Jason Newfield, Esq.

One hotly contested issue that arises in certain disability cases is when a professional, whether a doctor, dentist, chiropractor, podiatrist, or lawyer, is faced with disciplinary action from the governmental agency charged with overseeing such conduct, and seeks to file a claim for disability benefits. 

Claimants often have disabling conditions that either have caused them to engage in conduct which subjects them to disciplinary action, or have suffered disabling conditions relating to such conduct. An example may be a doctor addicted to narcotics who is caught taking medication from the hospital, and as a result, is going to be suspended or even lose their license to engage in their profession. Insurers will often seek to deny or terminate benefits to claimants who lose their license to practice their profession, or have disciplinary action taken against their license, even where the disabling condition preceded any action against the professional’s license. 

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The issue is characterized by the courts as “legal disability” versus “factual disability.” A legal disability will not permit recovery of disability benefits, while a factual disability will entitle a claimant to recover benefits. A legal disability arises from the situation where the claimant can no longer practice their profession because of the loss of a license, or other disciplinary activity. This is where there is not a disabling medical condition which has pre-dated the license issues. One example might be a situation of billing fraud, which ultimately results in some impact against the dentist’s license. If the dentist were not medically impaired at the time of the licensing issues, it is likely the claim will not be compensable. 

In contrast, a factual disability is where the claimant has a disabling condition (whether physical, mental, emotional, addiction) that causes the claimant to become unable to perform the duties of the occupation, and thereafter suffers disciplinary action against the license, often as a direct result of the disabling condition. It is our position that so long as the disabling condition precedes the loss of the license, a claimant should be permitted to recover benefits under his or her policy.     

As an example, a dentist who suffers an addiction to drugs may engage in conduct that causes the state agency to investigate and act against their license. However, due to this addiction, the dentist is unable to effectively (and safely) perform the duties of dentistry. That claimant should be considered factually disabled and entitled to benefits, even if the license to practice dentistry in the future is revoked, suspended or otherwise impacted.  The important issues relate to the timing of the disability onset, when considered against the timing of the licensing issues.

Jason A. Newfield, Esq., is a founding partner at 

 a national disability law firm, where he aggressively represents claimants in long term disability insurance, ERISA, and other insurance claims and litigation. He holds an AV® Preeminent Peer Review from Martindale-Hubbell and has been named to the Super Lawyer New York Metro list from 2013 — 2016. Mr. Newfield is frequently invited to speak before bar associations, medical organizations and other trade organizations regarding disability claims and has published numerous articles on Disability Insurance. He is a member of the American Conference Institute, regularly presenting to attorneys and claims personnel at national conferences on disability litigation.  

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Articles

One hotly contested issue that arises in certain disability cases is when a professional, whether a doctor, dentist, chiropractor, podiatrist, or lawyer, is faced with disciplinary action from the governmental agency charged with overseeing such conduct, and seeks to file a claim for disability benefits.Â  

Legal vs. Factual Disability: Complications Caused by Disciplinary Action

While consulting with dentists seeking to file disability claims or who have questions regarding their existing coverage, we have seen an interesting issue raised time and again.

The issue is whether an insured with a disabling condition, who suffered a decline in income from his practice for a year or 18 months (or sometimes longer), can file a claim for disability insurance on their policy backdated to when the income declined. Such a strategy has the potential to provide a significant amount of money to an insured, depending on the loss of income suffered.

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The answer is largely dependent on the policy language, but the main issue in this analysis relates to not if the claim can be backdated, but how far back it can be backdated. Most policies require an insured to provide “proof of loss” — with time periods for such proof as short as 30 days or as long as 6 months after the commencement of the disability.

One important policy provision that would be important to analyze is the Notice of Claim provision.  Ordinarily, the policy will have language such as "proof of loss" to be provided shortly after a claim occurs (typically 30 to 60 days). While those are requested time frames, these policies also usually contain language stating that proof is to be provided as soon as reasonably possible, but in no event, more than one year after the period in claim.

As a practical matter, what does this mean? Can you file a claim more than one year prior to the date of disability? The answer is yes, but perhaps the issue becomes one of whether you can receive benefits for these subject periods. One strategy to employ would be to utilize some of these otherwise “disqualified” periods to accrue the elimination period — that period that must be satisfied before benefits are payable. By using this period to satisfy the elimination, your benefits become compensable within the notice period.

An insured who has a disabling condition, and who suffered a loss of income often does not appreciate the policy provision for “residual” or “partial” disability, and thus fails to realize that benefits could be payable for the period with the loss of income. That period could also be utilized in many cases to satisfy the elimination period (the period which must be satisfied before any benefits are payable).

Thus, if an insured has a disabling condition that has caused a decline in income, most of the policies would permit recovery for partial disability for that period. The only remaining question is whether the insurance company will argue that the notice of claim was too late. Of course, the insured must be under the regular care and treatment of a doctor for the claim to be compensable.

Most residual disability policies permit an insured to determine “Prior Monthly Income” based on a choice of earnings, ranging from the best two consecutive years of the five years prior to disability, to the best calendar year of the three years prior to disability, permitting an insured to initially evaluate and determine the greatest base income to utilize for pursuing a residual disability claim.  

Residual disability claims present the greatest challenge for claimants, since the issues involve financial evaluations in addition to the usual occupational and medical issues. Careful consideration must be given to best strategize such a claim prior to filing.

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Can a dentist who has suffered a disabling condition backdate a disability insurance claim to when their income began to decline because of the disability? The answer largely hinges on how the insurance company requires the dentist to establish proof of loss, an issue which can prove to be complicated. Jason Newfield, Esq., a disability attorney with the firm Frankel & Newfield, explains what you need to know.

Residual or Partial Disability: Backdating A Claim

Except for an IRS audit, few requests for information are as unpleasant as a letter from the disability insurance company asking for complete financial disclosure. 

If the disability insurance payments are based on practice income, in the case of a claim for partial disability or residual disability benefits, the request for financial disclosure does not seem out of order. How else will the disability insurance company determine the correct payment amount? But this isn’t usually the case. Where a claim is for total disability, however, it may be that the request for such financial disclosure is both onerous and improper.

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Most disability insurance policies sold to dental professionals contain clear language about the amount of monthly benefits to be paid, with no reference to the financial statements of the dentist personally or professionally. So why are the insurance companies asking for documentation of your income, details of your expenses, and more information than the IRS is entitled to?  

Financial records are requested to evaluate income, assets and earnings. Expect them to be reviewed under a high-definition microscope. And for a partial or residual disability, expect to provide monthly financial support for your claim.

This is an intrusive process. It is also a strategic move to reveal how hard the dentist is willing to push back. The presence of an experienced disability attorney at this stage changes the dynamic. The representatives from the insurance company are now faced with a professional who is going to challenge requests that a dentist is not legally compelled to fulfill. That doesn’t mean the onerous requests disappear, but they become part of the negotiations for getting the claim resolved.

If you have filed a claim and the insurance company has requested a complete set of your financial records, here are steps you can take to protect yourself:

Find your original disability insurance contract and read it.

 Locate the section that discusses financial disclosure. This is often governed under a section of the policy called Proof of Loss. If there’s language in there you don’t understand or that doesn’t make sense to you, call an experienced disability insurance law attorney. You may have to provide some records — but it is unlikely that you have to provide everything.

Determine what information is truly appropriate and/or necessary for the insurer to consider your claim properly.

  Do not permit an insurer to brow beat or intimidate you into disclosing more information than would be appropriate.

You can contact the insurance company directly and ask them to provide their request in writing, and ask them to show you specifically where that language appears in your contract. Don’t expect them to be accurate or comply with this request.

Document every request and every telephone conversation with insurance company representatives.

  Be aware of this tactic: A conversation takes place with the insurance company, and a letter describing the conversation is sent, but the description of the conversation does not always reflect the conversation accurately. Included in the letter is often a phrase that if you do not respond to the letter, you have agreed to the statements therein.

All too often, people find the process so unpleasant that those letters go unopened, and the insurance company deems the claimant to have agreed to its version of the conversation.

If you are required to provide practice information, make sure that your office records are up to date and complete. 

Check with your CPA, bookkeeping service or comptroller to ensure that the records are fully compliant with local, state and IRS requirements. If there are any questions regarding tax issues, the insurance company may not care — but some of their own documentation searches could set up a red flag for local, state or federal agencies. Be prepared to back up your methods of recordkeeping.

Records from other sources of income may also be requested.

 The disability insurance company is seeking information that would support a reduction in benefits because income from activities that are not part of the “own occupation.” If your practice offers ancillary services or products that could be considered outside of the scope of a regular dental practice, the insurance company will seek to deduct that income from your dental income. In addition, the insurance company will use that information to prove that you are able to work in that other income stream even if you cannot perform the material tasks necessary to be a dentist.

Be aware that dentist’s disability claims are frequently denied because, frankly, they are expensive for the insurance company’s bottom line. 

 a national disability law firm, where he 

aggressively represents claimants in long term disability insurance, ERISA, and other insurance claims and litigation. He holds an AV® Preeminent Peer Review from Martindale-Hubbell and has been named to the Super Lawyer New York Metro list from 2013 — 2016. 

Mr. Newfield is frequently invited to speak before bar associations, medical organizations and other trade organizations regarding disability claims and has published numerous articles on Disability Insurance. He is a member of the American Conference Institute, regularly presenting to attorneys and claims personnel at national conferences on disability litigation. 

When dentists file total disability claims, insurance companies will often ask them for a complete financial disclosure. A complete financial disclosure contains more information than even the IRS is entitled to. In the case of total disability, this request may be improper. What follows are tips on how to get through this process as painlessly as possible. 