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

Barger & Wolen partners Martin E. Rosen and Robert E. Hess will each present at the 2010 Western Claim Conference (June 27-29, 2010 | Indian Wells, CA).

Disability Legal Update by Martin E. Rosen (Session 2 | Monday, June 28)

• Keep up to date! What topics have disability insurers and their insured’s been battling about in the courts over the past year? And with what results? Come hear an outside counsel seasoned in litigating disability bad faith disputes discuss some of the issues that judges from around the country have written about in their published legal decisions.

"Help! They want to take my deposition!" by Robert E. Hess (Session 3 | Monday, June 28)

• This presentation is designed to help personnel across the insurance industry prepare for and give a quality deposition.

We look forward to seeing you at the WCC. If you cannot attend, but would like a copy of the materials, please contact Mr. Rosen or Mr. Hess directly.

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The California Assembly’s Insurance Committee is scheduled to conduct its first hearing today on AB 1868, a bill outlawing clauses in insurance policies and other related documents that purport to vest the insurer with discretionary power to determine eligibility for benefits or to interpret the terms of the policy.

Under the proposed legislation introduced by Assemblyman Dave Jones (D-Sacramento), any provision in an insurance policy, contract, certificate or agreement providing or funding life insurance or disability insurance coverage that purports to reserve discretionary authority with the insurer would be void and unenforceable. The bill would also require that the Insurance Commissioner disapprove of any disability policy containing such a provision.

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Bilezikjian v. Unum Life Ins. Co. of America, __ F. Supp. 2d __ (C.D. Cal. Jan. 25, 2010).

Without a sudden event, an insured’s injury does not constitute an “accidental bodily injury” within the meaning of a disability insurance policy that distinguishes between accident versus sickness. Where it was undisputed that the insured’s disabling condition -- carpal tunnel syndrome (or “CTS”) -- was caused by repetitive and forceful activities in which the insured had engaged for years in connection with his occupation as an orthopedic surgeon, the insured’s disability was not due to an “accidental bodily injury” as a matter of law. This was the common-sense approach taken by the U.S. District Court for the Central District of California in Bilezikjian v. Unum Life Insurance Co. of America.

Bilezikjian was insured under several disability income policies issued to him by Unum Life. The insurance policies provided that benefits were payable up to age 65 for disability due to “sickness.” The policies also provided that lifetime benefits were payable for disabilities due to “accidental bodily injury,” terms that were not further defined.

Bilezikjian collected total disability benefits for his CTS under the sickness provision of his policies for years until he reached age 65. However, as Bilezikjian neared age 65, he sought ongoing benefits under the policies’ “accidental bodily injury” provision, asserting that his CTS should be considered accidental because he never intended to render himself totally disabled. Unum Life determined that Bilezikjian’s CTS was not due to an accidental bodily injury. Bilezikjian then filed suit for breach of contract, bad faith and punitive damages.

Unum Life moved for summary judgment on all claims, primarily on the basis that in accordance with Gin v. Pennsylvania Life Insurance Co., 134 Cal. App. 4th 939 (2005), “the culmination of repetitive stresses caused by normal, everyday activities is not the result of an accidental bodily injury.” Bilezikjian pursued a cross motion for partial summary judgment on his contract claim.

In granting Unum Life’s motion and denying Bilezikjian’s cross motion, the District Court held that the terms “accidental bodily injury” were unambiguous and that Unum Life did not breach its insurance contracts with Bilezikjian when it concluded that his CTS was not covered under the policies’ “accidental bodily injury” provision.

Ed Oster and Jenny Wang are counsel for Unum Life in this matter.
 

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Allison Bell of the National Underwriter reported on September 11, 2009 that approved disability claims rose more quickly in 2008 at the Social Security Disability Insurance program than at private disability insurers. She explained that the Council for Disability Awareness in Portland, Maine reported that findings in a summary of results from an analysis of SSDI program data and a survey of the 15 CDA member disability insurance companies were as follows:

SSDI applications rose 5.9% in 2008, to 2.3 million, and the number of workers approved for SSDI benefits increased 8.7%, to 895,000, the CDA reports.

The percentage of workers covered by the SSDI program who are receiving SSDI benefits increased to 4.8% in 2008, from 3.5% in 1998.

At CDA member companies, the number of individuals receiving long-term disability benefits payments increased 1.5% in 2008, to 573,500, and 30% of the member companies’ LTD claimants do not qualify for SSDI benefits, the CDA says.

Because of the aging of the U.S. workforce, the percentage of claims filed by workers under age 50 has been declining, and the number filed by workers over that age has been increasing.

But 27% of the survey participants said the overall claims rate has stayed about the same, and 64% said the incidence rate has been falling.

Only one of the participating companies said the recession has had any noticeable effect on disability claims.
 

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In Bosetti v. The United States Life Ins. Co., 175 Cal.App. 4th 1208 (2009), the California Court of Appeal addressed whether a standard, two-year benefits limitation on disabilities due to “mental, nervous or emotional disorder[s]” could serve to limit benefits payable to an insured disabled from depression and anxiety who also complained of interrelated physical impairments. The Bosetti court held that the limitation was ambiguous and was not applicable if the claimant’s physical problems contributed to her disabling depression or were a cause or symptom of that depression. The Bosetti court further concluded that the insurer’s denial of benefits based upon that two-year limitation was not in bad faith under the genuine issue doctrine.

Bosetti worked as an assistant director of adult education for a school district and first sought treatment after learning that her position would be terminated. Based upon the report of her treating physician and her complaints of depression and anxiety, she was put on temporary disability under her group policy. She thereafter applied for permanent disability benefits complaining of depression and fibromyalgia pain in her muscles, though her treating physician reported that her disabling impairment was solely mental or nervous in nature. After paying Bosetti’s benefits for two years, United States Life determined that she did not qualify for any additional benefits and could work in “any occupation”, which was the governing disability standard after two years. That determination was based primarily upon the two-year benefits limitation for mental or nervous disorders, the results of a functional capacity examination, and an independent physician consultation.

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Hecht v. Paul Revere Life Ins. Co., 168 Cal. App. 4th 30 (2008)

Practitioners in the field of bad faith disability law are all familiar with the "grandaddy" of DI cases, Erreca v. Western States Life Ins. Co., 19 Cal. 2d 388 (1942), as well as its children, Moore v American United Life Ins. Co., 150 Cal. App. 3d 610 (1984) and Austero v. Nat. Casualty Co., 84 Cal. App. 3d 1 (1978), overruled on other grounds in Egan v. Mutual of Omaha Ins. Co., 24 Cal. 3d (1979). For years these cases have explained how the concept of "total disability" is to be interpreted in California. In citing these cases, plaintiffs lawyers -- and often the courts -- would usually only cite to the first part of the famous Erreca definition: "[T]he term 'total disability' . . . means such a disability as renders the insured unable to perform the substantial and material acts necessary to the prosecution of a business or occupation in the usual or customary way." The courts seemed reluctant to qualify the definition with the second part of Erreca's teachings: "Conversely, the insured is not totally disabled if he is physically and mentally capable of performing a substantial portion of the work connected with his employment." Now Erreca has spawned a "grandchild" that confirms that the second part of the definition is equally important.

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