California Insurance Lawyer Blog

After more than two years of fighting, five months spent submitting claims forms, a protracted appeal, a lawsuit and a call from ABC News’ “Good Morning America,” Susan Kristoff, unable to work and being treated for stage 4 cancer, finally received her long-term disability benefits.
Cigna, her insurer, announced that its change of heart resulted from “additional information” uncovered during Susan’s appeal. Susan’s lawyer Alicia Grisham thinks differently. “The insurance companies understand that if they deny and deny claims, then many of the claimants will never pursue their claims,” Grisham said, describing a tactic known as “slow walking.”

We’ve seen this before: Bury the policyholder in mountains of claims forms, move your customer service department off-shore, keep your clients on hold, lose the paperwork, deny the claim, ask for more information, subject the sick or injured claimant to a confusing and prolonged appeal process, delay, deny, delay, deny, and perhaps the insured will give up or die.

The sad fact is that there are enough people in Susan Kristoff’s situation to keep “Good Morning America” on the air well into the next century.

Is the answer, as Grisham suggests, penalizing insurance companies for slow walking by allowing punitive damages in consumer lawsuits? Right now, the federal law known as ERISA protects disability insurers from such punitive damages in employee welfare benefit cases, and that give insurers little incentive to speed up claims processing and appeals.

At the moment, a policyholder’s best protection against slow walking is speed dialing an experienced disability insurance lawyer the moment a claim is denied. Two years without income is too long to wait, even if it means you end up featured on “Good Morning America.”

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Posted In: ERISA , Insurance Bad Faith , LongTerm Disability (LTD) Insurance

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Last week, the U.S. Supreme Court heard oral arguments about what standard to use when reviewing an insurance company denial of ERISA welfare benefits (employer provided long term disability insurance). MetLife v. Glenn, 06-923. Under current law, an insurance company can make a terribly unfair decision to deny employee welfare benefits, and if the benefit plan contains some “magic words” a court can be prevented from reviewing such a decision on the merits, and instead, forced to let the unfair denial stand. Those magic words, notoriously known as “discretionary clauses” give the insurance company full discretion to interpret policy language and make claims decisions. Some federal districts have developed case law which requires a reviewing court to give consideration to the fact that an insurance company in the position to both pay the claim, and grant or deny benefits, stands in an inherently conflicted position. If it can be shown that such conflict tainted the claim decision making, then some lesser degree of discretion should be given, and the insurance company’s decision given more scrutiny. The problem lies in the reality that different courts look upon these circumstances differently, and there is no one general rule to be easily and consistently applied when an insurance company plays a dual and conflicted role.

In Wanda Glenn’s case, and as in so many other disability benefits cases that pass through our offices – the only entity determining the employee isn’t disabled is the insurance company acting as a plan administrator. For Ms. Glenn, her doctor diagnosed that if she returned to work she could die. The Social Security Administration determined that she was disabled and paid her government benefits. Incredibly, MetLife alone, decided there must be a job somewhere for her, so it denied her claim, and also thereby avoided having to pay her benefits. For additional detail on the facts in Glenn, click here.

For the actual Supreme Court transcript of the hearing, which can give you a sense of how unclear (even for the Supreme Court), and frustrating this system is click here.

The bottom line is that it just isn’t fair for insurance companies to be making claims decisions that are insulated from full scrutiny or “de novo” review by the courts. Hopefully, the Supreme Court will establish a rule that recognizes, and prevents this egregious conduct in the future.

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Posted In: ERISA , LongTerm Disability (LTD) Insurance

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We have been helping people with claims against insurance companies for over 18 years. Obviously, there is a lot to know about this process. From the countless claim appeals and lawsuits we have handled over the years, three basic, yet critical considerations rise to the top of our list of things to keep in mind when making a health related insurance claim:

1) ALWAYS GET A COPY OF THE POLICY, AND READ IT, BEFORE MAKING YOUR CLAIM.

It may seem obvious to suggest a careful read of the policy, but we have encountered countless people who forget about this critical step. Almost every insurance policy is written with subtle (and not so subtle) limitations on or exceptions to coverage. Look for things such as “mental and nervous” or “own occupation vs. any occupation” in exceptions in Long Term Disability policies. In health policies, look for limitations on “experimental” or therapeutic treatments, brand name pharmaceuticals, eating or psychiatric disorders. Long term care policies might require lengthy periods of hospitalization, or skilled nursing as prerequisites to coverage, or may condition coverage on an unreasonable definition of incapacity. Insurance companies are notorious for trying to characterize a claim so that it falls within one of the limitations or exceptions, and oftentimes mischaracterize an unwary claimant’s own words or writings to try and support a denial.

Often, policies are governed by ERISA (Employee Retirement Income Security Act) which is a Federal Law with very specific mandates about insurance claims, and can severely limit the available remedies.

2) PAY CAREFUL ATTENTION TO THE TIME LIMITATIONS SET FORTH IN THE PLAN.

Almost every policy has specific time limitations relating to things such as when a claim must be made, how much time the insurance company has to respond to a claim, and/or how long a claimant has to file a lawsuit if the claim is denied. The time limits are one of the very first things to look at, and calendar, when reviewing your policy. You might be able to make some legal arguments to avoid the harsh consequences of failing to comply with these deadlines insofar as they pertain to pursuing your claim, but it is always wise to act as though the deadlines are absolute.

3) ALWAYS COMMUNICATE WITH THE INSURANCE COMPANY IN WRITING, KEEP COPIES, AND USE CERTIFIED MAIL.

Insurance companies are in the practice of making copious notes about the substance of every phone conversation they have with an insured. The problem is, those notes may not always accurately reflect what you communicated, or even how the company representative communicated with you. The best solution to this is for you to send your questions in writing, AND to always confirm the substance of important conversations with a follow-up letter. If you can, try to get an email address for your representative, as email can serve as a very good substitute when sending letters via certified mail might be difficult.

Paying attention to these three simple rules related to insurance claims can greatly increase the probability of a successful claim, or if necessary, a successful lawsuit to force claim payment.

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Posted In: ERISA , Health Insurance , Insurance Bad Faith , Life Insurance , LongTerm Care Insurance , LongTerm Disability (LTD) Insurance

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A court ruling that actually favors the insured and hurts insurance companies?!? As far-fetched as that sounds, particularly in California, that’s exactly what happened recently when a state appellate court questioned California health insurers’ practice of waiting until policyholders incurred medical expenses before scrutinizing individual policies for misstatements, and then canceling coverage for omissions and errors.
This long-standing practice called “post-claim underwriting” occurs when the insurer examines representations made on the policy application only AFTER medical claims have been submitted. If ANY inaccuracies are uncovered, the company CANCELS THE COVERAGE ALTOGETHER. The insured is left with the medical bills and no insurance at a time he or she needs it more than ever.
Post-claim underwriting has been illegal in California since 1993. But that hasn’t stopped insurers from attempting to circumvent the law by using the practice against unsuspecting policyholders such as Augusto Ticconi, who sued Blue Shield for denying coverage after he incurred more than $100,000 in medical expenses. Post-claim underwriting cases don’t usually make it to trial, because insurance companies quietly settle before courts have a chance to rule against them.
Ticconi didn’t go away. He asked the trial court to certify a class action, which would allow other policyholders denied coverage to benefit from a ruling against Blue Shield. The trial court denied class certification. The 2nd District California Court of Appeals overruled the trial court and ordered it to reconsider class certification.
This paves the way for a class-action lawsuit against Blue Shield and other major health insurers. The thousands of individuals taken advantage of by their insurance providers over the years may finally get a chance to win restitution for the loss of their health coverage at the worst time possible.
In Ticconi v. Blue Shield, the California Court of Appeal sent two clear messages. To insurers, the court said post-claim underwriting won’t be tolerated. And the court assured consumers they can fight insurers and win.
This is a message of hope to policyholders of life, health, disability, long-term care and every other type of insurance who have been treated unfairly by an insurance company.

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Posted In: LongTerm Disability (LTD) Insurance

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As one of its top ten financial resolutions for 2008, Union Bank of California advises people to invest in long-term care insurance as part of a financial safety net for their families. Along with the government, private companies see the validity of both long-term care and disability insurance to help individuals deal with exorbitant medical costs. Some estimates predict that 50 percent of the population may need to rely on these types of policies in the future.

We agree that long-term care and disability policies are increasingly important insurance coverage. But purchasing a policy now doesn’t necessarily mean that coverage will be available when you need it.

People with Fibromyalgia, Lupus, Epstein Barr, Multiple Sclerosis, and Chronic Fatigue have few financial options aside from specialized insurance coverage. But we have seen an increase in insurance companies’ erroneous denial of individuals’ long-term care, long-term disability and health claims. Life is difficult enough for people suffering from a chronic illness, and we understand that having their claims denied by their private insurance company only exacerbates the situation.

The following are a few facts that highlight the problem:

• The government isn’t going to pay for long-term care at home, in a nursing home or in an assisted living center. Medicare pays 100 percent of long-term care for 20 days and all but $95 a day for the next 80 days. After that, nothing. And Medicare only pays for skilled care; most long-term care is not skilled care.
• The national average cost for nursing homes is approximately $105 a day. Assisted living ranges anywhere from $50 to $90 a day. These costs are perfectly capable of wiping out a lifetime of savings, not to mention the emotional effect long-term care has on a family.
• At age 65, a woman has a one out of two chance of spending some time in a nursing home. A man has a one out of three chance. In the case of men, mortality catches up with morbidity.
• Children would like to help, but children often have kids of their own. They certainly can’t quit their jobs to care for their parents.
• Most people want to choose where they go instead of having to go where they are taken, and if independence is important to them, they will need to have either a large estate or adequate insurance.

All this means that most people are better off with some form of long-term care or disability insurance than none at all. And when the time comes that you need it, we sincerely hope you are among the fortunate few who see the return on their investment. If you are not, we can help.

GK

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Posted In: LongTerm Care Insurance

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Insurers Are the Last People Who Should Decide How to Reform Health Care

California Gov. Arnold Schwarzenegger late last month proposed controversial health care reform legislation that would ensure everyone in the state has health insurance. As far as we are concerned, it’s an idea whose time has come. And we’re not alone. The measure has already passed the Assembly and most likely will receive Senate approval.

So who is against this plan? Most notably, the insurance industry. According to the New York Times business an insurance industry trade group has come up with its own proposals to help 47 million uninsured Americans obtain health coverage. The trade group acknowledges what most of us have known for a long time: that many insurers are too quick to deny coverage or cancel pre-existing policies of people most likely to need health care. Now they want us to believe they want to fix the problem.

The Times quotes Karen Ignagni, chief executive of America’s Health Insurance Plans, “We are taking responsibility for ensuring that no one falls through the cracks.”

But isn’t the insurance industry the entity responsible for the cracks in the first place? And haven’t they been zealously blocking all attempts to repave the road to affordable health care?

The insurance industry will not – nor should it be given the option to – police itself. Our office files are filled with the heart-wrenching stories of too many people who had to fight insurers to obtain benefits they paid for. Are we now to believe that overnight insurers have decided they really want to help sick people?

Our state government has a good plan that attempts to spread the cost of universal health care proportionally among all stakeholders. The insurance industry is being asked to share their part of the cost. They don’t like it and they never will. And any so-called fix they are likely to devise on their own will certainly be skewed in their favor.

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Posted In: Health Insurance

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In January 2008, Lisa Kantor won an appellate decision for a client suffering from an bulimia. In Jacobs v. Kaiser Foundation Health Plan, Inc., 04-57131 (C.D. Cal. Jan. 30, 2008), Laura Jacobs, was diagnosed with life-threatening bulimia, but was denied adequate treatment by her medical plan provider Kaiser. Kaiser did not offer adequate treatment for plan participants, and declined to refer Ms. Jacobs to an out-of-plan treatment facility. It further refused to pay for the cost of treatment when Ms. Jacobs’ mother obtained the care her daughter desperately needed by checking her into an eating-disorder treatment facility. Although the lower court found that Kaiser had not abused its discretion in denying treatment, the Court of Appeal ruled that her mother’s “decision to take Laura outside the Kaiser treatment system may have saved her daughter’s life.” The case was reversed and remanded with instructions for the lower court to reimburse the Jacobs’ for the non-plan services and to pay Ms. Kantor’s fees and costs.

Although the Jacobs case was unpublished, it is still part of only a few appellate decisions addressing the issue of health coverage for eating disorders. In January 2006, Lisa Kantor previously won the first published appellate decision in an eating disorder case where her client was denied benefits for in-patient treatment of bulimia. In Thompkins v. BC Life and Health Ins. Co., 414 F.Supp2d 953, (C.D.Cal. 2006), the Court of Appeal interpreted California’s mental health parity law AB88 to include beneficiaries who did not live or seek medical care in California. That law requires health insurance policies to cover treatment for mental illness (including eating disorders) on the same terms and conditions applied to other medical conditions. As such, BC Life and Health was obligated to pay Ms. Kantor’s client benefits under its plan.

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Posted In: ERISA , Health Insurance

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December 10, 2007
755,000 reasons why you can’t rely on Uncle Sam.....
755,000! No, that’s not the amount of money Alex Rodriguez makes per home run. It’s actually the number of backlogged cases in the U.S. Social Security Disability system. A recent article by the New York Times reports that it can take as long as three years for an appellate decision in a Social Security Disability Income (SSDI) case.
Why this unconscionable backlog? Every year, more appeals are filed than the country's 1,025 appellate judges have the capacity to handle, even working overtime. When Congress proposed a budget item seeking $100 million to add more judges to issue more timely rulings, President Bush vetoed the bill calling it "profligate."
Every American with a disability waiting for an SSDI appellate decision (and likely anyone else who can reason) could tell the President the real meaning of "profligate": Spending $177 MILLION A DAY on the war in Iraq.
How does the President's veto affect you? It means that having your long-term disability insurance claim handled quickly and effectively is more important than ever. All too often, I get a call about an LTD claim from someone who has waited a year or more to take action. In the typical call, the policyholder denied insurance coverage was confident he or she would receive SSDI, only to find that Social Security denied them as well and their day in court won’t be coming for a LONG, LONG time. That's when I have to break the sad news that the deadline for appeal has already passed or the statute of limitations (the amount of time you have to take legal action) has already run out. Unlike SSDI, which has no statute of limitations, LTD policies must be litigated within four years of the date proof of loss is required, and in some cases it can be as short as one year.
The time to take action against your insurance company is immediately after coverage is denied! Delay and you could find yourself standing behind 755,000 other claimants in a line not going anywhere fast.
--- MH

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Posted In: LongTerm Disability (LTD) Insurance

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