8/21/2005, The Safety Net She Believed In Was Pulled Away When She Fell

http://articles.latimes.com/2005/aug/21/nation/na-disability21

Debra Potter made a good living selling disability coverage. But like many working Americans, she learned the hard way that federal law now favors insurers…

Disability insurers had sold a generation of doctors extremely generous, individual, “own occupation” policies, confident that their new clients would continue working almost no matter what, and therefore file few claims. But as the managed care revolution began to clamp down on what physicians could charge, many doctors started to exit their profession and, according to insurance industry executives, a considerable number filed for disability…

“I’m a big fan of ERISA,” UnumProvident Chief Executive Thomas R. Watjen said in a recent interview. “It gives consumers a voice they didn’t have before.”

But industry experts say that the profitability of disability insurers hinges not so much on the mass of routine claims, which typically are for short periods and involve small sums, but rather on a small number of long-term claims by people who were making good — and therefore expensive-to-replace — incomes…

“In the last 12 months alone, we’ve seen the largest insurance brokers in America, the largest property and casualty companies in America, the largest title insurance companies, the largest financial service firms and the largest disability insurers all engaged in flagrant violations of their most basic obligations to their customers,” said Garamendi, the California insurance commissioner. “This is not just a UnumProvident problem; it’s an insurance industry one.”

Although ERISA prohibits state regulators from intervening to help individuals in most disputes over employer-provided disability insurance, states can investigate insurers’ overall conduct, penalize firms for bad behavior and, in some cases, ban companies from doing business within their boundaries…

In Berkeley, Joan Hangarter had had to give up her chiropractic practice because of shoulder, neck and arm pain several years earlier. But after paying Hangarter under her individual disability policy for 20 months, a UnumProvident subsidiary terminated her benefits, attached her bank account and canceled her policy. Before it was over, the single mother of two had lost her home and gone on welfare…

In Michigan, another insurer, Liberty Life Assurance Co. of Boston, came in for a blistering verbal assault from a federal judge for its treatment of former Steelcase Inc. employee Nancy Loucks. The company, as administrator of Steelcase’s disability plan, first concluded that Loucks had been disabled by a rheumatic condition and began paying her. Then, after requiring her to undergo repeated evaluations by company-paid doctors, it concluded that she was not disabled and stopped paying…

When Deskins fell ill in 2002 — like Potter, with multiple sclerosis — administrators for her employer’s disability insurance plan apparently were so convinced that she would never work again that they assigned a specialist to help convince Social Security that she met the government’s stringent standard for federal disability payments, which requires that applicants be unable to function in any occupation.

Disability insurers have a huge financial interest in getting people who are seeking benefits from them onto the Social Security rolls. In effect, these insurers have come up with ways to shift much of the risk of having to cover ill and injured workers from themselves to Washington even as they continue collecting premiums…

For example, the multi-state review concluded that there was a bias in the way UnumProvident’s in-house medical staff interpreted the records that claimants submitted to prove their disability. “The bias,” the regulators wrote, “was reflected in attempts to focus upon any apparent inconsistencies in the medical records or other information supplied by claimants, rather than attempt to derive a thorough understanding of the claimants’ medical condition.”

Disability insurers have a considerable financial interest in concluding that a disability has psychological rather than physical roots. Most policies — including the one that covered Potter — limit the benefits that a company must pay for “mental and nervous disorders” to two years. By contrast, many of those with physical causes must be paid until the claimant turns 65…

After reviewing company records, state regulators said they found many instances where UnumProvident denied benefits “on the grounds that the claimant had failed to provide ‘objective evidence’ of a disabling condition” even where the company’s claim forms did not require such evidence.

Company documents show that within three weeks of receiving her disability claim, UnumProvident officials were on the phone to Potter complaining that her condition was “self-reported” and saying they needed objective evidence that something was wrong with her…

Among other things, the regulators said they found evidence that UnumProvident was engaged in a companywide effort “to shift the burden of responsibility to the claimant to provide … records in support of a claim,” rather than investigate a claim’s legitimacy on its own…

“There is no basis to support that her complaints are anything other than legitimate. Clearly, not having total knowledge of the pathophysiology of a disorder is no basis of the denial of its existence.”

When Potter tried to get the insurer to reconsider, she was sent her 4-inch-thick claim file and told the case was closed…

However, the files that the insurer sent to Potter after it closed her case suggest that UnumProvident’s decision to reverse itself occurred only after Potter retained Jon Holder, a Bar Harbor, Maine, lawyer. It was Holder who provided the company with new information about Potter’s condition and notified the insurer that Social Security had concluded that she was totally disabled…

As for Ricky D. Hart, the North Carolina chicken plant mechanic, UnumProvident acknowledges in documents that he has coronary heart disease. But in a letter last month, it said that it was cutting off his disability checks after an independent medical exam paid for by the company concluded that Hart could still work a 40-hour-a-week desk job and “should not have any problems in operating heavy machinery.” It suggested that he exercise…

Advertisements

If you don't comment, I'll just assume you agree with me

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s