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Four Common Disability Insurance Provisions and Why They Matter

Posted Friday, January 25, 2019 by Pivotal Law Group

As with most insurance cases, disputes over disability insurance coverage or benefits frequently turn on the specific insurance policy language at issue. The policy’s fine print can lead to outcomes that might seem counterintuitive. Below are four common policy provisions that are often key to the outcome of disability insurance disputes.

1. The Definition of “Disabled”

Disability insurance policies can define “disabled” in different ways. Some policies define disability in terms of the insured’s employment qualifications. Such a policy might provide: “you are unable to perform the duties of any gainful occupation for which you are reasonably fitted by education, training or experience.” Other policies define disability in terms of the insured’s existing occupation, defining disability as: “you are unable to perform the material and substantial duties of your regular occupation, or you have a 20% or more loss in your monthly earnings.” Further, some insurance policies change the definition of disability once the insured has been disabled for a certain time period, typically tightening the standard.

For insureds, the definition of disability is the key to claiming benefits. Many disability insurance disputes focus on whether the insured meets the definition of disability. That’s key because insurers sometimes deny claims under the wrong standard of disability. Denying claims under an erroneous standard could result in denying benefits where the insured is otherwise entitled to them.

The definition of disability also establishes the specific medical evidence needed to establish the insured is disabled. That’s key because doctors typically do not write medical records with the insurer’s definition of disability in mind; they focus on the medical information relevant to the patient’s diagnosis treatment. Accordingly, insurers often claim the insured’s medical records don’t prove the insured is disabled because the doctor’s notes don’t precisely match up with the definition in the policy.

2. Mental Health Limits

Many disability policies contain special provisions restricting coverage where the insured’s disability relates to their mental health. Although the federal Mental Health Parity Act generally prohibits health insurers from disfavoring mental health coverage, disability insurers are still often free to do so.
An example of a common mental health limitation in a disability policy: “Disabilities which are due in whole or part to mental illness have a limited pay period during your lifetime. The limited pay period for mental illness is 24 months during your lifetime.”

Mental health limitations can be critical to disability insurance disputes. The insured may have both physical and mental health symptoms. Sometimes, the physical ailments cause the mental health symptoms directly, for example, in the case of a traumatic brain injury which manifests with difficulty concentrating or focusing. Or, the mental health symptoms may be ancillary to the physical injury; for instance, people suffering a physical disability often seek mental health treatment after becoming depressed and anxious about their inability to work, engage in hobbies or socialize because of their physical disability. Sometimes the mental and physical symptoms may be completely unrelated, for instance, when a person who has been treated for anxiety for many years sustains a physical disability following an injury.

In these circumstances, insurers often conflate the physical and mental health symptoms to justify limiting benefits under the mental health limitation. Insurers may ignore the physical ailments that prevent the insured from working and focus on ancillary mental health symptoms that were well-managed prior to the onset of physical symptoms. Or, the insurer may incorrectly determine that any physical limitations are caused solely by mental health conditions, for instance, by characterizing migraine headaches as a symptom of anxiety.

To avoid this, it’s critical to present the insurer with medical records and statements from treating providers that clearly differentiate mental health conditions from physical ailments, and indicate whether the physical ailments alone render the insured disabled.

3. “Objective” Evidence Requirements

Similar to mental health, many disability insurance policies limit coverage for so-called “self-reported symptoms,” defined as symptoms that cannot be proven through “objective” testing.

Many disabling conditions are, by their nature, not readily provable through “objective” testing. Chronic migraines, fibromyalgia, or Chronic Fatigue Syndrome are common examples. These conditions sometimes result in disabling symptoms, but are difficult to objectively measured through things like MRIs or X-Rays. Consequently, many insureds have coverage denied for conditions that render them disabled but cannot be identified on objective tests.

Overcoming “objective” evidence requirements often entails establishing that the condition is one that is known in the medical community to resist proof by objective means. Many courts have recognized the medical consensus that conditions like fibromyalgia do not show up on MRIs, and, consequently, do not allow insurers to deny such conditions for lack of “objective” testing that, by definition, cannot exist.

4. ERISA

Disability policies issued through an employer are typically subject to a federal law called the Employee Retirement Income Security Act (“ERISA”). If ERISA applies, it imposes important deadlines and procedural rules insureds must follow in order to contest a disability insurance denial. For instance, insureds must appeal a denied claim within specific time periods (usually measured in days). Moreover, the appeal must include all information the insured relies on in claiming benefits; information absent from the appeal often cannot be considered in a lawsuit disputing the denial.

Pivotal Law Group attorney McKean J. Evans represents insurance policyholders and has obtained favorable outcomes in disputes with insurance carriers in disability and other insurance disputes, including under insurance policies subject to ERISA. If you have questions regarding a disability insurance or other insurance coverage matter, contact McKean for a free consultation.

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Do I Really Need A Will? The Who, What, When, Where, Why and How of Estate Planning for the New Year

Posted Thursday, January 17, 2019 by Pivotal Law Group

Most Americans lack an estate plan, especially Millennials. Many people find even thinking about estate planning daunting. But, like any problem, it’s easy to approach by breaking it down into small steps. Here’s a straightforward checklist of why an estate plan is necessary and how to get started.

Who

“Who” means you and your family – the people who are important to you and impacted by your life. Spouses, parents, children, siblings, other family members, and close friends will all be impacted by choices you make in your estate plan.

There’s also the state, which has a default estate plan for everyone under what are known as “intestacy” laws. These laws provide for default transfers of your estate in the event you don’t have an estate plan. These can be counterintuitive, contrary to what you would want, or contrary to what your family would expect.

There are also the probate courts, which often become a battleground for family disputes over what persons without an estate plan would have wanted after they pass away or become unable to make decisions for themselves.

Lastly, there’s the IRS and state Department of Revenue, who collect estate taxes – which are typically larger in estates lacking tax planning.

What

What you need for an estate plan depends on the circumstances. It might include the following:

  • A Last Will, probably the document most people think of first. This can control the disposition of your assets, designate guardians for minor children, establish trusts, and designate a personal representative (a/k/a executor) to administer your estate.

  • Durable Powers of Attorney for Finances and Healthcare – these designate an agent, usually a trusted family member or close friend, to make decisions on your behalf in the event you are unable to do so, for instance, due to a medical condition.

  • Healthcare directive – provides your family guidance about your wishes if you are in a terminal unconscious condition.

  • Burial instructions and Organ Donor Pledges – tell your family how you want these sensitive subjects handled.

Besides these basic documents, there are other tools at your disposal depending on your plan and objectives. Community Property Agreements can be important to designate respective spouses’ ownership interests. Some assets, such as real estate or financial accounts, can be titled to give your heirs survivorship rights, bypassing probate entirely. Retirement accounts like 401(k)s or IRAs allow you to designate a beneficiary. These are all part of the constellation of tools you can use to implement your goals.

When

Now. Even if you’re young, it’s wise to consider issues like what happens when you die or are unable to make decisions for yourself. All too often, people pass away unexpectedly leaving their family to deal with the confusion and potential conflict of not knowing what they wanted. Or, medical emergencies, in the absence of an advance plan expressed in a Durable Power of Attorney and Healthcare Directive, can lead to the same issues.

Where

The obvious answer is an estate planning attorney’s office. But developing your estate plan also takes place outside a law firm. It involves your close family. It can also involve other professionals such as CPAs or financial planners.

Why

“Why do I need an estate plan?” The answer depends on your specific circumstances, but a high priority for many people is: certainty. An estate plan gives your family certainty regarding your wishes about fundamental issues like your life, health, and property.

When a person dies or becomes incapacitated without a plan, family members don’t know what they would have wanted. Would dad have wanted a nursing home or a live-in caregiver? Who should get the family home, jewelry or photos? Who should be guardian for the kids? Sure, mom wanted her grandkids to share her estate, but did she want the grandkids’ spouses to also share?

An estate plan answers these questions definitively and in advance. When your wishes are in black-and-white, your family doesn’t have to question or, often, fight over what you would have wanted. And it increases the chances that your wishes are respected after your death.

Besides certainty, estate planning has other advantages that may be important depending on your goals, such as minimizing tax consequences or avoiding public probate of your estate.

How

Know what you want: the best way to have an estate plan is to have a plan. Consider an organized financial plan and prepare a list of important assets. Talk to your spouse and close family to identify people you trust to serve as personal representatives, agents under a Power of Attorney, or guardians for minor children. Secure knowledgeable assistance from attorneys, CPAs and financial advisors.

Pivotal Law Group has provided estate planning advice in and around Seattle for decades. If you have questions regarding estate planning matters, contact Pivotal Law Group attorney McKean Evans for a free consultation.

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Case Law Update: Res Ipsa Loquitur

Posted Monday, January 14, 2019 by Christopher L. Thayer

In a recent Washington Court of Appeals Division III case, Clarke v. Nichols (35477-6, January 3, 2019)(Unpublished), the Court took the opportunity to review and clarify application of principles of Res Ipsa Loquitur (Latin translated literally as “the thing speaks for itself”).

In Clarke, plaintiff was injured while attempting to help defendant install some trim to the soffit of a “shack” on defendants’ property. Plaintiff was standing on a ladder and apparently fell. Plaintiff did not remember how he fell or what caused him to fall, and defendant did not witness the fall. Plaintiff was seriously injured and subsequently sued defendants for negligence. Plaintiff was unable to provide any evidence of wrongdoing by defendants, other than positing a number of speculative theories. Plaintiff’s case was dismissed on summary judgment by the trial court and plaintiff appealed.

A party asserting a claim based on negligence must generally establish four elements: (1) existence of a duty owed to plaintiff; (2) breach of this duty; (3) resulting injury, harm or damages; and (4) a proximate cause between the breach and the injury, harm or damages. A party is not generally entitled to presume negligence. However, there is a narrow exception known as the doctrine of Res Ipsa Loquitur.

Res Ipsa Loquitur “spares the plaintiff the requirement of proving specific acts of negligence in cases where plaintiff asserts he or she suffered injury, the cause of which cannot be fully explained, and the injury is of a type that would not ordinarily result if the defendant were not negligent.” Jackass Mt. Ranch v. S. Columbia Basin Irrigation Dist., 175 Wn. App. 397-98, 305 P.3d 1108 (2013). In order for this doctrine to apply, a plaintiff must show:

(1) the accident or occurrence producing the injury is of a kind which ordinarily does not happen in the absence of negligence; (2) the injuries are caused by an agency or instrumentality within the exclusive control of defendant; and (3) the injury-causing accident or occurrence is not due to any voluntary action or contribution on the part of plaintiff.

Horner v. N. Pacific Beneficial Association Hospitals, 62 Wn. 2d 351, 359, 382 P.2d 518 (1963).

Washington Courts have identified three scenarios where negligence could be inferred without affirmative proof:

(1) when the act causing the injury is so palpably negligent that is may be inferred as a matter of law, i.e., leaving foreign objects, sponges, scissors, etc. in the body, or amputation of the wrong member [limb]; (2) when the general experience and observation of mankind teaches that the result would not be expected without negligence; and (3) when proof by experts in an esoteric field creates and inference that negligence caused the injuries.

Horner, at 360.

In the Clarke case, the Court of Appeals noted the ladder plaintiff was standing on was not in defendants’ exclusive control and it also cannot be said that a fall from a ladder ordinarily does not happen in the absence of negligence by the person who provides or places the ladder. The Court of Appeals held Res Ipsa Loquitur did not apply and affirmed the trial court’s dismissal of Clarke’s claims.

If you have questions about a potential negligence claim or you or a loved one was injured due to the carelessness of another, please feel free to contact managing member Chris Thayer at (206) 805-1494 or at CThayer@PivotalLawGroup.com.

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King County Bar Association Publishes ERISA Disputes Best Practices Guide by Pivotal Attorney McKean Evans

Posted Friday, January 4, 2019 by Pivotal Law Group

The King County Bar Association’s January 2019 edition of the Bar Bulletin features an ERISA disputes best practices guide by Pivotal Law Group attorney McKean J. Evans. McKean describes circumstances in which attorneys may encounter ERISA benefit questions from their clients and outlines how attorneys can help protect their clients’ rights under ERISA.

McKean has obtained favorable outcomes for employees and insureds who are wrongfully denied benefits under employer-sponsored, ERISA-governed insurance plans. If you have questions about employer-sponsored health, disability, life or other insurance benefits under ERISA, contact McKean for a free consultation.

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Court Ruling Emphasizes Common Sense Reading of Insurance Policy in Win for Policyholder

Posted Monday, December 31, 2018 by Pivotal Law Group

The Washington Court of Appeals recently decided Poole v. State Farm Fire and Casualty Company, a case about fine print in a homeowner’s policy. After the Pooles’ home burned down, State Farm denied coverage under a technical reading of the words “similar construction.” Washington’s Court of Appeals disagreed with State Farm and emphasized the traditional principal that insurance policies are interpreted based on their ordinary and common meaning as a reasonable policyholder would understand them.

The Pooles had a State Farm homeowner’s policy covering their home. Their home also contained a shop the Pooles used as a business. The shop was in the same building as the home. After the structure containing the home and shop burned down, the Pooles made a claim under their State Farm policy. State Farm agreed the policy covered the loss and agreed to pay to rebuild the structure.

The dispute arose when the Pooles decided to rebuild the shop as a separate building from the home, rather than rebuilding both in the same building as they had been originally. State Farm refused to pay to rebuild the shop in a separate building, claiming the policy only provided coverage if the Pooles rebuilt the shop in the same building as the home.

State Farm relied on language limiting coverage to the Pooles’ “dwelling” and allowing reconstruction only for “similar construction.” Since the shop was only covered as an attachment to the Pooles’ home, State Farm argued rebuilding the shop in a detached structure wasn’t “similar construction.”

The court disagreed, applying the ordinary and common meaning of the term “similar construction.” The court noted that the limitation on coverage to the Pooles’ “dwelling” limited only coverage, and did not limit the Pooles’ reconstruction options. Regarding whether the detached shop was “similar construction,” the court found reasonable the Pooles’ argument that the detached shop featured the same style, quality and building materials, and was used for the same purpose, as the original shop. The court also noted State Farm’s representative admitted “reasonable people could disagree” about whether the policy covered reconstruction of the shop in a detached structure.

Because the Pooles’ interpretation was reasonable, the court applied the traditional insurance law principle that policy language capable of more than one meaning must be given the meaning that favors the insured. Accordingly, the court found in favor of the Pooles.

The Poole case is an important reminder that technical terms in insurance policies matter, and that insureds are entitled to have ambiguous insurance policy language interpreted in favor of coverage.

Pivotal Law Group attorney McKean J. Evans represents insurance policyholders and has obtained favorable outcomes in disputes with insurance carriers in homeowner’s and other insurance disputes. If you have questions regarding a health insurance or other insurance coverage matter, contact McKean for a free consultation.

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DISCLAIMER: This blog is not legal advice. This site and any information contained herein are intended for informational purposes only and should not be construed as legal advice under any circumstances, nor should it be construed as creating an attorney-client relationship. The information on this blog is a general statement of the law and may not be up to date, accurate or applicable to your specific circumstances. Prior success in litigation is not an indication of future results; each case is unique and past results cannot predict future outcomes.

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