Articles Posted in Life Insurance

There may come a time in your life when you will need to consult with a lawyer – whether it be good news or bad news. We routinely speak with individuals who have had life, health, and disability claims denied by their insurance companies. Understandably, this is a very difficult time for the individuals who call us. We understand that, and try to make the process simple…but we need your help.

As lawyers, we are well-versed in the practice of law, but we rely on the information from our clients to steer us in the right direction and guide each case. It takes TEAMWORK to get a successful outcome for our clients.

Here are a few tips for talking to your lawyer and sharing with them what they need to know.

On May 11, 2017, the US Court of Appeals for the Ninth Circuit issued a decision in Orzechowski v. Boeing Co. Non-Union LTD Plan, et al., Case No. 14-55919 (9th Circ. May 11, 2017) upholding the application of the California law which invalidates “discretionary clauses” in Long Term Disability (LTD) plans and other life and disability contracts of insurance.

Prior to 2012, insurers in California (and many other states) were allowed to place “discretionary clauses” into their insurance policies. These clauses, while seemingly innocuous, actually made it significantly harder for insureds to challenge wrongful denials of insurance benefits in court. These clauses forced Federal Courts to review denials of insurance benefits under an “abuse of discretion” standard. In order to prevail under this standard, an insured not only had to show that they were entitled to the benefits under the contract, but they also had to show that the insurer’s decision was “arbitrary and capricious.”  The effect of this was that Court’s were routinely deferring to the “discretion” of the insurer thereby upholding their denial. This created is a much more difficult standard of proof for insureds to meet than in an ordinary civil lawsuit, where one need only prove their case by a “preponderance” of the evidence, and where Courts do not give any special weight to the evidence presented by the other side.  The result of the so-called discretionary clauses was that many insureds lost their lawsuits for wrongfully denied benefits even when, technically, they were entitled to benefits under the term of the contract.  Court’s would simply hold they could not find evidence the insurer “abused its discretion” or acted unreasonably enough so as to justify overturning the insurer’s denial of benefits.

In 2012, the California legislature passed California Insurance Code §10110.6, which provides that all discretionary clauses in California insurance contracts are null and void, if the insurance policy or plan “renewed” as of January 1, 2012. As a result, Courts will now look at the evidence anew, or “de novo” to make a determination of whether the insured is entitled to benefits, instead of simply deferring to the insurance company’s conclusions.  This is a much easier burden for insureds to meet than the older “abuse of discretion” standard.

For over 25 years, I have been representing individuals who have had life, health, and disability claims denied by their insurance companies.   I have represented over 3,000 people.   What is so disheartening to me is that I hear from clients again and again that they “almost gave up before calling” me. They tell me they were beaten down by the process, convinced their insurance company must be right, or that they didn’t know there were lawyers who specialized in handling their kind of case on a contingent basis.   While sometimes the client HAS waited too long for us to help them, usually my law firm, Kantor & Kantor, is able to step in and successfully resolve their claim.

However, I wonder just how many DO give up unnecessarily.   While my view of the insurance industry may appear very cynical, I am 100% convinced that the industry employs a strategy of denying as many claims as possible in the hope that claimants will just give up and go away.   I could write pages upon pages of stories about clients who had almost given up, but for whom we were able to obtain benefits with nothing more than a well written letter.   It sometimes seems like the insurance company is daring their insured to challenge the denial, or to get a lawyer.   If they do, the insurance company will reconsider its denial. If not, the denial will stand and the insurance company will keep the benefits which are rightfully yours.

In the last month, I have obtained over a $1,000,000 in total benefits for several clients who separately told me that they had seriously considered giving up before calling my firm.   This led to me to come back to a familiar thought, which was to wonder about all the people who did simply give up.   I decided to write this blog in the hope that maybe ONE insured might read it, and decide not to give up.   I am not writing this to get business. I have more than I need.   I practice in California, but this blog might be read by someone in Florida, or Illinois, or New Jersey, for example. If it is, and you were considering giving up trying to get your benefits, I am not suggesting you call me.   Go on the internet, or call your State Bar, and find an experienced attorney in your State.   The worst thing that happens, is that no one will take your case  —  but what if they will?

Insurance denial, ERISA denial, claim denied
Every insurance policy requires that you give notice of your claim for benefits to the company before benefits can be paid.  It doesn’t matter if the claim is for medical services, disability benefits, life insurance, fire, flood, theft, etc. Obviously, notice and information about your claim is necessary before the insurance conpany can process and pay the claim. Policies also usually require that notice of a claim be given within a specified time period following the loss, for example, “30 days,” or “as soon as practicable,” or “as soon as reasonably possible,” etc.  Again, this is fair because evidence related to the claim is fresh, and most readily available nearer the time of the event.

But, what happens if you can’t, or don’t comply with the policy notice requirement?  What happens if don’t give notice until months, or even years after your claim accrued?

Good questions.

One of the most common mistakes we see with long term disability (“LTD”)  denials (ERISA and non-ERISA/bad faith) is claimants rushing to submit their appeal. The desire to move quickly is understandable:

  • You have no money coming in;
  • You are angry at the insurance company and want to give them a piece of your mind;

Many of the “rules” governing ERISA claims are not contained in the statute itself, but rather are the result of judicial decisions interpreting ERISA. In the landmark case of Firestone v. Bruch, 489 U.S. 101 (1989), the U.S. Supreme Court upheld the right of an ERISA fiduciary (including insurance companies!) to reserve “discretion” to decide eligibility for benefits under an ERISA plan. When “discretion” is granted to an insurance company or a claims administrator, a reviewing court does not decide whether or not the claimant is entitled to benefits under an insurance policy. Instead, a court is limited to deciding whether the insurance company abused its discretion or acted “unreasonably” when deciding the claim.   Under this standard of review, some courts have concluded they are compelled to uphold the insurer’s decision merely because there was some medical support for the decision. See, Carlo B v. Blue Cross Blue Shield, 2010 WL 1257755 (D. Utah, 2010 (It does not matter whether the Court agrees with the insurer or its physicians. The decision need not be the only logical decision or even the best one.)

After years of unfair decisions under this standard of review, some states, including California, have taken action. Effective January 1, 2012, the California legislature outlawed discretion in policies. California Insurance Code, Section 10110.6. The statute applies to any policy which “issued or renewed” after January 1, 2012 and which covered residents of California.  What this means is that courts can now actually look at the evidence and decide for themselves whether they think an insured person is entiteld to benefits.  This is called a “de novo” proceeding, meaning the court will look at the evidence “anew” instead of deferring to what the insurance company decided. (See one of our earlier blogs for more info: https://www.californiainsurancelawyerblog.com/2015/03/california_insurance_code_sect_1.html )

Insurance companies such as MetLife, Liberty Life, Prudential and others have tried making all kinds of arguments to avoid the impact of section 10110.6. Application of the statute can depend on the facts of the case, but, since January 1, 2012, Kantor & Kantor has been successful in persuading many Federal Judges, and even insurance company lawyers, to invalidate or ignore grants of discretion written into insurance plans. A number of other experienced ERISA practitioners have also been successful in this argument. To date, the statute has been applied in at least 15 court decisions in California.

Why pass on free personalized advice?

One of the people who contacted us this week was a woman who had her Long Term Disability benefits terminated by Standard Insurance Company after Standard had paid her those benefits for many years. Despite multiple surgeries, her symptoms had not improved. Each morning she takes powerful pain medications. Sometimes those medications offer enough relief to enable her to attend to daily functions, but often, they do not.

Either way, she was certainly not able to perform the duties of her job when Standard cut off her benefits. Nonetheless, Standard Insurance Company all of the sudden determined she had not provided sufficient proof of disability and terminated her Long Term Disability benefits. Thinking this was simply a misunderstanding, she appealed the denial on her own without speaking to an attorney first. After all she reasoned, Standard Insurance Company had told her all she needed to do was explain to them why she was still disabled.

On January 13, 2017, the Los Angeles Times published a column entitled Healthcare insurance hell: If at first your claim is denied, try, try again

The article describes on insured’s extreme difficulty in obtaining approval for treatments of her multiple autoimmune disorders that cause chronic pain, migraines, extreme dizziness and debilitating chronic fatigue. As the title shows, the main thrust of the argument is to never give up if your health insurance claim is denied – however, this advice is not only applicable to health insurance claims – the same holds true, believe it or not, for Long Term Disability, Long Term Care, and even Life Insurance claims!  

Some interesting additional information is also included in the column:

Don’t ever assume that you Life Insurance policy will pay benefits to your beneficiaries.

Why? Because so often, benefits are not paid. We know this is true because we are in the business of suing insurance companies when they fail to pay valid claims. But, most people never imagine that a valid life insurance claim won’t get paid. Most of the problems we see at our firm involve insurance companies failing to pay life insurance benefits based on allegations of such things as fraud in procuring the policy, or that the policy was not properly applied for through an individual’s employer. Insurance companies often make these assertions without good faith, or without having performed a full and fair investigation of the facts. And often, when we challenge the insurance benefit denial, we get benefits paid for our clients.

But, what happens when someone doesn’t even know they are the beneficiary of a life insurance policy? Should the insurance company make an attempt to contact beneficiaries when they have knowledge an insured has died? Most state laws say”yes.” Should insurance companies continue to collect premiums (from policies with cash value) when they know an insured has died? Common sense, and the law, say”no.” Yet many insurance companies have been doing exactly what they should not be doing, and have realized mind-boggling profits by doing so. The television show, 60 minutes, ran a segment last night revealing these unfair practices. Florida Insurance Commissioner, Kevin McCarty, led the national task force investigating the industry. He explains as a result of the investigation, twenty five of the nation’s biggest life insurance companies agreed to pay more than 7 and a half billion dollars in back death benefits. For more information on the 60 minutes piece, click here: http://www.cbsnews.com/news/60-minutes-life-insurance-investigation-lesley-stahl/

As part of Kantor & Kantor’s”Throwback Thursday”, we take a look at Mondolo v. Unum Life Ins. Co. of Amer., CV-11-07435 CAS (MRWx) (C.D. Cal. 2013).

Kantor & Kantor LLP achieved a victory on behalf of client Tanya Mondolo, who sued Unum Life Insurance Co. in U.S. District Court for the Central District of California for wrongfully denying her disability insurance benefits. The court ruled that Unum, a Fortune 500 company and the largest group and individual disability carrier in the United States, abused its discretion in terminating Mondolo’s disability benefits. The court ordered Unum to reinstate benefits, with interest, and that Kantor & Kantor could make a motion for attorneys’ fees and costs.

Mondolo suffered from fibromyalgia and avascular necrosis, often called bone death. Her physicians believed the bone death was a late developing side effect from the chemotherapy regimen used years ago to treat her leukemia. She had difficulty walking, suffered from uncontrolled pain, and was too weak to tolerate prolonged sitting or typing.

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