When It Comes To The Definition of Disability, Insurers Don’t Play Fair

Here’s a non-exhaustive list of things that aren’t fair:

  1. When a coworker/friend/random stranger spoils the latest episode of your favorite TV show (Game of Thrones, anyone?).
  2. When your spouse eats your leftovers.
  3. When your Amazon Prime package doesn’t arrive within the previously promised two-day timeframe.

Today’s blog post is about disability benefits, however (and not our list of grievances, which are substantial), so we’ll limit our discussion to things that aren’t fair about that process. And there are plenty. However, we at least aim to be short and concise, so for now we’ll focus on one common unfair tactic used by insurance companies and plan administrators to deny long-term disability (“LTD”) claims: manipulating the definition of disability.

To receive benefits under a disability insurance policy, you must be “disabled.” But what does that mean? While we may use the words “disabled” or “disability” loosely in general conversation, these words have a precise definition within the context of your insurance policy or ERISA plan.

In general, most LTD policies define disability under two broad classes: “own occupation” and “any occupation.”

Under an “own occupation” definition of disability, you are entitled to LTD benefits if your disability prevents you from being able to perform the material duties of your “own occupation.” So, if you’re a construction worker who is medically unable to handle the physical requirements of that physically demanding job, you’re disabled, even if you would be able to perform another, less strenuous job.

Under the more restrictive “any occupation” definition of disability, you are entitled to LTD benefits if your disability renders you unable to perform the material duties of “any occupation,” usually based on your education, training, and experience. Therefore, a construction worker who cannot lift heavy objects or operate machinery would not be disabled under an “any occupation” definition of disability if he’s still capable of performing other jobs, such as working in a hardware store, as that would be consistent with his training and experience.

The definition of disability in many LTD policies switches from “own occupation” to “any occupation” after a certain period of time, often 24 months. Insurers regularly perform a re-evaluation of the claim around the 18 to 24-month mark, which frequently results in termination of benefits.

Sounds simple enough, right? Wrong.

Unfortunately, the crafting of the disability definition is one way in which insurers try to avoid paying out deserving LTD claims. Insurers often include important terms within the definition of disability that totally change the requirements in the policy. Words and phrases like “job,” “education, training, and experience,” “material and substantial duties,” “illness” or “sickness,” “injury,” “pre-disability earnings,” and “national economy” are often found within the definition of disability and are terms of art with specific meanings for purposes of your disability claim, often narrowing the broader definition. It is imperative that you fully understand your policy’s applicable definition of disability and accompanying terms. Otherwise, it will be nearly impossible to submit the proof the insurer is looking for.

Another common insurance company tactic in this regard is to misrepresent the claimant’s occupation. Despite the “own occupation” definition found in most disability policies, insurers often characterize a claimant’s occupation in generic categories that do not accurately reflect what was required of the claimant at his or her job. These generic categories include: sedentary work, light work, medium work, heavy work, and very heavy work. These categories are usually accompanied by a reference to the Dictionary of Occupational Titles, published by the Department of Labor. By characterizing a claimant’s occupation in generic categories, it is much easier for an insurer to determine that the claimant is not disabled.

One of the most common ways they do this is by defining “own occupation” not to be your actual “own occupation,” as you would, of course, expect, but rather, they narrow the definition of your occupation to as it is performed in the national economy. So, for example, let’s say you take phone orders for a warehouse and part of your job is to fill the order once it comes in. That may entail walking the length of a warehouse that is five football fields long, climbing two stories, and bringing down a 20 pound box of dishes. To your shock, however, the insurance company denies your claim because it has classified your occupation as “customer service representative” or “telephone sales rep” and nationally, i.e., in the “national economy,” the job only requires the sedentary taking of phone calls, not manually filling orders.

But all hope is not lost. A recent case held that, even under an “own occupation” definition of disability that is measured by a national economy standard, the insurer must still consider and review the employee’s specific job duties. See Nichols v. Reliance Standard Life Ins. Co., 2018 U.S. Dist. LEXIS 109526 (S.D. Miss. June 29, 2018). So, in the example above, the insurer must consider that your job requires you to manually fill orders in addition to taking phone calls.

There are many other ways in which insurers use the definition of disability to avoid paying claims, but we’ll have to save those for another day. Remember, we’re striving to be “short and concise.”

The moral of the story? Your policy’s definition of disability and how that definition will be applied to the facts of your case can have a major impact on whether you qualify for benefits. Insurers rely on the relative inexperience of claimants in order to manipulate or improperly apply the definition, or otherwise hang their hat on otherwise unobvious intricacies within the definition. It’s not fair, but it happens all the time. If you are unsure, be sure to contact an experienced ERISA attorney for help. And, oh yea, it is okay to stop talking to anyone who provides GOT spoilers. Forever.

Disclaimer: We are ERISA attorneys, but we are not your attorneys and this article does not create an attorney-client relationship. The information in this blog post is provided for general information purposes only, and may not reflect the current law in your jurisdiction. No information in this blog post should be construed or seen as legal advice, nor is it intended to be a substitute for legal counsel on any subject matter.