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Every employer-provided long term disability policy I have reviewed in the past ten years contains some sort of limitation on conditions for which disability benefits can be granted or the duration of those benefits. The most common type of limitation seen in a long term disability policy relates to “mental disorders,” “substance abuse,” and a general provision typically referred to as “other limiting conditions.” The payment of LTD benefits is often limited to 24 months for the lifetime of a claimant’s disability if it is caused or contributed to by any of these conditions.
Over the years, the “other limiting conditions” provisions we have seen have grown ever more inclusive. We suspect that employers buying these group policies from the various insurers are quite unaware of the nature of these limiting provisions and the reality that many types of disabling illnesses are not actually covered or are seriously limited. A particularly onerous provision recently found in a policy issued by Standard Insurance includes the following:
Other Limiting Conditions means chronic fatigue conditions (such as chronic fatigue syndrome, chronic fatigue immunodeficiency syndrome, post-viral syndrome, limbic encephalopathy, Epstein-bar virus infection, herpes virus type 6 infection, or other myalgic encephalomyelitis), any allergy or sensitivity to chemicals or the environment (such as environmental allergies, sick building syndrome, multiple chemical sensitivity syndrome, or chronic toxic encephalopathy), chronic pain conditions (such as fibromyalgia, reflex sympathetic dystrophy, or myofacial pain), carpal tunnel or repetitive motion syndrome, temporalmandibular joint disorder, crainomandibular joint disorder, arthritis, diseases or disorders of the cervical, thoracic, or lumbosacral back and its surrounding soft tissue, and sprains or strains of joints or muscles.
Are you kidding me!? Why doesn’t the insurance policy just say “we will pay you a monthly benefit for your disability, but you should be aware that we don’t actually cover most disabling disabilities or conditions.”
The employer who purchased this policy on behalf of its employees should have paid better attention to the product it was buying. This particular limiting provision would rule out the payment of benefits beyond 24 months for perhaps 30-40% of the individuals who contact our office suffering from a disabling illness, condition, or disease. This particular employer likely had no idea this type of provision had been included in its policy. Claimants seeking disability benefits under a group policy have a difficult enough time actually receiving those benefits given the protections afforded to employers (not employees as intended) and insurance companies by the Employee Retirement Income Security Act (“ERISA”). Such onerous provisions make it that much more difficult. Frankly, such a policy rises to the level of being illusory – meaning the policy promises a benefit that really isn’t there.
Shawn McDermott has been recognized as a Colorado “Super Lawyer” for 2010. Mr. McDermott’s recognition falls in the area of Employee Benefits/ERISA Insurance Coverage and Personal Injury. The Super Lawyer’s recommendation is made by FindLaw.com, a Thomas Reuters business, an independent lawyer rating service. The selection process is based upon a “comprehensive, good faith and detailed attempt to produce a list of lawyers that have attained high recognition, meet ethical standards, and have demonstrated some degree of achievement in their field.” According to the Super Lawyer’s website, each candidate is evaluated on 12 indicators of peer recognition and professional achievement. Selections are made on an annual state-by-state basis. Only 5% of lawyers in the state of Colorado are given the designation of Super Lawyers. The Super Lawyers website can be found here.
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The Supreme Court of our land issued a new ERISA decision on May 16, 2011 titled Amara v CIGNA, Case No. 09-804, which restores equity to the law of employee benefits.
Here, the plaintiffs were understandably perturbed when CIGNA converted their defined benefit plan to a cash balance plan. The summary plan description of the changes provided by CIGNA to its employees was misleading in that it characterized the new plan as being more generous than it actually was. At the district court level, the judge found that CIGNA had withheld accurate information from the employees. CIGNA appealed. The Second Circuit agreed with the district court, and the case ultimately ended up at the Supreme Court. Although CIGNA technically won the battle with Amara (who was the representative plaintiff in the class action), the ultimate impact of the decision should well benefit plan participants. The Supreme Court agreed with CIGNA that the lower courts had incorrectly used an ERISA enforcement provision found at 29 USC Section 1132 (a)(1)(B) to reform CIGNA’s pension plan. Generally speaking, an ERISA claim against a plan or plan insurer under section 1132 (a)(1)(b) allows courts to award claimants the benefits due under the plan.
However, importantly, the Court went on to hold the plan could be reformed under a different subsection of the same statute, subsection (a)(3), which provides ERISA participants with “appropriate equitable relief” to redress violations of an ERISA plan or to enforce the terms of a plan. The Supreme Court ruled that pension plan fiduciaries could in fact be held liable for “make-whole” relief for the harm they cause employees (participants in the plan) in failing to comply with their duties in administering the pension plan. In the end, the Court really seems to have opened the door for the employees to recover what an employer promises would be received in exchange for their employment efforts. Yes, I know this sounds obvious to the casual reader, but the past 20 years of ERISA decisions by our courts had so twisted this arena that many wrongs committed by plan fiduciaries did not result in an actual, fair remedy to the aggrieved employee. Hopefully the tide is turning.
Insurers and their ilk are already attempting to spin this decision in their favor, as CIGNA was in fact successful in having the lower court decision overturned. But the only thing that really happened was that the Supreme Court clarified which section of the ERISA enforcement statute provides the relief sought by the class plaintiff, and clarity was provided as to the scope and substance of remedies available under subsection (a)(3) which could include money damages.
Click here for further information on ERISA welfare benefit claims.
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One by one, additional states are knocking down discretionary clauses in long term disability insurance policies. In Maryland this past week, its bill to outlaw discretionary clauses in their disability policies has passed both houses of their legislative branch. The bill will now move on to a full vote and eventually (presumably)signature by their governor. When that occurs, Maryland will join the list of an ever growing number of states who have passed laws in one form or another banning an insurance company’s use of a discretionary clause. Colorado is one such state. As reported in prior blogs and throughout our website, a discretionary clause can be the biggest hurdle to a successful recovery of a claimant’s denied long term disability benefits, if the claim is governed by the Employee Retirement Income Security Act (“ERISA”). For more on discretionary review, please click here. If you believe your long term disability insurance or life insurance claim has been wrongfully denied, feel free to contact our office at any time to learn more about your rights, the law that applies to your claim and your legal options and remedies. Our initial consultations are typically performed without charge.
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While some people have purchased a life insurance policy on their own, most individuals have coverage in the event of death under a plan established by their employer. Most employer-provided benefit plans which include life insurance, are governed by ERISA (Employee Retirement Income Security Act). While every claim for life insurance benefits should be handled carefully, the impact of the applicability of ERISA should not be taken lightly. Most people are surprised when an unfortunate death of a family member occurs and the insurance company denies (more…)
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Our disability clients are often surprised to hear that their life insurance coverage may continue in full force and effect even if they are disabled and cant work. Most individuals have coverage in the event of disability or death through benefits or policies of insurance provided by their employer. If so, such claims are likely governed by ERISA (Employee Retirement Income Security Act). Most group life insurance policies contain what is often called a “waiver of premium” provision which provides that the life insurance protection continues without having to pay a premium (more…)
The Texas Department of Insurance has adopted a new rule prohibiting discretionary clauses in disability insurance policies. Texas now joins the growing list of a number of states which have undertaken similar action. The ban applies to group life and disability policies and is similar to Colorado’s ban on discretionary clauses as found in C.R.S. § 10-3-1116. For a brief description of Colorado’s ban on discretionary clauses, see our prior blog post by clicking here. (more…)
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The disability insurance attorneys at the Law Office of Shawn E. McDermott prevailed in a recent ERISA appeal filed on behalf of their client when Life Insurance Company of North America (LINA), a subsidiary of CIGNA, wrongfully terminated his long term disability benefits.
In the claim against LINA, Mr B was originally rendered disabled by bladder cancer which had gone into remission. However, at the time of the termination of long term disability benefits, he began suffering from (more…)
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The disability insurance lawyers at the Law Office of Shawn E. McDermott prevailed in a recent ERISA appeal filed on behalf of their client when Hartford Life & Accident Insurance Company wrongfully terminated her long term disability benefits.
In the claim against Hartford Life & Accident Insurance Company Ms. H suffered from the following conditions: (more…)
A Federal Court Magistrate Judge recently ordered Qwest Disability Plan to pay Plaintiff’s attorney’s fees in an action pending in the United States District Court for the District of Colorado.
In Robin Cross v. Qwest Disability Plan, Magistrate Judge Kathleen M. Tafoya awarded attorney’s fees in favor of Plaintiff Cross whose disability benefits had been reinstated during the course of litigation. The Court ordered Defendant to pay for all but a small portion of Plaintiff Cross’s attorney time incurred on the claim. The Court determined that (more…)