Life, Health and Disability Insurance Law Blog : Life, Health and Disability Insurance Law Blog : California Disability Lawyer & Attorney : Barger & Wolen Law Firm : CA Life Insurance & ERISA Law, Life Health Disability

An interesting New York Times article entitled "Disability Cases Last Longer as Backlog Rises" by Erik Eckhom discusses the Social Security Administration's ("SSA") backlog and how it affects disability payments to claimants.  The article states that the wait for appeals hearings is about 500 days, twice as long as it took in 2000. In addition, the article notes that approximately two-thirds of appeals are successful. This is not news to group disability insurers who often have provisions in their policies allowing for offsets of SSA disability benefits.

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On February 10, 2009, Treasury Secretary Timothy Geithner stated that some form of federal insurance oversight will likely be a part of a forthcoming financial regulatory overhaul by the Obama administration.

Geithner already has been urged by a group of U.S. House members, led by Reps. Melissa Bean, D-Ill., and Ed Royce, R-Calif., to create a federal insurance office within the Treasury Department or assign a high-level Treasury appointee an insurance portfolio, to fill a void on insurance oversight and expertise at the federal level. Bean and Royce were sponsors of the House version of the National Insurance Act in the 110th Congress, and have announced plans to introduce legislation dubbed the National Insurance Consumer Protection and Regulatory Modernization Act.

Appearing before the Senate Banking Committee, Geithner offered his thoughts on the potential for a federal insurance regulator, in response to questions by Sen. Tim Johnson, D-S.D. In the last two sessions of Congress, Johnson has served as co-sponsor of the National Insurance Act, which would create an optional federal charter system for insurers and producers in both the life and property/casualty sectors.

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As reported by the Associated Press, for the second time in two months, California Insurance Commissioner Steve Poizner is being accused by his predecessor, Lt. Gov. John Garamendi, of proposing regulatory changes that will weaken consumer protections. The latest dispute involves Poizner's proposal to roll back regulations that prohibit insurers from reducing group disability insurance benefits to account for pensions, workers' compensation payments or wages that the policyholder might receive.

Poizner, a Republican who succeeded Garamendi as California's chief insurance regulator in January 2007, said the regulations are unnecessary. He maintains the insurance commissioner already has the authority under state and federal law to ban insurers from including so-called offset clauses that reduce benefits in disability policies.

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Insurance in the United States has traditionally been regulated by individual states. With the recent meltdown in the financial services industry, Congress is considering legislation to allow life insurers to operate under a federal charter, similar to the banking industry’s dual regulatory system that would allow companies to choose between the state system and a national regulatory structure. The life insurance industry has been pushing for federal legislation for years as they see the current state system as overly complex, anticompetitive and unduly burdensome in that it increases the cost of compliance and delays the launching of new products. A good article discussing this can be found at the Insurance Information Institute’s website: 

http://www.iii.org/media/hottopics/insurance/opt/

One proposal would create a framework for a national system of state-based regulation, which would create uniform standards in such areas as market conduct, licensing, the filing of new products and reinsurance. Among those supporting an optional charter are large insurers that sell coverage to major corporations, reinsurers, brokerage firms, life insurers and banks that are moving into the insurance business.

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For those interested in reading a decidedly anti-insurer ERISA article published in the Utah Law Journal last September, take a look at “ERISA: License to Cheat, Lie, and Steal for the Disability Insurance Industry,” authored by Loren M. Lambert. In it, Lambert argues that ERISA “has created a brutal, arbitrary, and inefficient administrative process controlled by the insurance industry.” According to Kantor & Kantor, Lambert is finishing the final editing on a 25-minute documentary that follows one of his clients through the process of attempting to obtain her disability benefits. It will not be hard imagine what conclusions he will reach in this documentary.

The article is at:

http://webster.utahbar.org/barjournal/2008/09/erisa_license_to_cheat_lie_and.html

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On January 27, 2009, the city of San Francisco filed a lawsuit against the California Department of Insurance (“CDI”) contending that it allows health insurers to discriminate against women when charging premiums for health insurance. The suit alleges that the CDI, Insurance Commissioner Steve Poizner and Cindy Ehnes, director of the Department of Managed Health Care, approved a system that allows the insurance companies to impose "gender rating" when pricing policies, resulting in women paying as much as 39% more for coverage than men. According to a Los Angeles Times article published on January 28, 2009, the CDI allows the practice of charging women more for health insurance than their male counterparts (i.e., “gender rating”) believing this practice to be appropriate under the existing California law.

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