Disability coverage: You may have to fight to collect

This doctor endured an eight-year battle to win the benefits she was entitled to.

For doctors who suffer a disabling illness or injury, having to give up their practice can be a terrible blow to the ego. But at least those with disability insurance can take comfort in the expectation that their policies will provide much of their former income. Or can they?

Joanne Ceimo, an invasive cardiologist in Scottsdale AZ, made that assumption when she claimed the benefits she felt she was entitled to under her disability policy. Her insurer disagreed. The following account of her eight-year struggle to win those benefits is based largely on court records in her case.

Ceimo had purchased an "own-occupation" disability policy from General American Life Insurance Company in 1986, and bought additional coverage in 1991. Such policies provide benefits if the insured becomes physically unable to perform the essential duties of his or her specialty. They are therefore considerably more expensive than "general occupation" policies, which would not provide benefits if, for example, an invasive cardiologist could still practice as a clinical cardiologist, an internist, or even as a clinical instructor.

In late 1994, Ceimo, then 44, was diagnosed with cervical arthritis, which made it increasingly difficult for her to perform invasive procedures. As her condition worsened, she continued to practice cardiology, but had to give up invasive procedures completely. In 1995, she filed a claim for disability benefits, certified by her physician. Under her policy, she was entitled to benefits of $12,000 a month, or $144,000 a year, for life.

During the time Ceimo held her policy, General American turned its claims business over to The Paul Revere Life Insurance Company, which in turn was taken over by Provident Life and Accident, which then merged in 1999 with Unum. Today, UnumProvident has more than 40 percent of the individual disability market.

A long, painful struggle for benefits

According to Ceimo, Paul Revere failed to act on her claim for 15 months. Then, after an extensive review of her practice records, but without conducting an independent medical exam of her physical condition, the company finally denied her claim in 1998, nearly three years after she'd filed it.

The company didn't contest Ceimo's disability. Instead, it claimed that she wasn't really an invasive cardiologist, and that her "partial" disability didn't prevent her from continuing to perform the duties of a general cardiologist. The company based its decision on the grounds that Ceimo spent only six to 10 hours a week doing invasive procedures. But as she pointed out, that estimate ignored the many pre- and post-op hours she spent on diagnostic exams, tests, evaluations, and consultations.

In pursuing the suit Ceimo later filed, her attorney, Steven Dawson, cited a previous Arizona appellate decision in a similar case. The judges in that case ruled that "a disability exists when a practicing physician can no longer perform the specific tasks of his practice, regardless of the duties of a more general practice."

Dawson also used the analogy of a shortstop whose professional duties include hitting, running, catching, and throwing. If the shortstop suffered an injury to his throwing arm, he would effectively be totally disabled even though he could still hit, run, and catch. While throwing was only one of his key functions, it was an "essential duty of his regular occupation." In a similar way, he argued, "the ability to perform invasive procedures was a key component of Dr. Ceimo's practice, and indeed of her professional identity."

With no disability income, and as a single mother with two children to support, Ceimo was forced to continue her general cardiology practice despite her progressively worsening condition. She couldn't afford to take the time off from her practice for the physical therapy that might have alleviated her chronic pain. Battling the insurance company and trying to keep her practice going also took an emotional toll, as she endured "increasingly intense feelings of frustration and helplessness."

In 1999, after consulting a rheumatologist and other specialists, Ceimo was diagnosed with fibromyalgia and chronic fatigue syndrome, and had to give up her practice completely at the age of 49. She resubmitted her claim in 2000, contending that she was then totally disabled, and could not work in any kind of cardiology practice. According to Ceimo, the company continued its delaying tactics, subjecting her to repeated requests for additional medical and financial records, and several independent medical exams.

Turning to the courts as the last resort

In March 2000, Ceimo sued General American, Paul Revere, and Provident for breach of contract and bad faith denial of her disability claim. She also asked for punitive damages, charging that the companies had "engaged in outrageous conduct designed to deprive" her of her legitimate benefits. Her attorney accused the companies of "reckless disregard" of Ceimo's health because "they knew that their insistence that she keep working full time . . . would—and did—cause her physical condition to deteriorate."

To support her bad-faith claim, Ceimo accused the companies of failing to conduct independent medical exams until after she filed her suit, and of relying instead on the "unsupported statements" of in-house doctors rather than the evaluations of her own treating physicians.

Her attorney Dawson cited internal company documents that showed that the insurers had urged claims adjusters to conduct "intensive" investigation of high-dollar claims like Ceimo's. He also cited testimony by company doctors—from depositions in other cases—that they had been pressured to deny or terminate such claims.

In May 2003, eight years after Ceimo first filed her claim, the case finally went to trial in Phoenix. Just before the trial began, the defendants agreed to pay her $404,800 in disability benefits, but by then it was too little, and too late.

At the conclusion of the 10-day trial, the jury decided that Ceimo was, indeed, totally disabled under the terms of her policy, and found the defendant companies guilty of bad faith and breach of contract. They awarded her nearly $6.7 million in compensatory damages, including $5.4 million for emotional distress, and $1.25 million for past-due benefits plus interest. They also awarded her $79 million in punitive damages, making this one of the country's biggest jury verdicts of the year, according to Lawyers Weekly USA.

In their motion to overturn the verdict, the defendant companies argued that the jury's award was unjustified and excessive. But the judge disagreed. He ruled that "the evidence in this case overwhelmingly supported breach of contract, bad faith, and punitive damages," and that "the jury's verdict was driven not by passion, but the extraordinary nature of the defendant's conduct." Punitive damages, he pointed out, depend on "the degree of reprehensibility of the defendants' conduct," and noted: "As bad faith cases go, this one was pretty bad. General American sold Ceimo a very special policy and then abandoned her to Paul Revere and Provident, who welched on the deal."

Nevertheless, the judge was compelled to reduce the punitive damages to $7 million, based on federal court guidelines. He also awarded Ceimo $600,000 in attorneys' fees. The defendant companies have appealed the verdict.

Disability insurers' hardball tactics

"What happened to Dr. Ceimo isn't unusual," says Dawson, who specializes in representing physicians in disability litigation. "In fact this wasn't even the worst case we've handled."

According to a database search of US District Courts conducted by another law firm, at least 1,675 disability suits were filed against UnumProvident companies from January 1997 through January 2003. According to Dawson, many of these suits have revealed a pattern of aggressive company tactics similar to those used to delay and deny Ceimo's benefits.

These tactics include contesting the disability, making endless demands for paperwork, and requiring multiple independent medical exams. Critics say these "hardball" tactics are designed to wear claimants down, and make them give up. If that doesn't work, some carriers offer to "buy out" the claim for a fraction of the policy's promised benefits. Doctors who've tired of battling the company may finally accept the offer.

But instead of giving up, physicians are fighting back, going to court to collect the benefits they feel they've been wrongly denied. Fighting a big insurance company isn't easy, however, as Joanne Ceimo discovered, and the odds of winning aren't great. But as she proved, it can happen.

How to protect yourself: Follow these steps

1. Ask your insurance agent or broker about the company's claims record before buying a disability policy. Do an Internet search on the carriers you're considering. Find out what claims experience their policyholders have had, how often the company has denied or terminated benefits, and whether there's any current litigation against the company alleging unfair claims practices.

2. Ask your colleagues, state medical society, or a disability attorney what they know about the company's reputation for handling claims. Contact your state insurance department or the National Association of Insurance Commissioners (www.naic.org) to find out how many complaints have been filed against the company. (Keep in mind that very few people actually file such complaints, even if they feel they've been treated unfairly.)

3. Get necessary claim forms as soon as possible after you become disabled. Also ask about deadlines on submitting the claim. Some policies require claims to be filed within 30 or 60 days of the onset of disability. Waiting too long may also raise questions about the credibility of your claim.

4. Get copies of your medical records from your treating doctors. Your supporting records should include your doctor's description of your disability, test results, and treatment. Give them all relevant information about your disability, and its effect on your professional performance, so that they'll be fully informed when your carrier contacts them.

5. Compile proof that you're disabled. First read the policy's definition of disability. For example, "own-occupation" policies generally state that your illness or injury must prevent you from performing "the substantial and material duties of your occupation." Tell your treating physician what those duties are, and ask if he'll certify a claim to that effect.

6. Ask an experienced disability attorney for advice on what to include in your claim and to review the claim to make sure it's thoroughly documented. He'll then be prepared to help when the company starts asking questions, or to assist you if the company wants to interview you. If your claim is denied, he'll be in a better position to represent you in appealing the denial, or in subsequent litigation.

7. Supply with your claim a detailed account of how you spent your average workday before your disability. Include the percentage of time you typically devoted to the specific activities you can no longer perform, and the amount or percentage of your practice income you'll lose if you can't perform them. "Remember," says Bonny Rafel, a disability attorney in Livingston, NJ, "you bought the insurance to protect your ability to do medical procedures and clinical work, not administrative duties."

8. Ask for a different independent medical examiner if you believe the physician your carrier's named is biased in the company's favor, or if he's not credentialed in a specialty relevant to your condition. Don't be afraid to suggest the name of a physician you trust. In any case, keep a careful record of the exam, including the tests that were ordered. You can also ask for a copy of the exam results to be sent to you or your own doctor.

9. Ask—in writing, and by certified mail—for a detailed explanation of its reasons if the carrier denies your claim or fails to reach a decision in a reasonable period. Also check your policy to see if it contains a time limit for appeals, or for initiating legal action. Then call your disability attorney for help.

Berkeley Rice. Disability coverage: You may have to fight to collect.

Medical Economics

Aug. 20, 2004;81:42.