May 5th, 2015

Accidental Death and Disability (AD&D) policies cover loss caused by “accident.” Accident is generally defined by the courts as an “unexpected and unintended” occurrence. Thus though injury from a medical procedure may be part of the normal risk of the procedure (and thus not unexpected) injury due to the negligence of the doctor is never expected or intended and thus is classified as an accident.

Nevertheless insurance companies typically deny claims for AD&D benefits arising out of medical malpractice. This is often due to an exclusion in most policies for loss caused by sickness or the treatment thereof. However, depending on the actual policy language and the specific facts of the case, we have been able to obtain coverage despite the medical treatment exclusion. As an example we have had several cases where death was caused by the toxic interaction of medication prescribed by a physician or where the amount of a single medication prescribed became fatally toxic.

The California Insurance Code limits the manner in which insurance companies can exclude losses caused by prescription medication.  Insurance policies that are written for distribution throughout the country often fail to comply with individual state’s requirements.  Additionally at times the policies themselves become ambiguous when they specifically indicate they cover certain losses but then turn around in a later section and claim that they exclude the same losses. Since the insurance company created the policy any ambiguities in the policy must be interpreted in favor of coverage.

The bottom line is that if you believe you may have a claim under an AD&D policy do not be satisfied with the explanation of an insurance company when they deny your claim. Seek out an attorney experienced in life and AD&D insurance to provide you their perspective. These evaluations are, at no charge to the client.  Therefore, you have nothing to lose.

February 11th, 2015

Our Client’s Husband, who had a history of alcohol issues, died following an evening of binge drinking.  The coroner’s office classified the manner of death as “accidental” and the cause of death as “acute alcohol intoxication.”  The Husband had two insurance policies that promised benefits to his wife if he died as a result of an accident. Our client submitted a claim to each of the insurance companies and both denied coverage under an exclusion for loss caused by “sickness or disease.”  Both insurance companies claimed that a contributing factor to decedent’s death was his alcoholism which they asserted excluded coverage.

After obtaining clarification from the San Diego County Medical Examiner that decedent’s death was due to “acute” alcohol intoxication and not from his “chronic” alcoholism (which can cause serious medical issues like liver disease), we submitted an appeal to both insurers on behalf of our client.  One insurer, LINCOLN NATIONAL, responded by paying the accidental death benefits.  The second insurer, CIGNA, responded by reiterating its denial by asserting that decedent drank the amount of alcohol that resulted in this death because “alcoholics can’t stop drinking.”

With the assistance of our own medical consultant, we pointed out the absurdity of CIGNA’s position.  To suggest that an alcoholic cannot stop drinking because of his “alcoholism” would mean that every alcoholic would die at a very young age due to their inability to stop drinking.  This of course is not the case.  There are numerous reasons why an individual may drink to excess on a particular occasion.  None of these potential causes were investigated by CIGNA.  CIGNA just assumed that his drinking problem caused him to drink, on this one particular day, more than his body could handle.

Both insurance carriers initially denied the claim.  After submitting an appeal, LINCOLN looked at the evidence and concluded that the claim was covered.  CIGNA, on the other hand, ignored the evidence and looked for excuses to deny the claim.  This has resulted in a lawsuit against CIGNA, which we believe will result in payment of the claim.

Denials of Accidental Death claims, due to the standard exclusion for death caused by “sickness or disease or the treatment thereof” are often improper.  If you find yourself in the unfortunate situation of our client in this case, make sure to consult with an experienced attorney to help you with your claim.

November 20th, 2014

The Ninth Circuit Court of Appeals in Salomaa v. Honda LTD Plan 637 F.3d 958 found that CIGNA’s Insurance Company’s decision to deny disability benefits to a claimant with chronic fatigue syndrome was illogical, implausible and without support because:

  • Every doctor who personally examined the insured concluded that he was disabled;
  • The Plan Administrator demanded objective tests to establish the existence of a condition for which there are no objective tests;
  • The Administrator failed to consider the Social Security Disability Award;
  • The reasons for denial shifted as they were refuted, were largely unsupported by the medical file, and only the denial stayed constant;
  • The Plan Administrator failed to engage in the required “meaningful dialogue.”

The Court found that in a disability claim that turned upon subjective evidence, such as the amount of a claimant’s pain and fatigue, it was an abuse of discretion for the insurer to rely solely upon doctors who merely reviewed the records without examining the patient when there was a uniformity of agreement by treating physicians what the individual was disabled.

Another important feature of the case was the Ninth Circuit confirming that CIGNA’s physician report is one of the documents that the Plan is required to provide the claimant as part of its duty to provide a full and fair review.  Most importantly, the Court held that these physicians’ reports must be provided prior to a final determination.  This allows the claimant or his/her physician to comment on or rebut the insurer’s physician report prior to a final determination on appeal.

November 20th, 2014

Posted In:

The Agent’s Commission is Their Motivation

The replacement of existing life insurance policies with new policies (referred to as twisting) is a practice that has been abused by insurance agents for decades.  Because the agent’s commission is heavily weighted toward the first year’s premiums (commissions equaling as much as 120% of first year’s premiums) their financial incentive is to convince clients to buy policies, not to service old policies.

The agent makes larger commissions when their client rolls over the cash value of their existing policy into a new policy because the cash value (often tens of thousands of dollars) becomes part of the first year’s premiums and the basis of the agent’s commission.

The replacement of an existing life insurance policy is almost never to the insured’s advantage because of the following:

  • Premiums on new policies are generally higher because you are older than when you purchased your existing policy and your health may be worse.
  • New policies may have high costs the first few years to cover the expense of selling and issuing the policy.
  • You may lose cash value built up in your existing policy because of surrender charges.
  • A new policy will contain a contestability clause that allows the insurance company to rescind the policy within the first two years.

Twisting Policies May Result in No Policy

This last point became of special interest to me when a widow came to my office after her husband’s life insurance company refused to pay her the benefits under his life insurance policy.  The insurer rescinded (retroactively cancelled) the policy because her husband had failed to check off the box on his application that would have informed the insurer that he had high blood pressure (an insurer can only rescind a policy within the first 2 years after issuance of the policy).  Unfortunately, his agent had talked him into turning in all his old policies (that would have paid the widow’s claim) for this new policy that paid the widow nothing.  This resulted in my firm suing the insurance company and the agent on behalf of the widow.  Though we prevailed on behalf of our client, no one should have to go into litigation to receive the benefits of an insurance policy.

Because of these problems with replacing existing life insurance policies with new policies it is often said that “your best life insurance policy is the one you already have.”

An insurance agent has a fiduciary duty to its client to fully inform them of not only the advantages, but the disadvantages of replacing an existing policy.  It is unlawful for an agent or insurer to recommend the replacement of an existing policy by use of an inaccurate presentation or comparison of an existing policy with a proposed new policy.  (Cal. Insurance Code 10519.8(a)).

There is nothing wrong with adding additional insurance to your existing coverage.  However be very wary of an agent who suggests that you surrender an existing policy in favor of a new policy with shiny bells and whistles.  Ask the agent how much his commission will be and whether there is any cash volume in your existing policies.

May 29th, 2014

Posted In:

Most people associate Parkinson Disease as a disorder characterized by resting tremor.  Often the resting tremor is not noticeable because it is controlled by medication.  However, a major aspect of the disease effects cognition which cannot be controlled by medication and which may be the most disabling symptom of Parkinson.

The cognitive impairments associated with Parkinson include visuospatial ability, memory, and executive functions.   If the requirements of a job include quick decision making, supervision of employees, working with the general public, writing detailed reports, and other types of executive functions, the cognitive impairments resulting from a Parkinson diagnosis would disable an individual from such employment.

Statistically Parkinson patients first diagnosed at an older age will suffer with cognitive impairments more frequently than younger patients.

There are numerous other symptoms associated with Parkinson disease.  For example in approximately 50 % of the diagnosed Parkinson cases depression will occur with symptoms of sleep disturbances, loss of self-esteem, anxiety and suicidal thoughts.

It is not uncommon for older executives in high pressure jobs diagnosed with Parkinson to become disabled due to the impairment of their cognitive abilities.   However, their claim for disability benefits may be rejected, in large part because of a lack of understanding of the non-obvious cognitive effects of the disease.  Insurers focus more on the obvious physical symptoms commonly associated with Parkinson which are often not as disabling as the cognitive aspects of the disease.

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