Most employers provide some type of disability insurance coverage for their employees. It might be time to refresh your memory on what your employer provides you with specifically. In an unpublished opinion, the Ninth Circuit recently determined that an employer provided disability insurance company was within its rights to reduce an employee’s disability benefits by $800,000. The $800,000 came from a recent personal injury settlement the employee received on a completely unrelated matter. Haddad v. SMG Long Term Disability Plan, No. 16-CV-01700-WHO, 2021 WL 2187979 (E.D. Cal. May 28, 2021).

The case turned on the legal distinction between “offsets” and “exclusions” and “limitations” in regard to long-term disability plans. This marginal difference may be the difference between receiving the anticipated total value of long-term disability benefits or having that total value later diminished. Exclusions and limitations carve out areas from the scope of an insurance policy’s coverage. Offsets reduce the total amount owed for covered claims.

For example, in the case mentioned above, Mr. Haddad was an employee that received long-term disability benefits from his employer-sponsored insurance plan after becoming disabled. He received an $800,000 settlement for an unrelated matter and his disability benefits were reduced, or offset, by the amount he received in the settlement. Mr. Haddad challenged this offset and ultimately lost. The Ninth Circuit reasoned that offsets are distinctly different from exclusions and limitations and therefore the employer-sponsored insurance plan was within its rights to reduce Mr. Haddad’s disability benefits by the amount he received in his settlement.

The Ninth Circuit further stipulated that the employer-sponsored insurance plan was clear and unambiguous when it mentioned specifically in its long-term disability plan that disability benefits would be offset by any payments that were the result of a settlement or judgment to the insured employee. This long-term disability plan specifically did not require that the offsets to settlements be for related injuries. This long-term disability plan provider was also not required to draw attention to the language in its plan related to offsets based on settlements or judgments. Thus, even though Mr. Haddad received the settlement for something unrelated to his disability insurance it was still deemed okay for the employer-sponsored insurance provider to reduce his disability benefits by the settlement amount.

If you have questions about your disability insurance plan or have experienced a situation similar to Mr. Haddad, call us today at (859) 225-3731 or visit us here to request a free consultation with one of Mehr Fairbanks’ attorneys.

*The information contained within this post should not be considered legal advice or legal representation.

Though the COVID-19 pandemic may now be the new normal to many of us, courts are continuing to address new questions stemming from ongoing issues related to the pandemic. As businesses struggled to remain unharmed by the pandemic and protect their employees from illness, some insurers have made the task even more difficult through denials of coverage relating to COVID. A Federal Court in Virginia recently dealt with one such issue in Carilion Clinic v. American Guarantee and Liability Insurance Company.

The Plaintiff in this case, Carilion Clinic, brought suit against their insurer alleging damages for the insurer’s denial of coverage under the Plaintiff’s $1.3 billion property damage and business interruption policy, for which they paid approximately $1 million in premiums. The insurer failed to honor the terms of the policy and provide coverage after more than 10% of the Plaintiff’s employees became ill with COVID. The Plaintiffs alleged that this failure manifested in two ways, first that the insurer failed to provide coverage for property damage sustained through the spread of COVID on company property, and second for denial of coverage relating to business interruption.

Though many courts have held that damages related to COVID do not require coverage, the Court in this case stepped away from that line of thought and stated that the Plaintiff’s claims relating to business interruption warranted extended discovery, as the filing deadline resulted in a hasty discovery process and issues relating to business interruption had not been fully presented to the Court.

Another case relating to COVID coverage concerns a group of 60 Washington state colleges and universities filing suit against their insurers for denials of coverage relating to loss of revenue due to the pandemic. The institutions involved in the suit all belong to the Educational & Institutional Insurance Administrators; the Administration purchases coverage for the educational institutions from various providers. The colleges and universities then each pay premiums and make claims separately. Given the nature of the varying providers and locations, some of the insurers moved to dismiss the case in Washington on the basis that the forum was inconvenient, but each motion has been rejected, and the Court ultimately decided that the case will continue in Washington.

A federal judge in the Eastern District of Virginia recently decided in favor of State Farm policyholders, granting a class certification for a group of over 100 businesses. The named Plaintiff in the case, Elegant Massage LLC, is leading the charge, asserting that the insurance company wrongfully denied claims under their all-risk policies. The occurrence leading to the denied claims concerns closures during the beginning of the pandemic, at which time Elegant Massage was made to close by an executive order from Virginia’s governor. State Farm denied their claims for business losses, stating that they were not required to provide coverage because there had been no civil order forcing the business to close. Further, State Farm stated that they would not provide coverage when no actual property damage had occurred. However, it was decided that the case would proceed, as the Plaintiffs had proven that the “virus exclusion” to the policy did not apply, and the business had a claim to coverage based on their losses due to the pandemic.

Attorneys are continuing to fight for policyholders’ rights to coverage related to losses sustained through COVID. The process of ensuring that policyholders receive the coverage to which they are entitled under claims related to COVID is ongoing, though courts may be beginning to view the policyholder’s grievances in a more favorable light than in past cases.

Health insurance companies are supposed to protect their policyholders by providing financial protection and reimbursement against losses. They collect premiums from their clients over a period of time to pay for future losses. When a person buys an insurance policy, they are entering into a contract. This contract is expected to be upheld and followed even when unexpected accidents and expenses occur. There are laws set in place to help and protect policyholders from health insurance companies when they wrongfully deny coverage to their insured. Read on to find out how you can identify the signs of wrongful treatment and how to protect yourself.

What Should Health Insurance Companies Cover

This list does not include all the possible items and instances of coverage. To see a full list of items that should be covered by your insurance company, take a further look into the details of your health insurance policy. The list below includes major services that should be covered under basic policies:

• Must adhere to the Affordable Care Act
• Must follow individual state laws
• Outpatient care (Ambulatory patient services), which includes doctor visits, X-rays, etc.
• Prescription drugs
• Pediatric services
• Preventive care, which includes regular checkups, health screenings, etc.
• Laboratory services, such as pathology, blood work, organ function, diagnostic tests, etc.
• Emergency services
• Hospitalization for surgery, overnight stays, and other conditions
• Birth control
• Breastfeeding
• Mental health and behavioral coverage, such as seeing a psychologist, therapists, receiving treatment, etc.
• Substance use disorder services
• Rehabilitative and habilitative services, which includes physical therapy, occupational therapy, treatment, medical equipment, etc.
• Pregnancy, maternity, and newborn care

Ways Health Insurance Companies Will Deny Policyholders

There are many possible ways for health insurance companies to deny coverage and put you in an unpleasant situation. Below are signs to look for to help determine if you have been wrongfully treated:

• Claim is denied with no explanation
• Delay in handling of a claim
• Not conducting a thorough investigation
• Claiming there is no coverage under the policy without proof
• An unreasonable settlement or payout is offered
• Falsely marketing their insurance plans and coverage
• Attempting to mislead, misrepresent, and deceive
• Failure to notify policyholders in the event of a change, including but not limited to their provider network, coverage, policies, etc.
• Failure to disclose to potential policyholders’ important information about current and pending changes
• Making the claim process difficult by asking for additional documentation and actions

What To Do if This Happens to You

If you believe you have suffered from a health insurance company wrongfully denying coverage of your claim, help mitigate your losses and continue with the steps below.

• Contact the insurance company and determine their reason for denial.
• Reread your policy to verify whether their denial reasoning is legitimate.
• If you are unable to resolve the denial at this point, you have the right to reach out to an experienced health insurance attorney for advice and to help you appeal the denial.
• Do not give up. Be persistent and follow through.

Every case is different and depends on the information present, the policies set in place, and the actions of both parties. Not every policy and situation are the same.

Our insurance attorneys at Mehr Fairbanks Trial Lawyers are experienced in working to get what you deserve. We believe no one should suffer as a result of unfair claims practices. Our mission is to get you the benefits you deserve under your policy. Give us a call at 800-249-3731 for more information and a FREE case evaluation. Let us fight for your rights and benefits while you focus on yourself.

“Legal to Us, Success for You”

For more information:

• Click here: https://www.mehrfairbanks.com/contact-us
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This information should not be construed as legal advice or a guideline to your specific claim.