Disability insurance companies employ a variety of tactics to delay, deny, and defend claims and benefits. It is important for insureds to be aware of these strategies so they can maximize their chance for claim approval and avoid unnecessary delays and/or a denial of benefits.
“Slow Walking” is a common strategy used by many insurance carriers to delay the payment of a benefit. The insurance company “slow walks” the claim by requesting additional, irrelevant and duplicative information on a continuing basis, asserting that this information is required in order to determine whether your claim for benefit payments will be approved, despite having ample proof of disability.
As a way to limit benefits, insurance companies may ignore the primary cause of disability. For example, when an individual suffers from more than one condition, the insurance company may base its denial of benefit payments on the secondary cause of disability, which may be a condition that is not covered under the policy, does not rise to a level of being “disabled” pursuant to the policy terms, or is limited to twenty-four (24) months of benefit payments. Under many policies, mental nervous conditions (such as Depression or Generalized Anxiety Disorder) are capped at twenty-four (24) months of benefit payments. Thus, a carrier may claim that the depression an insured is experiencing (usually as a reaction to his physical disability) is the primary disabling condition and will try to limit benefits to only twenty-four (24) months, rather than the maximum amount of benefit payments allowed under the plan.
Another tactic insurance companies use to avoid coverage is to claim that the individual is not part of the disability plan’s “covered class”. An insurer will deny coverage on the basis that the individual was not “actively at work”; that the individual is precluded from coverage because he or she has a pre-existing condition; or that the insurance coverage had not taken effect at the time the insured became disabled. Generally, employer sponsored disability plans define “covered class” as active full-time employees who work at least 30 hours per week. Hence, when an individual reduces his or her work hours prior to becoming disabled, insurance companies deny coverage on the basis that the individual was not actively at work at the time he or she became disabled, and therefore, the individual is not entitled to coverage of benefit payments.
With respect to mental/nervous claims, insurance companies request nonexistent or irrelevant documents. Mental nervous claims are difficult to prove as there is little objective evidence, such as an x-ray or MRI, that can be used to verify the condition. Insurers must rely on the veracity of the insured and his or her treating physicians and thus often deny claims for lack of proof. However, statements from a treating psychiatrist and psychiatric test results are sufficient in many cases to prove disability.
Recently, certain insurance companies have been denying benefits based on alleged misrepresentations made by the insured on the initial application for insurance coverage. In this case, the carrier asserts that the insured “hid” or “failed to disclose” pertinent medical information in response to an application question. Had the insurer responded “truthfully,” the carrier may not have issued the policy or may have excluded that condition from coverage. However, in reality, the insured did answer truthfully, but the insurer misconstrued information in an old medical record in an effort to avoid coverage.
Insurance companies will employ numerous tactics in order to avoid coverage and/or benefit payments; thus, it is important that the individual or employee not give up. Insureds entitled to the disability benefits promised to them under their policy should understand their rights and their insurance company’s obligations. Please contact our firm for a free consultation if you have any questions about your policy, coverage, and/or believe the insurance company has wrongly delayed or denied your claim.