A Senator's View of ERISA Disability Insurance Claims (Ep. 20)

Today we are going to discuss a video which features a recent Senate Finance Committee hearing which was chaired by Senator Baucus from Montana. In this hearing, Senator Baucus is going to specifically discuss some of the problems with ERISA long-term disability insurance claims. You will hear Senator Baucus discuss things such as the abusive tactics used by insurance companies such as working with hired gun physicians. You're also going to hear Senator Baucus discuss the fact that there's no punitive damages for ERISA disability claims, no right to a jury trial, and what Senator Baucus seems to indicate is an unfair discretionary clause. Now we've spoken in many videos on our website about discretionary clauses and ERISA, but in this video it's really great for disability claimants for the first time to hear a senator on the floor of the United States Congress basically saying there's a problem with ERISA. So let's take a look at what Senator Baucus has to say, and after we watch the clip, myself and Stephen Jessup are going to provide some commentary on the video. Today we'll look at long-term disability insurance. We'll consider cases where insurance companies are failing to live up to their side of the bargain. We'll learn about plans offered to employees through their employers. This occurs under ERISA, the Employee Retirement Income and Security Act. Abusive insurance company tactics start with having doctors with conflicts of interest review claims. Many of these doctors are employed either by the insurance company or by the companies that do a lot of business with the insurance company. These arrangements make it far too easy for the doctors to deny claims, terminate claims, or reject appeals. Consider the case of Charles Tucker. Charles' neurologist diagnosed him with multiple sclerosis. Charles' doctor said that the disease, quote, basically disabled him from performing his occupation, end quote. Ten other doctors agreed. Charles filed a claim with his long-term disability insurance company, Standard Insurance Company. Meanwhile, a doctor who worked for Standard put a medical report in Charles' file. The company doctor never met Charles. The company doctor never examined him. Even so, the company doctor concluded that, quote, the diagnosis of multiple sclerosis is not supported and the patient could return to a sedentary work activity, end quote. When Charles found out about this report, he was understandably quite upset. He contacted the news media. He contacted the insurer. Only then did Standard approve Charles' claim. Or consider the case of Rocky Whitney. Rocky suffered a broken neck. As a result, Rocky had severe headaches, memory loss, pain, and significantly reduced vision from all the medicines that he had to take. Rocky's doctor said that he was permanently disabled. But Rocky's insurance company, the Hartford, hired a private investigator. The private investigator put Rocky under video surveillance. And that private investigator took videos of Rocky getting in and out of a van, reading a magazine, and dipping corn chips into salsa at a restaurant. So the Hartford sent Rocky a letter telling him that he was, quote, physically capable of performing full-time sedentary occupations, end quote. And the Hartford terminated his benefits. Rocky appealed the decision through the Hartford's internal appeals program. But the company's internal appeals program turned him down. Soon, his finances became desperate. Rocky and his attorney prepared to sue the Hartford. And Rocky reached out to the news media. The media called the company, and miraculously, the Hartford paid Rocky's back benefits and reinstated his monthly benefits. Abuses like these are not uncommon. Thousands of cases clog the district courts. Many claimants end up in desperate straits. Some lose their homes, their savings, and even their spouses for custody of their children. How do insurance companies get away with these abuses? Unfortunately, loopholes in the law permit them. First, ERISA preempts state insurance measures to address these abuses. That means the claimants cannot get jury trials, pretrial discovery, or the right to submit evidence to the court. And claimants cannot receive punitive or consequential damages. Second, companies can include what's called a discretionary clause in their insurance plan document. In most states, these clauses mean that it is not enough for a claimant to prove that the company's reasoning is weak when it decides to deny benefits. To win the case, the claimant has to prove that the company's reasoning is arbitrary or capricious. That's a significantly higher standard. It's time to close these loopholes. It's time to end the abuses. Insurance policy is only good if the insurance company actually compensates the consumer when there's a loss. And insurance law is only good if it helps to make that happen. It's time to make sure that the law does that. To hear the senator talk about two recent cases, which probably came to his attention because they were on a national news story, the one against there and the one against Hartford, it's a little pathetic that that's what it took when this is something that's been going on for years, their conduct. But at least we got a forum for claimants, at least now, to start hearing about problems with ERISA and hopefully it's going to make a change. You know, the question is, is there going to be changes that come about? What do you think is going to happen after this hearing? You know, I think that's going to be an issue with the changes. It's good in the sense, you know, that it's being shown on that. Us being in this area of the law in the arena and people watching this, more than likely are watching this because they are having issues with their disability insurance company. There's that fear. But now there is an authoritative voice, like you said, a lawmaker who now is on the same page and is advocating. But unfortunately, he's just one senator at this point. It's going to take a lot more, you know, to be able to make any substantive change in the law. But this is definitely a step in the right direction. I think we've seen at the state level recently, we've seen at least between 12 to 15 different states that have done away with that discretionary clause, which Senator Baucus discussed. And that's something that's controlled at the state level, not the federal level. Although we know that that's been an issue that's been litigated when all of the insurance companies have been challenging, especially Standard in a case of Morrison versus Standard Insurance Company out of Montana, challenged the discretionary clause and whether a state had the ability to do that. And they lost that argument. So we know that California and Texas also just recently abolished discretionary clauses, and other states are attempting to work on that. So that's a very positive thing for disability insurance claimants. I want to hear your thoughts on when Senator Baucus said these abusive insurance company tactics, and they start with doctors with conflict of interest. I mean, do you see doctors with conflict of interest? What does that mean to you? I think everyone has. And I think in especially in this case, because Senator Baucus does really kind of highlight the fact that these doctors with conflict of interest are ones that never even saw the claimant, never treated, just did a peer review, a paper review, and they're getting paid by the insurance company to write reports. It's business. I mean, we've spoken in other videos about the amount of money that some of these independent doctors are making on account of this. And if you want that train of business to keep coming in more often than not, you're going to write reports that are tailored to the insurance company. So we see the same doctors being used, you know, over and over again throughout the claims. So that's inherently going to be a problem there, that when you're penning a check to this, how independent can it be? You know, so I don't know how much is possibly going to change with that, but I think it's important that it's highlighted, that it's seen as a major issue and a problem with the way that the insurance companies are doing reviews of the claims. All right, well, maybe they would propose some kind of law where they couldn't rely on only their internal doctor to make a decision, because what's really not fair is you take a claim rep who goes to their hired doctor that they use a thousand times a year, and then they end up relying on their internal doctor's opinion instead of the opinion from, like, in this case, an example, this particular claimant in this Hartford claim had 10 different doctors' opinions, and they had their doctor's opinion. So, you know, how does a claim rep say, I'm going to ignore your 10 treating positions, but I'm going on my doctor that I've used a thousand times? And the interesting thing is that the insurance company tries to argue, well, your 10 doctors, they treat you, they probably have a conflict of interest because they know you personally, but they're writing their opinions, and it's not like they're getting a direct paycheck necessarily for that opinion. They're making these opinions as a basis of treating the person and trying to help them, you know, health-wise, get them, you know, healthier, whatever the case may be. So, there's not that same thing, but the insurance companies will tend to want to ignore that, like you said, and just go with the internal review process. And I think that's because of the fact so many states have these, you know, discretionary clauses that allow them to hide behind this idea that they gave it a reasonable review. So, if they have one doctor who says what they want, they'll hang their hat on that and just try to deny the claim based on that. I think also, Senator Baucus said, how do these insurance companies get away with these abuses? And I think you just called it, they can basically get away with it because of the discretionary clause, and also because of the way that ERISA is set up where you have this administrative record, and once you exhaust all of your administrative remedies in your last appeal, you can't submit any other additional information unless there's some exceptional circumstances, but that almost never happens. So, when the court gets the file, they're stuck with information that's already probably three to six months old at the earliest, and the judge can't consider anything new whatsoever. So, I think that's also a major problem in the system by closing administrative record. And, you know, Senator Baucus says, unfortunately, loopholes in the law, you know, permit these things, it's time to close the loopholes. So, and one of the things he mentions is things like punitive damages or a jury trial. I don't know necessarily that punitive damages is going to be the answer because you have punitive damages available in some individual disability policies, but a jury trial would be a major deal changer in my opinion. What do you think? Oh, I would have to agree, especially now, and when you said the judge would have to determine, because now at this point, you know, like we've spoken in the other videos, the judge is the one that makes the call. And the insurance companies, unfortunately, when it's a judge and it's a legal mind, especially, it's going to be black letter, there's going to be the motions to have the case dismissed and all that stuff. And it takes away, in another way, it's robbing the insured of a human element. You know, they're a claimant, they're the claim, you know, that you have a claim number. And they don't even get to have, you know, that quintessential day in court that we think of when you think of the American justice system. So I think just having that ability to be able to have a platform with which, you know, jury of your peers get to hear what has happened to you, what's wrong with you, and the way the insurance companies acted towards you. I think if jury trials were allowed in these cases, there would be a shift in the way that insurance companies handle and treat their insured. Right. And, you know, there's, we know from statistics that 30% of the U.S. workforce has long-term disability coverage. But I also know from 99% of people that call us who have had their claims denied, when we tell them that they're not going to have a jury trial with members of their peers or members of the community, they're like, what are you talking about? So I don't, I don't, I think you have the same experience. I don't think anyone realizes when they have these policies that they're going to be stuck with a, with a judge making a decision whose hands are tied potentially by discretionary clause. So obviously, besides if you have a claim and you have a lawyer helping you, that's something that you need, a congressman or a senator is not going to help you get your claim approved, but they can, they do want to hear from claimants who are on claim, even if you don't have problems, to help make changes in the law so that these future problems, you know, don't happen again. I've had clients, you know, contact their congressmen and senators and, you know, they'll get a letter back that, you know, unfortunately we can't assist you with this because that isn't their job. That isn't their position is to help, you know, an individual person on a one-time basis, but it's a matter of, you know, writing new law and possibly making changes to the existing law. Right. I mean, obviously, you know, we win appeals all the time and we win lawsuits for clients. And it was interestingly because, interesting because Max, Senator Bacchus says, miraculously, both of these claimants were paid after the media was called. We always like to get feedback from people, you know, who watch our videos and also who blog on our website. And if anyone has a specific question about something in this video, or you want to share comments, we encourage you to call us or blog on our website. If you have a specific issue with your claim, we're happy to provide you with a free consultation to take a your claim. Thank you for your time and watching this video. And we hope that you found it helpful.