Misrepresentations On Your Disability Enrollment Forms & How They Can Destroy Your Disability Claim

On this week's Episode of Winning Isn't Easy - Nationwide ERISA Long Term Disability Attorney Nancy L. Cavey talks about what happens when "Misrepresentations On Your Disability Enrollment Forms" occur!


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Transcript

ERISA Attorney Nancy L. Cavey: 0:15

Hey, I'm Nancy Cavey, national ERISA, and IDI disability attorney. Welcome to winning. Isn't easy. Before we get started, I've gotta give you a legal disclaimer. This podcast isn't legal advice. The Florida bar association says, I've gotta say that. So I've done that, but nothing will ever prevent me from giving you an easy to understand overview of the disability insurance world, the games that carriers play and what you need to know to get the disability benefits you deserve. So off we go, if you are on disability benefits, in other words, you're on claim or you're in the process of applying for benefits. I think there's a, a lot that you need to know, but one of the most important things you need to know is, uh, one of the first defenses that a disability carrier will raise to your disability claim, uh, is what's called a misrepresentation, uh, defense. And I'm gonna talk to you today about that misrepresentation, defense, how to avoid making them and how to avoid getting, um, a letter from the disability carrier that says too bad. So sad. We're not paying your benefits because of a misrepresentation on your application or enrollment forms. So we're gonna talk about three things today. One, what does rescinding a disability insurance policy mean? Two making false statements. After you've applied for disability, insurance benefits can doom your claim. And thirdly, don't mess with the disability carrier and fail to tell them about your work activity, the tale of how one attorney destroyed his case. Let's take a break for a moment before we get started in this week's episode,

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ERISA Attorney Nancy L. Cavey: 2:13

Welcome back to a winning isn't easy. What does rescinding a disability insurance policy mean? Well for you, it's gonna mean sad news and disastrous news. When you file a disability insurance claim, the disability carrier is looking for reasons to deny the claim. And one of the primary reasons that they can deny a claim is a coverage defense based on a misrepresentation, which results in them actually rescinding the disability insurance policy. So what is rescinding a disability insurance policy? Now the insurance company's going to review your enrollment documents or your application for disability insurance. If you have an individual disability insurance policy, they're looking for false statements on your initial policy application or enrollment forms that they can use to deny your coverage. So let me give you an example. Let's say the enrollment or application form asked you if you've gotten medical care of any nature in the five years before completing the form. If you deny you saw a chiropractor for cervical problems in that five year period of time, and then you file a disability insurance claim because of a herniated cervical disc, there's a good chance that a disability insurance carrier will rescind the policy. And that's exactly what happened to one of my clients. Uh, when we submitted the application, rescinding a policy is different from denying a claim. When an insurance company resins a policy, it treats the policy as if it never existed. The disability insurance company's gonna refund any premium that you sent them. And they're gonna deny your claim and say, look, this policy never existed. Had you told the truth. We wouldn't have written this policy. We would've issued a waiver for your cervical condition, or we had to charge you a boatload of premium. It's not uncommon, unfortunately, for courts in this type of situation to uphold the denial of the claim on the basis that the disability insurance company properly rescinded your insurance policy or plan because you made false statements on the application. So what should you do when you're completing an insurance disability application or enrollment form? Look, I know that applying for disability insurance involves a lot of paperwork. I've got my own disability insurance policy. Now these forms can include a policy application or enrollment forms, supplemental applications, or supplemental enrollment forms, medical history, questionnaires statements, and even physical examinations. Some people are inclined to just blast through all this paperwork and rely on their current memory. You should take the time. You need to review the questions and answer the questions correctly and thoroughly. This is a final exam that you need to take seriously. That means that you might have to obtain a copy of your medical records and your pharmacy records before you review them before answering the questions or consult with a significant other who may know, uh, your medical history. Now, if you don't understand a question, you should not gloss through it. You should talk to your HR department, or if you're buying an individual disability insurance policy, uh, talk to the agent. Now, I want you to remember that in some instances, and they're limited that insurance company can be prohibited from successfully rescinding a policy based on information that you provided to the insurance company's agent. So if the agent says, look, you don't need to put that information in this application, uh, or enrollment form. Uh, when in fact it should be included. You may have an opportunity to defend the policy rescission, but you're gonna have to have some sort of proof that the agent or the HR told you not to put that information on the policy. Nobody's just gonna accept your word for it. Each case is factually medically and legally different. So don't think you're gonna have an easy win with a policy rescission case. It's better not to go there to begin with. So what should you do if your do disability insurance policy is rescinded well, if this is a ERISA case based on a policy offer to you by your employer, you're gonna have to file within an appeal. You're gonna have to do that within 180 days of the day of the denial. Now, some of the reasons that your insurance policy or plan can't be rescinded, that you might wanna consider arguing is that the purportedly false statement was, uh, trivial nature. That the purportedly false statement was immaterial, that you didn't know, you suffered from a medical condition that you didn't understand the significance of the questions or your answers. Now, on the other hand, there are some arguments that you could raise and I'll tell you that a court is not gonna be sympathetic too. Um, one of them is going to be, you didn't understand a question such as prior medical treatment and your medical records document, extensive medical treatment, and even time off. Secondly, the court's not gonna be sympathetic if you've clearly misrepresented your answers, not withstanding the fact that you're you claim that you didn't understand the significance of the question. If you are facing a policy rescission in an individual disability policy, you need to discuss this with an experienced disability attorney, because potentially you can take legal action against the insurance company for a breach of contract and bad faith in attempting to resin your insurance policy. Why do I say you should consult an attorney if it's an IDI claim? Because quite frankly, there's a lot of money at stake, more money in terms of benefits than if you have an ERISA disability insurance policy. I don't want a disability carriers, denial of coverage based on misrepresentation to be an excuse to deny your disability, uh, benefits. And you purchased that policy to provide you with peace of mind. So before you walk away from a policy, um, denial based on a rescission contact me so that we can actually look at the medical facts, the application, what you put, what the carrier is saying so that you can make an intelligent decision about whether or not you want to fight this. Got it. All right. Let's take a break. Welcome back to Winning Isn't Easy making false statements after you've applied for your insurance benefits cannot doom your claim. Do you know that many disability insurance policies have a concealment or fraud provision in the disability policy or plan that can result in a forfeiture provision that allows the carrier to void or rescind the coverage? If you make false statements relating to insurance. So let's talk about a common version of this provision. It may say something like this, concealment or fraud with respect to the person insured under this policy. We provide no coverage for loss. If whether before or after the loss, when the policy, uh, person insured under this policy has, and here's the material part of this intentionally concealed or misrepresented, any material effect or circumstance has engaged in fraudulent conduct or has made materially false statements relating to this insurance. Now that third one is where the disability carriers really ride hard. Now this can apply not only to questions on your application for insurance, but when you apply and you're completing your application, you're gonna complete a lot of forms. One of those is an activity of daily living form. And if you have not completed that accurately, that can come back and bite you. Now, you also may be speaking with a disability insurance adjuster, which quite frankly I wouldn't be doing, I would only be communicating in writing. Um, or you may be asked to speak with an investigator from the disability insurance company. Any one of these three, um, events is an opportunity for the disability carrier to say, look, you've intentionally concealed a material, uh, fact about your circumstances or more likely you've made a material false statement relating to this insurance, and that comes to play, uh, particularly when they've got surveillance on you. So let me give you an example. Let's say you stop working. You apply for your short and long term disability benefits for a, a back condition you're asked, you know, did you ever file a prior worker's compensation claim or ever file a personal injury lawsuit or ever file a prior, shorter, long term disability claim? Now you're going to see that on an application. You might say no, because you forgot you injured your back five years earlier in a worker's comp claim. When you got some injections or you were rear-ended, you got some medical care, and then ultimately you settled the personal injury claim, but you know, didn't get any treatment or maybe a few years ago you filed for short term disability benefits. Guess what? The disability carrier guaranteed is gonna do a background check on you. They're going to pull, what's called a medical canvas, a drug canvas. They're gonna search the personal injury or worker's compensation, uh, records in the, the civil, uh, arena. And they're gonna discover the truth. Now you may have denied any one of these prior occurrences because you forgot about them. But the question ultimately is going to be is that I forgot, excuse enough, to overcome a claims denial. So that's going to be potentially an issue for the court and the question's gonna be is the statement that you made, um, after a claim is filed an innocent mistake, or is it an incorrect statement or an intentionally incorrect statement? Now I have to talk to you a little bit here, like a lawyer, um, a false statement in the legal context includes an element of intent to mislead. And the court's gonna look at the policy or plan to see if there is a definition of false statement. If there is the court's going to apply that definition to the facts of your case. Now, if not, the court's gonna get out the dictionary like the American heritage, uh, dictionary, and they're gonna look at what the ordinary dictionary meaning of the term is now. Um, that sounds easy, but quite frankly, it's not get out the dictionary and look at the definition of a false statement. Now it has two meanings. One is contrary to the facts or truth or deliberately untrue. Hmm. So which one is it in the context of a legal proceeding? The term false has a connotation of intentionally deceptive statements and it's in part requires sort of knowledge and an intent to deceive. So you've gotta know, and you've gotta be intentionally trying to deceive the disability insurance carrier. Now while forgetting, doesn't have an element of fraud policy, language isn't meaningless, and each word in that policy is gonna be given. Meaning now, here in Florida, it's a well settled law that a misstatement in, or an admission from an application for insurance need not be intentional for recovery to be denied. And that's an old case called Kaiser versus old line life insurance company. It's a 1998 case, but I promise you at least here in the state of Florida, that case is cited all the time by the insurance company and accepted by the courts as a reason, uh, to uphold a, uh, denial of a, of a case based on a policy rescission. Now, I also want you to understand that, um, the courts have also ruled that incorrect post, um, claim statements have to be false as the term is defined in the policy or plan. And if not defined based on the ordinary dictionary meeting. So the court's gonna go through this same analysis. If the disability carrier is denying your claim on the basis that you've made a false statement in your activity of daily living forms, uh, or other in, in conversations that you have with the, uh, adjuster or a field investigator. So be careful, quite frankly, if you're asked to have a, a statement from the, uh, investigator from the disability carrier, you should get an attorney. The bell should be going off because there is a reason why they want to take your statement or have a field visit. It is not to see how you're doing and how life is after you've filed your disability claim and, and offer their services and blessings. That's not what it's about. Got it. Okay. Let's take a break.

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ERISA Attorney Nancy L. Cavey: 15:56

Welcome back to winning. Isn't easy. Don't mess with a disability carrier and fail to tell them about your work activity, a tale of how one attorney destroyed his long-term disability case. Now when the disability company puts you on claim and begins to pay benefits, um, you're gonna be sent on a regular basis forms called activity of the other living forms that are gonna ask questions about your activities, including work activities. You have an obligation to tell the truth. And if you don't, your claim could be denied and worse yet worse. Yet the dis carrier just might Sue you to recover the disability payments it made to you. So I'm gonna tell you the story of Mr. Messing, who lived up to his name and messed up his disability claim. Big time misrepresentations about his work activity. Messing was a former partner in a law firm, and he certainly knew the likely consequences of making a misrepresentation in his activity of daily living forms. Misrepresentation is a fancy legal term for lying. Now messing claimed in 1998 that he was disabled because of depression. And he was unable to handle the stress of being a trial lawyer. And I'll tell you, it is stressful Provident accepted the claim and paid benefits until 2018. When they found that he was able to work as a lawyer and they terminated his benefits. What missing had never disclosed was that between 1999 and 2013, he had worked on 13 cases for which he was paid. Now the failure to disclose his work and his money, uh, that he had earned on his activity of daily living forms came back to bite him. Unum Providence did a simple search using a, uh, legal tool called pacer. They typed in his name and out came information about these 13 cases. And while this was not part of the administrative record, it did not help his case. So what did Unum Providence do? They were obviously, not a legal term, but you know what I mean, Unum prominent. Counterclaimed what he filed a lawsuit for restitution of the disability benefits. They said, look, messing, misrepresented his inability to work in as an attorney. And we want our money back. Fortunately for messing, the judge found that UN Providence hadn't met its burden of proof to show that the misrepresentations induced the payment of his benefits. The judge concluded that at best Unum, Providence could only show that it would've investigated the claim. Had it known about the misrepresentation and that it was speculative as to whether or not this information would've even led to a claim denial. Well, the good news is that he didn't have to pay back. The money union Providence had paid him from 1999 to 2013, but the bad news is that messing loss is disability claim. I don't want you to give the disability carrier reasons to deny your claim. They're in the business of denying claim, but you shouldn't give the carrier a reason to deny the claim or misrepresent your, your work activity. I just recently had a client do this, where she, uh, created an online business and had an actual site, uh, with information about all of the presentations that she had done around the, um, country. Now, she claimed that she was unable to work in part because of interstitial Citis and, uh, urological issues. But here she was getting on airplanes, standing in front of audiences, giving speeches, and she'd even wrote a, a book that she had for sale on her website. Well guess what happened that misrepresentation resulted just like in Mr. Messing's case, a claim denial, a claim, determination, a claim for, uh, restitution. And in Messing's case, there was a referral to the department of insurance for fraud, even worse for Mr. Messing, his misrepresentations could have resulted and maybe did result in a bar complaint and an ethics violation that could result in the loss of his legal license. So the consequences of misrepresentation can go far beyond simply a denial of a claim, termination of benefits, or even a claim for re a restitution. Don't make misrepresentations tell the truth all the time. I hope you've enjoyed this week's episode of winning. Isn't easy. If you've enjoyed this episode, consider liking our page, leaving a review or sharing it with your friends and family, please become a subscriber to this podcast. That way you'll be notified. Every time a new episode comes out.