In our last few blog posts, Insurance Bad Faith: Cherry-Picking Your Medical Records and Disability Insurers Misuse Independent Medical Examinations, we have examined the prohibitions from the 2005 Order that coincided with the California Regulatory Settlement Agreement with Unum. In this post, we look at another one of these enumerated proscriptions.
The twentieth prohibition from the California Insurance Commissioner’s Order bans Unum from misleading claimants that they must file for Social Security Disability Income (SSDI) in order to receive the full monetary amount on their private disability claim. First, let us be clear: If your disability insurance policy does not say you must apply for SSDI in order to receive an unreduced benefit, then you need not apply in order to receive an unreduced benefit from your insurer—you are entitled to the full amount. Furthermore, the disability insurance company cannot demand that you apply in later correspondence if you did not agree to this initially.
If you are already receiving SSDI, however, then it is important to take another look at the policy provisions in your disability insurance plan. Some, but not all disability insurance policies now include provisions which allow the company to offset the amount due by the amount you receive from the state. For example, if your disability insurance plan pays a maximum of $5,000/month and you currently receive $1,000/month in SSDI, then, depending on your plan’s policy provisions, the disability insurance company may only be required to pay $4,000/month as long as you continue receiving $1,000/month in SSDI.
When the state of California conducted an investigation on Unum’s business practices, it found that Unum illegitimately offset disability benefits payments by estimating the SSDI amount a claimant could receive (even though the disability claimant was not actually receiving social security) and reducing monthly payments by that amount. Unum would then demand the claimant apply for SSDI benefits in order to get the difference. Because it made these demands without express contractual authorization, the California Insurance Commissioner found that Unum’s behavior constituted an unfair business practice under California law.
Too often, disability insurance companies take advantage of claimants who do not understand their policy provisions. They often use ambiguous language in their policy provisions to confuse claimants. Before filing a disability claim with your insurance company, consult with an experienced disability insurance attorney.