the huge effort involved.

9. At some point in the claims process, and especially if the above applies, your Company may request a face-to-face meeting with one of its field representatives in order to conduct a personal interview. Most field representatives are well-trained investigators who usually have much experience dealing with policyholders claiming disabilities and in obtaining related information. The purpose of the interview is obviously for the Company to obtain more information, and first-hand, at that. It is usually the Company’s first opportunity to meet with you in person, and size you up as a claimant. This meeting is often critical to the claims process. Any and all information which you provide (or don’t provide) to the Company during the interview may be used to refute your claim. Unfortunately, the completion of the field representative meeting does not necessarily mean the end of the requests for information, the claims process, or otherwise.

10. One of the important tools at the Company’s disposal during the claims process, or afterwards, is surveillance. Within legal guidelines, this is permissible. Your Company may film or photograph you, or even attempt to interview your neighbors, business associates or other people whom it feels can provide relevant information. The likely purpose of surveillance is to develop information to refute the claim. Your Company will be looking for inconsistencies between the information you have provided for consideration and the actual activities in which you were engaged as captured on film.

11. Ultimately, and hopefully, at some point after considering all of the information submitted and obtained, your Company should come to a decision on your claim. (By the way, sometimes the Company does not make a decision on your claim). In the best case scenario, if your Company does accept liability for your disabling condition, agreeing that you have satisfied your contractual obligations under your policy, the process is still not over and will continue for the entire duration of your claim. You need to prove entitlement to your benefits every month that you are on claim. The forms, financials (if relevant), and information flow to your Company will be a continuing requirement before you get paid your benefits. And that assumes that the information submitted satisfies the Company’s proof of loss requirement and ongoing acceptance of your condition as disabling.

12. On the other hand, the worst case scenario is for your Company to deny your claim (during your time of need and despair). The biggest problem that you may very well face, during what can be a huge uphill battle against your Company, is that you will be stuck with whatever information you or your treating doctors provided to your Company during your claims process.

When you consider the importance and magnitude of the claims process, in conjunction with all the issues, defenses and strategies at play, you certainly don’t want to end up with a big nightmare. The Company will look for any skeletons in your closet in order to reap the fruits of this information. You have to sow the seeds of a successful claim in order to harvest the benefits to which you are entitled. If you become disabled, you hope to give thanks for the joy of having your disability insurance policy. Unless you believe in Santa, you better take this process seriously.

Mark F. Seltzer, Esq., is the founder of the law firm of Mark F. Seltzer and Associates, representing Physicians, Healthcare Practitioners and Professionals in disability insurance claims and cases. The firm is located in Philadelphia, Pa.

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ERISA LTD claims tug of war continues

Physicians News — Sun, 13 May 2007 01:47:40 +0000

By Mark F. Seltzer, Esq.

Spring approaches, one thing is as certain as "April showers bring May flowers" and kids playing in the park, for you, the disabled physician: claiming benefits under your group long term disability policy is the same as "hope springs eternal." Almost every disabled physician looking to his or her group policy as part of a financial safety net to maintain their hard-earned quality of life will unfortunately be in for a rude awakening trying to maintain their claim, or even get paid in the first place. Instead, often-times the reality of successfully bringing a claim under your group LTD policy is such a distortion of reality, it’s more like Alice’s trip through "Wonderland."

In our previous articles, we tried to give you a concise guideline to consider when claiming benefits under LTD policies. We also provided you with some of the more common issues and defenses that will be employed against you or otherwise raised in your claim. We pointed out, at that time, the real probability that State bad faith law remedies would ultimately be preempted by ERISA, and therefore unavailable as both a tactic and additional form of recovery in these cases. We further advised you that the Federal Courts had ruled in concert that State bad faith remedies were preempted, thereby realizing our greatest fears, effectively condoning any claims practices by the disability insurance companies. In furtherance of Barber v. UNUM Life Insurance Company of America (2004) and Aetna Health v. Davilla (2004), the Federal Courts have consistently dismissed attempts to recover State bad faith remedies under ERISA governed cases.

Just when it seemed to be the reoccurrence of the "dark ages," and all hope for a level playing field was gone, a "Knight in Shining Armor" appeared from the far West to begin saving the day. Since the ERISA Statute and flurry of Court decisions interpreting the Statute had become more and more "company friendly," and further, since the legislature had failed to rectify the "iron claw" grip on disabled insureds as a result, in 2004 Insurance Commissioners of several states, led by the Insurance Commissioner of California, took it upon themselves as the last hope of the disabled to take direct and definitive steps to impose balance and fairness to vulnerability and inequity. The California Insurance Commissioner and Insurance Commissioners from other States began to attack the use of "discretionary clauses" in long term disability policies.

In 1989, the Supreme Court ruled in the case of Firestone v. Bruch that if an LTD policy contains language referred to as "discretionary clauses" conferring "discretionary authority" on the plan administrator, when making benefit decisions, the Federal Courts are limited to review the administrators’ adverse decisions on the basis of whether the decision was "arbitrary and capricious" and therefore an abuse of discretion.

With some limited exceptions to that rule, depending on the Federal Circuit and circumstances, following the Firestone mandate, it then became most likely that if the plan or claims administrator could show a "reasonable basis" which was relied upon in concluding an adverse decision, the adverse decision could not be overturned in Federal Court since the administrator had not acted "arbitrarily and capriciously." This precedent was, and has become, a huge weapon in the company’s arsenal that will be employed against you and other disabled physicians. Often times, the only way to get a fair shake in these cases, in the event of an adverse decision, is for the Court to review the plan or claims administrator’s decision on the basis of something less than an "arbitrary and capricious" burden, or most preferably, a "de novo standard of review."

Now back to the "Knight in Shining Armor." With the fight begun in California and other States, the National Association of Insurance Commissioners adopted the "Discretionary Clause Prohibition Act" banning discretionary language from insurance contracts. The intention was, in effect, to mandate the employment of the "de novo standard of review" in all LTD claims. This, in effect, allows the Federal Courts to consider your LTD claim on its own merits as opposed to whether or not your plan administrator abused their discretion.

In 2004, the California Department of Insurance provided written notice to LTD carriers, writing contracts in the State of California, that it would no longer approve the use of discretionary clauses in any disability policy. Since then, other states, including Michigan, Illinois, Hawaii, Nevada, Oregon, New York and New Jersey have taken similar steps. Currently, the Pennsylvania Insurance Commissioner is considering this issue.

Unfortunately, as consistent with the long trail of ERISA woe, the insurance industry did not want the playing field to be leveled and certainly does not want to lose one of its most potent weapons in attacking your claim. In response, Hartford Insurance Company, essentially on behalf of the Disability Insurance Companies, filed a lawsuit in California challenging the Insurance Commissioner’s right and ability to mandate and employ such a prohibition. Just recently, and fortunately, the California Superior Court sided with the Insurance Commissioner and allowed the ban on these clauses. This Court determination may have huge ramifications on your ability to collect benefits under your group LTD policy.

It’s Springtime, the flowers are blooming, "hope springs eternal," and the kids are playing in the park. Wait a minute, that’s not the kids playing, it’s the "Knight in Shining Armor" who has just joined the tug of war fight against the Disability Insurance Companies which they have been trying to win since 1989. Will we finally do it this time? Or is this just another one of Alice’s "pipe dreams?"

Mark F. Seltzer, Esq. is the Founder and Principal Attorney of Mark F. Seltzer & Associates, P.C., assisting Physicians, Healthcare Practitioners and Professionals in disability insurance claims and cases nationwide. The firm is located in Philadelphia, Pa. Special thanks and appreciation to Brian K. Sims, Esq., an associate with the firm, for his contribution to this article.

“Own occupation” in disability insurance claims

Physicians News — Thu, 13 Apr 2006 07:04:32 +0000

By Mark F. Seltzer, Esq.

Do you know your "own occupation"? Chances are you don’t! Sounds like a rather simple and straight forward question. But, when you bring a claim for benefits under your disability insurance policies, your company will redefine the "KISS" rule to be the " rule: Keep It Complicated and Confusing.

"Own Occupation" policies were, and still are, the "Cadillac" policies (or "Mercedes" depending on your auto preference). They are the "creme de la creme;" and when it comes to individual disability income policies, they are the policies held by most physicians. The term is so basic to these policies that the definitions of both total disability and residual disability are predicated upon your ability to perform the material and substantial/important/essential duties of your "own occupation." All you have to do, as a result of sickness or accident, is prove that you can’t perform some or all of those duties and your done, right?

Everything your disability insurance carrier does is financially-driven85and remember, they’re driving the car. The companies are now stuck with the same policies that they aggressively sold to physicians, as the "target market," in the 80’s and 90’s. And, it won’t help to call the "BBB," because to them, that means "Bad Block of Business." They have developed sophisticated strategies employed in considering your claim, and they have become more aggressive with their claims practices, often to try to "find a way not to pay"...and if they have to pay, to reduce the benefit amount and/or duration of your claim. So, if they confuse and dilute the basis of the disability equation, "own occupation," it obviously becomes harder to obligate them to pay. And that’s what it’s all about: diluting. Or is that "de-looting"?

So, I’ll ask you again, do you really know your "own occupation"? Now that I’ve gotten your attention, here are some important factors to consider.

Most Courts hold that your "own occupation" is determined at the time you become disabled, not at the time you applied for the policy. This actually does make a lot of sense since many physicians change specialties, or otherwise what they do professionally, during the course of their careers. So the first thing to remember is that the occupational component of your claim will be assessed at the onset of your disability. If you read the "specialty letter," which you may have gotten along with your policy, this is probably what it really says.

All occupational duties will be considered by your company. This is really where the fun begins. You probably practice a recognized medical specialty (e.g., orthopaedic surgery, anesthesiology), but the company’s assessment doesn’t end there. First, what do you really do within your area of specialty? Do you only perform surgery or do you also have an office-based non-surgical practice? And, do you perform administrative duties for the practice? The company will look to services rendered, revenue raised, time spent, and patients seen, in their analysis. But it doesn’t end there, either.

All occupational situations will be considered by your company. Do you own the practice, or have an ownership stake; so, are you also an entrepreneur? Do you have additional professional responsibilities outside of your practice? Do you act as a medical director, chief of staff, pharmaceutical lecturer, legal or medical consultant, professor at the medical school, or a million other things that you well earned the right to do as a result of your accomplished career and reputation? All of these factors will be considered by your company as part of the occupational component of the claim.

Dual occupation/Residual disability defenses. If the company can show that you were engaging in two or more separate and distinct occupations, the policies and cases say that you have to show that you are totally disabled from all of your occupations to be entitled to total disability. That’s the occupational grand slam home run for the company. Raising the dual occupation defense may allow the company to deny liability all together, and not pay you a dime. But, even if they can’t show that your occupational activities rise to the level of a separate occupation, they may still try to show that those activities were really material and substantial to your "own occupation." And, if they’re successful, they still hit a homer. Your company will first look at your after-disability "work" activities. It will then look to match the "occupational DNA" with your pre-disability "work" activities. If it’s a "match," they can then work to elevate the importance and materiality of that activity so they can attempt to determine that you are residually or partially disabled, not totally disabled.

As you may or may not know, residual disability claims end at Age 65, even if you have a Life Policy. Of course, that’s not to mention they’ll likely reduce your monthly benefit, per the policy income and benefit calculations, or maybe not have to pay you at all if you don’t meet the income loss trigger, if your claim is handled on a residual basis. And, then again, there will be those monthly profit and loss statements and yearly tax returns that they’ll require. Baseball is some game, isn’t it? And they can’t wait for the season to begin.

"Own Occupation" in Long Term Disability claims. If you think the issue of "own occupation" in individual disability income claims is confusing, try LTD claims on for size. LTD policies often have stricter, more complicated policy language definitions and usually have limited "own occupation" benefit periods before imposing a broader "any occupation" disability definition. At that time, the company will look at your ability to perform the material and substantial duties of "any occupation" for which you are reasonably fitted, considering your education, training and experience. If that’s not grounds for a "rhubarb," I don’t know what is.

Your disability insurance company has tremendous resources at its disposal used in evaluating your claim. They house a tremendous company "bullpen" of vocational consultants, accountants, claims specialists and medical professionals, which they will employ during the claims process who may help "relieve" the company of paying you money. You will always need to anticipate how any information you provide them will be considered in view of your occupational activities, and how it will impact your claim.

Conclusion. As I have told you many times before, you must know the terms of your policy and also be familiar with what encompasses your "own occupation" before you "engage" your disability insurance company. Remember, the company may try to re-engineer your policy, your "own occupation" and your claim. You must always anticipate any "curve balls" that they may throw at you during the claims process. In the words of the esteemed Phillies announcer, don’t let them hit it "outta here" with your claim.

Mark F. Seltzer, Esq., is the founder of the Law Firm of Mark F. Seltzer, P.C., representing physicians, health care practitioners and professionals in disability insurance claims and cases. The firm is located in Philadelphia, Pa.

Disability insurance bad faith

Physicians News — Wed, 13 Jul 2005 08:29:32 +0000

By Mark F. Seltzer, Esq.

The word "Faith" is ingrained in American society and the American way of life. It is the bastion of religious belief as well as the trust that allows us to achieve a comfort level to deal with others in our every day lives. So too is this "faith" ingrained in the very fiber of a contractual relationship between parties. The Restatement of Contracts 2nd speaks of the basic premise upon which all contracts are based as the concept of "Good Faith and Fair Dealing" which is assumed in the performance of contractual obligations and provisions.

It is then no surprise that this very same premise is presumed in the performance of the Disability Insurance Company’s obligations and commitments under the terms of its contract with its insured. Most states, understanding the extreme importance of an Insurance Company’s performance, at a time when its insured is most vulnerable, have legislatively mandated laws intended to enforce an insurance company’s commitments. They have enacted State Insurance Bad Faith Statutes for this purpose. These laws/causes of action are provided for the insured that is harmed by, or the victim of, the carriers’ acting in "Bad Faith" when handling its insured’s claim under his/her policy of insurance.

What Is Bad Faith, Anyway?

Black’s Law Dictionary defines bad faith as, "the opposite of good faith, generally implying or involving actual or constructive fraud, or a design to mislead or deceive another, or neglect or refusal to fulfill some duty or some contractual obligation, not prompted by an honest mistake as to one’s rights or duties, but by some interested or sinister motive."

The Pennsylvania Superior Court has defined Insurance Bad Faith to be, "...any frivolous or unfounded refusal to pay proceeds of a policy. It is not necessary such refusal be fraudulent. For purposes of an action against an insurer for failure to pay a claim, such conduct imports a dishonest purpose and means a breach of a known duty (i.e. good faith and fair dealing), through some motive of self-interest or ill will; mere negligence or bad judgment is not bad faith." Terletsky v. Prudential Property and Casualty Insurance Company.

The Pennsylvania State Insurance Bad Faith Statute applies, "...if the Court finds that the insurer has acted in Bad Faith toward the insured.85" In that situation, the Court may award interest, punitive damages, and/or attorney’s fees and Court costs.

Does Bad Faith Apply To Disability Insurance Claims?

There are essentially two types of Disability Insurance Policies: the Long Term Disability or Group Policy (LTD) and the Individual Disability Income Policy (DI).

LTD Policies are generally governed by ERISA, or the Employee Retirement Income Security Act of 1974. Recent Federal Court decisions have, for all intents and purposes, determined that there is no State Insurance Bad Faith cause of action under ERISA.

The U.S. Supreme Court held in Aetna Health v. Davila (2004) that ERISA preempts a state statute cause of action in a non-LTD ERISA case. The 3rd Circuit Court of Appeals held in Barber v. UNUM Life Insurance Company of America (2004) that the Pennsylvania Insurance Bad Faith Statute is preempted by ERISA in an LTD case. Therefore, it is this author’s opinion that the U.S. Supreme Court would hold that ERISA preempts a State Statutory Bad Faith claim in an LTD case when or if presented with these facts. This then leaves no "toothful" punitive remedy to enforce the covenant of "Good Faith and Fair Dealing" in an ERISA LTD case. The Courts have effectively condoned any claims practice in LTD cases.

On the other hand, the Pennsylvania Bad Faith Statute (as well as other States’ similar Statutes) does apply to DI claims. However, as an insured physician, you need to understand that Insurance Bad Faith is very hard to prove and is often confused with either claims handling conduct that does not rise to the Bad Faith level of severity, or with an adverse decision, despite your disagreement, with a reasonable basis.

What Types Of Events Can Constitute Bad Faith?

There are many different actions or inactions that may constitute Bad Faith on behalf of your disability insurance carrier. The Pennsylvania Unfair Insurance Practices Act (UIPA) lists multiple potential acts by an insurance company which may constitute an unfair insurance practice. While a violation of the UIPA may not constitute Bad Faith, it certainly acts as a good starting point to understand what types of actions the State’s Insurance Department has determined as constituting unfair and inappropriate claims practices.

Disability Insurance Companies are obligated to conduct a full, fair, thorough and objective investigation of every claim. This investigation not only includes the medical component of the claim or the potential "disabling condition," but also includes properly assessing and evaluating the occupational component. Depending on the facts, an unreasonable or incomplete investigation, presumably with adverse consequences to the insured physician, may constitute Bad Faith.

In addition, should a Disability Insurance Company misapply or misrepresent its policy provisions or contract language to its insured, this action, depending on the facts, may also constitute Bad Faith. This issue may be extremely compelling because, after all, it’s their policy, they wrote it, and presumably they know what it means. You, on the other hand, probably have never read your policy, and even if you have, don’t understand it. Therefore, you are putting your complete trust in the Company to advise you as to what needs to be satisfied in order to obligate it to pay you benefits under your policy. The insured physician may be very vulnerable to agendas that create confusion or misguidance.

How Will Bad Faith Affect Me?

The Pennsylvania Supreme Court case of Mishoe v. Erie Insurance held that there is no right to a jury trial in a Bad Faith case in Pennsylvania State Court. Therefore, if you desire a jury trial, with regard to your Bad Faith claim, you must file your cause of action in Federal Court. In addition, the U.S. Supreme Court case State Farm v. Campbell has set a "bright line," single digit ratio of punitive damages to compensatory damages. Campbell refers back to the three criteria enumerated in the Supreme Court case of BMW of American, Inc. v. Gore when considering the relationship between punitive damage awards and due process of law: the degree of reprehensibility of the misconduct, the variance between the actual or potential harm and the punitive damage award, and the relationship between the punitive damage award and penalties awarded in similar cases.

The "bright line" standard may or may not be argued to actually be a single digit ratio, and strategic considerations must be evaluated as to the Court selected, and jury versus non-jury issues. Even assuming that the factual scenario in your case is compelling enough to proceed with a Bad Faith claim, and even if you are successful in the prosecution of your claim, the application of complicated case law and procedure will not be over. Any favorable verdict or award will likely be appealed by the Company. It is one thing to be held responsible for breaching a contract; it is totally another thing to be held liable for improper conduct and claims practices that rise to the level of Bad Faith. And, especially, if your case shows Company-wide pattern and practice, which may get you a larger punitive damage award, you can expect a "tooth and nail" fight for the duration. Prosecuting your case can become the legal equivalent of a migraine headache.

You hope, if you are or become disabled, that your Disability Insurance Company will keep its promise. Remember, we are talking about the Company’s contractual obligations to you, not charity. After all, you have put your faith in your Disability Insurance Company to pay you benefits if you become disabled. The problem is that all the faith, hope and charity in the world may not get you paid. Your Disability Insurance Company has the obligation to handle your claim, and otherwise act, in good faith. Insurance Bad Faith is a complicated and difficult issue that will likely be fought to the end. Remember, the best medicine for a Bad Faith headache is always documentation and preparation.

Mark F. Seltzer, Esq., is the founder of the law firm of Mark F. Seltzer, P.C., representing physicians and professionals with Disability Insurance claims. The firm is located in Philadelphia, Pa.

Appropriate care in disability insurance

Physicians News — Thu, 13 May 2004 14:04:54 +0000

By Mark F. Seltzer, Esq.

The fact is that disability insurance companies are becoming more aggressive in attempting to find ways to not pay claims. All provisions of your disability insurance contract must be satisfied in order to make the company obligated to pay you benefits.

The definition of either total or residual disability typically contains a second condition, which not only has to be met in order for you to receive your disability income, but which is fast becoming a weapon in the company’s arsenal used to attack claims. I am referring to the physician’s care provision, or the issue of "appropriate care."

You must be under the care of a "physician" when on claim. Although, this is usually generic as to health care providers, your contract will contain a specific definition of "physician." Whereas older policies generally required the need to be under the "care" or "regular care and attendance" of a physician, the contract language ultimately changed to physician’s care which is "appropriate" for the condition causing the disability.

So, what’s all the fuss about, you ask? The answer is really quite simple. It’s all about the company that you look to for benefits, controlling your medical care and its focus, and therefore controlling your claim.

In the older policies, as long as you are under the care of a "physician" and unable to perform the material and substantial or important duties of your "own occupation," you satisfied the basic definition of total disability. If the policy contained "regular care" language, it then required regularity of treatment from a time sequence perspective. Initially, when "appropriate care" was required, the companies looked to the type of disabling condition, the type of care, and lastly, the caregiver, to make sure that the care was consistent with that condition. If the insured was under the care of a doctor specializing in treating the disabling condition and was compliant with that treating doctor’s treatment program, the "care" provision was satisfied and therefore, the treatment was "appropriate."

However, as the "new age" rolled in, the companies began to become more aggressive in dictating treatment. They now have their internal consultants and "experts" review the care being given a disabled-insured, and then they determine whether it is "appropriate" or not, irrespective of, and sometimes contrary to, successful treatment protocols adhered to by disabled-physicians.

Essentially, the companies try to dictate what they determine is "standard of care" as being "appropriate care" for the disabled-insured no matter what the language in the policy requires. While everyone who is disabled wants the best care under the circumstances, and wants to get well, or at least increase their level of function as a result of their medical care, the disability insurance company has no right to demand more care than is required to satisfy its own policy language. Nor do they have the right to demand that the focus of that medical treatment be to return a disabled physician back to work, (unless required per the policy), but, they’ll try to make treatment rendered specifically at returning the insured to his/her "own occupation" part of the "appropriate care" formula, anyway. Most companies ask the treating doctor that question every month on the attending physician statement form they require to be filled out. The more they control the medical care, the more they control the claim. And that is what it’s all about really – liability and duration.

The "appropriate care" argument was just that until the Court gave the companies some fuel for their fires. A lead case on this point was the 1987 Federal Court case of Heller v. Equitable. Heller suffered a disability as a result of carpal tunnel syndrome. Heller’s policy contained the "regular care and attendance" provision. In Heller, the Court reiterated the "majority view" that unless there is a specific "contractual requirement" to do so, the insured was not required to obtain medical treatment in order to "minimize his disability." Therefore, despite the fact that Heller refused surgery, the company was obligated to continue to pay for Heller’s disability based upon carpal tunnel syndrome.

However, in the 2000 Federal Court case of Provident v. Henry, the question was whether invasive surgery is required as part of "appropriate care." Henry refused the carpel tunnel surgery. The major difference between Henry and Heller is the care provision in the policies. Henry’s policy contains the "appropriate care" provision. Heller’s policy contains the "regular care and attendance" provision. In Henry, the Court held that . . . "the appropriate care provision does not merely state the insured must be under doctor’s care. It provides [that] the insured must receive from a doctor the appropriate care for his condition. The only reasonable interpretation of this clause is that it imposes a duty on the insured to seek and accept appropriate care for his disabling condition." The issue of whether or not the surgery was appropriate was a question for the jury; however, the case was settled before it got there.

What the Court will probably look at, in a case where surgery has been recommended by a treating doctor, is whether the surgery is an accepted, safe, low risk procedure with a high probability of success. Invariably, the company will argue that under those circumstances that surgery is absolutely "appropriate," therefore requiring the insured to undergo the procedure or risk the termination of benefits. You need to be well aware of this developing area in considering how to deal with this issue and in making informed treatment decisions.

The point here to remember, in addition to the above, is that no matter what care provision your policy contains the company will try to equate it with "appropriate care." The companies have been trying to push the envelope for years arguing that regular care really means appropriate care, anyway.

What should you do?

I always advise my clients to be proactive and inclusive. Make sure your treating providers are the highest degreed, highest qualified, and most specialized doctors specific to your disabling condition. Always consider everything your health care providers recommend as part of your treatment program. You must have a well-based medical position when choosing alternatives that are available. Stay ahead of their agenda. You will be in the best case scenario by considering the best possible care and you will be protecting yourself from the imposition of the company which aims to control your claim.

Mark F. Seltzer, Esq, is an attorney practicing in Philadelphia, Pa. representing physicians and professionals with disability insurance claims.

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ERISA and long term disability claims

Physicians News — Thu, 13 Nov 2003 14:34:59 +0000

By Mark F. Seltzer, Esq.

Do you have group long-term disability coverage that pays you if you become disabled? If you get sick or hurt, are you relying on that group LTD policy to pay you benefits? If you do, don’t count on it. There are three primary reasons for this: (1) inferior contract language, (2) ERISA, and (3) relevant court decisions. If you become disabled, you may be in for the fight of your life. But unfortunately, while disabled, when you are most vulnerable, is the worst time to mount a fight against the big insurance company. As you read this article, think how you may become better prepared to deal with this potential problem.

There is no question that one of the hottest topics in disability insurance law is ERISA, and the application of ERISA, to group long-term disability policies. ERISA, which stands for the Employee Retirement Income Security Act, was passed in 1974 by the legislature and enacted for the purpose of protecting employee benefits for plan participants. Unfortunately, this has not been the case. Generally, group policies are subject to the ERISA regulations.

Policy Provisions

Each policy from each insurer is very specific as to its provisions that need to be satisfied in order to obligate the insurer to pay you benefits. Therefore, it is extremely important that you become familiar with the policy and have a strong understanding of the contract language. There is a reason that LTD policies cost on average about one-sixth of the premium for a quality individual insurance policy: group policies are designed to limit coverage and the amount of benefits payable. This is done in many ways, including limited definitions of disability, offsets against benefits, as well as significant limitations and exclusions in the policy. Group coverage is inherently inferior to individual disability coverage.

In effect, the ERISA procedures set up an "administrative process," which must be satisfied before you have the right to file suit in court. Each policy will provide you with the specific procedure to be followed during the claims process. There are specific time periods within which to submit claims and information in support of claims, as well as when the insurance company (or claims administrator) must decide your claim. Both sides are bound to this procedure. In addition, there is an internal appeals process, in the event of a continued "adverse decision," relative to your claim. Again, this appeals process is established by ERISA and must be adhered to by both sides. If, after you have gone through the internal appeals process, the claims administrator still maintains its "adverse decision," and in effect, you have "exhausted your administrative remedies," you will then have the right to file a lawsuit in court.

What is absolutely critical in considering LTD cases is that the burden of proof that must be met by the insured physician establishes that the claims determination made by the claims administrator after considering the information of record was "arbitrary and capricious." This is a difficult standard to meet. Sometimes, under certain circumstances, this standard is "heightened." However, usually, the Court simply reviews the administrative record and determines whether or not there has been an "abuse of discretion" relative to the claims determination.

Important Recent Decisions

Treating Physician Rule. The "treating physician rule" was originally borrowed from social security law, as used in social security disability cases. The rule was arrived at on the basis that the "treating physician," having a physician-patient relationship, providing hands-on medical care, and having first-hand knowledge of the claimant, is in a better and more informed position to render opinions that need to be considered in a disability determination. Therefore, "deference" was given to the treating physician’s opinions in making a disability determination. Many of the US Circuit Courts followed the treating physician rule and applied it to ERISA cases. However, concurrently many Circuit Courts did not. This inconsistency, as it applied to the federal statute, was - unfortunately - ultimately clarified on appeal to the US Supreme Court by Justice Ginsburg on May 27, 2003. In Black & Decker Disability Plan v. Nord, the Supreme Court of the United States held that "ERISA does not require plan administrators to accord special deference to the opinions of treating physicians," therefore, effectively ending the use of the treating physician rule in ERISA-governed claims.

Bad Faith. Black’s Law Dictionary defines bad faith as, "the opposite of good faith, generally implying or involving actual or constructive fraud, or a design to mislead or deceive another, or neglect or refusal to fulfill some duty or some contractual obligation, not prompted by an honest mistake as to one’s rights or duties, but by some interested or sinister motive." In 1990, Pennsylvania enacted a bad faith statute relating to insurance carriers. Prior to 1990, there was no such codified statute in Pennsylvania.

However, notwithstanding the legislative-created cause of action, the question has always remained as to whether or not ERISA, a federal statute, "pre-empts" and therefore excludes the state bad faith cause of action. In addition, the statutory language also posed the issue in a state court in Pennsylvania as to whether or not a plaintiff, with a bad faith cause of action, has the right to a jury trial. This issue was recently decided by the Pennsylvania Supreme Court, in the case of Mishoe v. Erie Insurance, where the Court held that there was no such right to a jury trial.

The pre-emption issue as to state bad faith has created a major problem for both those attempting to bring bad faith causes of action as well as those defending same. Decisions have been rendered by different District Courts throughout the country concluding totally different positions on virtually the same given set of facts. There is no question that the trend in most District Courts was in favor of pre-emption. To say the least, the issue has been the source of much argument and confusion. In Pennsylvania, one District Court Judge in a 2002 decision, Rosenbaum v. UNUM, ruled that the Pennsylvania bad faith statute was not pre-empted by ERISA and varied from the traditional criteria upon which pre-emption was determined. However, other Eastern District Court decisions, following Rosenbaum, with virtually the same issue, found in favor of pre-emption applying the traditional criteria.

On April 2, 2003, the United States Supreme Court, in the case of Kentucky Association of Health Plans, Inc., et al. v. Miller, considering the issue of ERISA pre-emption of state law - albeit, not specifically dealing with the issue of state bad faith - effectively changed the criteria upon which pre-emption is based. This decision then paved the way to revisiting the issue which had never been definitively determined. It appeared to this writer that the door had effectively been unlocked to allow a state bad faith cause of action in an ERISA-governed disability claim. However, in the case of Morales-Cevallos v. First UNUM Life Insurance Company of America, decided on May 28, 2003 by the US District Court for the Eastern District of Pennsylvania, it was held that the Pennsylvania bad faith statue was pre-empted by ERISA, notwithstanding the Supreme Court decision of Kentucky v. Miller.

More recently, on August 1, 2003, the 9th Circuit Court of Appeals ruled that a state bad faith cause of action, stemming out of an LTD claim, is pre-empted by ERISA in Elliot v. Fortis Benefits Insurance Company.

In addition, in view of Kentucky v. Miller, reconsideration of Rosenbaum v. UNUM was requested. On September 8, 2003, upon reconsideration, the District Court Judge upheld his decision. He found that ERISA, and ERISA’s "savings clause," meant all along that state laws, including the Pennsylvania bad faith law, which "regulate insurance" are not subject to pre-emption and that his decision was consistent with that of Kentucky. Unfortunately, within a week after the Judge’s decision, and prior to the anticipated appeal to the Court of Appeals, which decision would have trumped the District Court decisions, the case was settled. This, in effect, perpetuated the confusion as to ERISA pre-emption of state bad faith law in ERISA-governed disability claims.

However, concurrently, in Oklahoma, in the case of Conover v. Aetna US Health Care, a case that was decided prior to Kentucky, a petition for writ of certiorari has been filed to the US Supreme Court. In Conover, the 10th Circuit US Court of Appeals held that ERISA pre-empts Oklahoma’s bad faith law. Hopefully, this issue will once and for all be decided by US Supreme Court, and the confusion will be resolved.

There is one more important issue relative to bad faith that needs to be discussed. In State Farm v. Campbell, another US Supreme Court decision, which was decided on April 7, 2003, the Supreme Court struck down a large jury award for bad faith damages stemming from State Farm’s actions in its handling of a motor vehicle accident matter. The Supreme Court has mandated the application of three rules in considering punitive damage awards. The court also has apparently established a ceiling of a single digit ratio of punitive damages to compensatory damages. This case, when taken in conjunction with the Mishoe case, largely nullifies jury participation in considering bad faith issues.

The Bottom Line

It’s now time for you, the insured physician, to understand the hard, cold reality of prosecuting a group LTD claim.

There is no question that the current trend in the sales of disability insurance, as well as the high growth area in disability insurance, is group policies. On the surface, this seems to make sense. After all, most group policies are offered by employers (usually hospitals) as an employee benefit. The "policy" is usually part of a greater employee benefit plan, which is part of a benefit package that most physicians are quite happy to have. The "policy," per capita, is cheaper, easier to sell, easier to administrate, and in every way more profitable for the insurance company, as opposed to individual disability insurance policies.

However, what you may not realize is that the benefits, especially in view of the policy provisions, are far inferior to the benefits in an individual policy, especially those sold in the 1980s and early 1990s.

But wait, it gets worse. Not only are the group benefits inferior, but the very same ERISA procedures enacted as a built-in safeguard for plan participants have been used to sabotage claims. The ERISA procedures in concept were sound and made sense. The insured had the ability to perfect a submitted otherwise defective claim because, under ERISA, the carrier upon arriving at an adverse decision is required to provide the insured with an explanation for its decision as well as any documentation upon which it relied in making its determination. This gave the insured physician multiple opportunities to perfect his/her disability claim by curing the defect.

However, this very same procedure has been used by the carrier for the exact opposite purpose in order to defeat that same claim. Because of the fact that the Court, upon appeal, will most often only review the administrative file, and further, because the standard of review is usually that of arbitrary and capricious, the insured is forced to produce all evidentiary documentation at the administrative level and during the administrative appeals procedure. This allows the insurance company to simply take a defensive posture in "sitting back" and picking apart the insured physician’s completed claim.

And, even worse, in view of the fact that there is no longer the use of the treating physician rule in order to "level the playing field," as long as the insurance carrier follows the "yellow brick road" map by having its team of internal medical consultants and "experts" properly address the claimant’s medical documentation, it could be virtually impossible to overturn the group carrier’s decision to deny or terminate a claim.

And now, the final coffin nail. The bottom line here is profit and an unpoliced profit motive. If the Supreme Court rules in favor of pre-emption and therefore holds that there is no right to a state bad faith claim under ERISA, it will continue to allow the "icing on the cake." Therefore, not only does (and will) the insured-physician have an untenable burden in prosecuting and prevailing on these claims, with virtually every tool at the insurance company’s disposal but, in addition, the Courts will in effect be condoning the use of any claims practice to defeat the claim. And, what is the worst case scenario for the insurance carrier? Most likely, holding on to the insured’s money for an additional year or two.

If you have a group LTD policy, if you become disabled, and if you expect to collect benefits under that policy, you need to know your policy and the application of ERISA like the "back of your hand." You will have to anticipate every company strategy that will be employed to defeat your claim. You will have to proceed in the face of a "mine field" of unfavorable court-decisions. And, you will have to "paper the file" with the "sun, moon and stars".

The essence of an arms-length good faith business transaction is to get what you bargain for. The problem with ERISA-governed disability policies is that the insured physician most often does not know or understand the bargain. There is an old maxim that says "you get what you pay for." But, between the group LTD policy language, the internal ERISA claims process, the insured’s burden of proof in a lawsuit, the flurry of insurance company-favorable court decisions, and the trend towards (and possibly permanent) pre-emption of state bad faith, it will be extremely difficult to get anything that is paid for. That little "lamb" can’t wait to sink its "teeth" into your claim. I think this will give you food for thought.

Mark F. Seltzer, Esq., is an attorney practicing in Philadelphia, Pennsylvania, representing physicians and professionals in disability insurance claims.

Protecting your disability insurance benefits

Physicians News — Fri, 10 Jun 2011 15:02:56 +0000

“Refinancing” Your Disability Insurance Claim

Physicians News — Tue, 11 May 2010 14:30:13 +0000

Does loss of license disable your disability claim?

Physicians News — Wed, 12 Nov 2008 09:33:01 +0000

By Mark F. Seltzer, Esq.

Also, the State Board of Medicine may be obligated to take reciprocal action as result of proceedings before an other State Board of Medicine.

Obtain Medical Specialty Own-Occupation Disability Insurance On-line

Disability insurance claims: 12 ways of business

Physicians News — Thu, 13 Dec 2007 01:13:00 +0000

By Mark F. Seltzer, Esq.

4. Beware of the information age. Any information about you, out there in Internet space, will most probably be discovered and compiled by your Company as part of its claims file.

6. Your Company will begin the process of assessing your occupation after reviewing this information, with an eye toward to achieving an occupational assessment most advantageous to the Company.

Obtain Medical Specialty Own-Occupation Disability Insurance On-line

ERISA LTD claims tug of war continues

Physicians News — Sun, 13 May 2007 01:47:40 +0000

By Mark F. Seltzer, Esq.

“Own occupation” in disability insurance claims

Physicians News — Thu, 13 Apr 2006 07:04:32 +0000

By Mark F. Seltzer, Esq.

So, I’ll ask you again, do you really know your "own occupation"? Now that I’ve gotten your attention, here are some important factors to consider.

Disability insurance bad faith

Physicians News — Wed, 13 Jul 2005 08:29:32 +0000

By Mark F. Seltzer, Esq.

What Is Bad Faith, Anyway?

Does Bad Faith Apply To Disability Insurance Claims?

There are essentially two types of Disability Insurance Policies: the Long Term Disability or Group Policy (LTD) and the Individual Disability Income Policy (DI).

What Types Of Events Can Constitute Bad Faith?

How Will Bad Faith Affect Me?

Mark F. Seltzer, Esq., is the founder of the law firm of Mark F. Seltzer, P.C., representing physicians and professionals with Disability Insurance claims. The firm is located in Philadelphia, Pa.

Appropriate care in disability insurance

Physicians News — Thu, 13 May 2004 14:04:54 +0000

By Mark F. Seltzer, Esq.

What should you do?

Mark F. Seltzer, Esq, is an attorney practicing in Philadelphia, Pa. representing physicians and professionals with disability insurance claims.

Obtain Medical Specialty Own-Occupation Disability Insurance On-line

ERISA and long term disability claims

Physicians News — Thu, 13 Nov 2003 14:34:59 +0000

By Mark F. Seltzer, Esq.

Policy Provisions

Important Recent Decisions

The Bottom Line

It’s now time for you, the insured physician, to understand the hard, cold reality of prosecuting a group LTD claim.

Mark F. Seltzer, Esq., is an attorney practicing in Philadelphia, Pennsylvania, representing physicians and professionals in disability insurance claims.

Protecting your disability insurance benefits

Physicians News — Fri, 10 Jun 2011 15:02:56 +0000

Physicians News » Featured Writer: Mark F. Seltzer, Esq.

Physicians News — Fri, 10 Jun 2011 15:02:56 +0000

“Refinancing” Your Disability Insurance Claim

Physicians News — Tue, 11 May 2010 14:30:13 +0000

Does loss of license disable your disability claim?

Physicians News — Wed, 12 Nov 2008 09:33:01 +0000

By Mark F. Seltzer, Esq.

Also, the State Board of Medicine may be obligated to take reciprocal action as result of proceedings before an other State Board of Medicine.

Obtain Medical Specialty Own-Occupation Disability Insurance On-line

Disability insurance claims: 12 ways of business

Physicians News — Thu, 13 Dec 2007 01:13:00 +0000

By Mark F. Seltzer, Esq.

4. Beware of the information age. Any information about you, out there in Internet space, will most probably be discovered and compiled by your Company as part of its claims file.

6. Your Company will begin the process of assessing your occupation after reviewing this information, with an eye toward to achieving an occupational assessment most advantageous to the Company.

Obtain Medical Specialty Own-Occupation Disability Insurance On-line

ERISA LTD claims tug of war continues

Physicians News — Sun, 13 May 2007 01:47:40 +0000

By Mark F. Seltzer, Esq.

“Own occupation” in disability insurance claims

Physicians News — Thu, 13 Apr 2006 07:04:32 +0000

By Mark F. Seltzer, Esq.

So, I’ll ask you again, do you really know your "own occupation"? Now that I’ve gotten your attention, here are some important factors to consider.

Disability insurance bad faith

Physicians News — Wed, 13 Jul 2005 08:29:32 +0000

By Mark F. Seltzer, Esq.

What Is Bad Faith, Anyway?

Does Bad Faith Apply To Disability Insurance Claims?

There are essentially two types of Disability Insurance Policies: the Long Term Disability or Group Policy (LTD) and the Individual Disability Income Policy (DI).

What Types Of Events Can Constitute Bad Faith?

How Will Bad Faith Affect Me?

Mark F. Seltzer, Esq., is the founder of the law firm of Mark F. Seltzer, P.C., representing physicians and professionals with Disability Insurance claims. The firm is located in Philadelphia, Pa.

Appropriate care in disability insurance

Physicians News — Thu, 13 May 2004 14:04:54 +0000

By Mark F. Seltzer, Esq.

What should you do?

Mark F. Seltzer, Esq, is an attorney practicing in Philadelphia, Pa. representing physicians and professionals with disability insurance claims.

Obtain Medical Specialty Own-Occupation Disability Insurance On-line

ERISA and long term disability claims

Physicians News — Thu, 13 Nov 2003 14:34:59 +0000

By Mark F. Seltzer, Esq.

Policy Provisions

Important Recent Decisions

The Bottom Line

It’s now time for you, the insured physician, to understand the hard, cold reality of prosecuting a group LTD claim.

Mark F. Seltzer, Esq., is an attorney practicing in Philadelphia, Pennsylvania, representing physicians and professionals in disability insurance claims.

Protecting your disability insurance benefits

Physicians News — Tue, 11 May 2010 14:30:13 +0000

Physicians News » Featured Writer: Mark F. Seltzer, Esq.

Physicians News — Fri, 10 Jun 2011 15:02:56 +0000

“Refinancing” Your Disability Insurance Claim

Physicians News — Tue, 11 May 2010 14:30:13 +0000

Does loss of license disable your disability claim?

Physicians News — Wed, 12 Nov 2008 09:33:01 +0000

By Mark F. Seltzer, Esq.

Also, the State Board of Medicine may be obligated to take reciprocal action as result of proceedings before an other State Board of Medicine.

Obtain Medical Specialty Own-Occupation Disability Insurance On-line

Disability insurance claims: 12 ways of business

Physicians News — Thu, 13 Dec 2007 01:13:00 +0000

By Mark F. Seltzer, Esq.

4. Beware of the information age. Any information about you, out there in Internet space, will most probably be discovered and compiled by your Company as part of its claims file.

6. Your Company will begin the process of assessing your occupation after reviewing this information, with an eye toward to achieving an occupational assessment most advantageous to the Company.

Obtain Medical Specialty Own-Occupation Disability Insurance On-line

ERISA LTD claims tug of war continues

Physicians News — Sun, 13 May 2007 01:47:40 +0000

By Mark F. Seltzer, Esq.

“Own occupation” in disability insurance claims

Physicians News — Thu, 13 Apr 2006 07:04:32 +0000

By Mark F. Seltzer, Esq.

So, I’ll ask you again, do you really know your "own occupation"? Now that I’ve gotten your attention, here are some important factors to consider.

Disability insurance bad faith

Physicians News — Wed, 13 Jul 2005 08:29:32 +0000

By Mark F. Seltzer, Esq.

What Is Bad Faith, Anyway?

Does Bad Faith Apply To Disability Insurance Claims?

There are essentially two types of Disability Insurance Policies: the Long Term Disability or Group Policy (LTD) and the Individual Disability Income Policy (DI).

What Types Of Events Can Constitute Bad Faith?

How Will Bad Faith Affect Me?

Mark F. Seltzer, Esq., is the founder of the law firm of Mark F. Seltzer, P.C., representing physicians and professionals with Disability Insurance claims. The firm is located in Philadelphia, Pa.

Appropriate care in disability insurance

Physicians News — Thu, 13 May 2004 14:04:54 +0000

By Mark F. Seltzer, Esq.

What should you do?

Mark F. Seltzer, Esq, is an attorney practicing in Philadelphia, Pa. representing physicians and professionals with disability insurance claims.

Obtain Medical Specialty Own-Occupation Disability Insurance On-line

ERISA and long term disability claims

Physicians News — Thu, 13 Nov 2003 14:34:59 +0000

By Mark F. Seltzer, Esq.

Policy Provisions

Important Recent Decisions

The Bottom Line

It’s now time for you, the insured physician, to understand the hard, cold reality of prosecuting a group LTD claim.

Mark F. Seltzer, Esq., is an attorney practicing in Philadelphia, Pennsylvania, representing physicians and professionals in disability insurance claims.

Protecting your disability insurance benefits

Physicians News — Wed, 12 Nov 2008 09:33:01 +0000

By Mark F. Seltzer, Esq.

Also, the State Board of Medicine may be obligated to take reciprocal action as result of proceedings before an other State Board of Medicine.

Obtain Medical Specialty Own-Occupation Disability Insurance On-line

Physicians News » Featured Writer: Mark F. Seltzer, Esq.

Physicians News — Fri, 10 Jun 2011 15:02:56 +0000

“Refinancing” Your Disability Insurance Claim

Physicians News — Tue, 11 May 2010 14:30:13 +0000

Does loss of license disable your disability claim?

Physicians News — Wed, 12 Nov 2008 09:33:01 +0000

By Mark F. Seltzer, Esq.

Also, the State Board of Medicine may be obligated to take reciprocal action as result of proceedings before an other State Board of Medicine.

Obtain Medical Specialty Own-Occupation Disability Insurance On-line

Disability insurance claims: 12 ways of business

Physicians News — Thu, 13 Dec 2007 01:13:00 +0000

By Mark F. Seltzer, Esq.

4. Beware of the information age. Any information about you, out there in Internet space, will most probably be discovered and compiled by your Company as part of its claims file.

6. Your Company will begin the process of assessing your occupation after reviewing this information, with an eye toward to achieving an occupational assessment most advantageous to the Company.

Obtain Medical Specialty Own-Occupation Disability Insurance On-line

ERISA LTD claims tug of war continues

Physicians News — Sun, 13 May 2007 01:47:40 +0000

By Mark F. Seltzer, Esq.

“Own occupation” in disability insurance claims

Physicians News — Thu, 13 Apr 2006 07:04:32 +0000

By Mark F. Seltzer, Esq.

So, I’ll ask you again, do you really know your "own occupation"? Now that I’ve gotten your attention, here are some important factors to consider.