Never underestimate the willingness of insurance companies to “try again” to deny benefits for reasons which have already been considered and rejected by the Courts.
We highlighted a case in July 2023 wherein a dental hygienist continued working through her chronic back pain while waiting for her insurance provider, Hartford Life, to process her long-term disability claim. She did this because she would lose her coverage and be deemed ineligible if she stopped working. Hartford cleverly argued that she could not be totally disabled because she was still doing her job. The Court wasted little time ruling in favor of the plaintiff, pointing out that no one would ever qualify for disability benefits using Hartford’s Catch-22 logic.
Undaunted, earlier this month, Prudential Insurance Company of America tried the legal equivalent of a Mulligan.
You’re ineligible if you work and you’re ineligible if you don’t work
In Joseph K. v. Foley Indus. Emp. Benefit Plan, Prudential, the insurer of Foley Industries’ employee disability benefits plan, denied the plaintiff’s benefits application because the plaintiff had been fired from his position, conveniently ignoring that the firing occurred as a direct result of the plaintiff’s inability to do his job because of his disabling medical conditions. His ailments included ankylosing spondylitis, chronic iridocyclitis, arthropathic psoriasis and memory issues.
After he was terminated, the plaintiff submitted claims for short- and long-term benefits under his company ERISA disability plan which was insured by Prudential. Ignoring legal precedent, Prudential argued that since the plaintiff applied for benefits after his termination, it considered the start date of his disability to also be after his employment ended; this despite the clear evidence that the plaintiff’s inability to do his work because of his medical condition was the reason for his firing! Ignoring this inconvenient fact, Prudential instead argued that because the disability began after the plaintiff’s employment termination, the disability plan no longer covered the plaintiff and he was therefore ineligible.
The Court didn’t fall for it
The Judge did not pull any punches in admonishing Prudential’s conduct, saying, “Defendants’ argument borders on the frivolous… Such an unreasonably narrow interpretation, resulting in a Catch 22 situation, is the epitome of arbitrary and capricious decision-making.” The Judge pointedly added, “advocating that employees cannot be eligible for benefits or considered disabled while working, has been soundly rejected by the circuits to have considered them.”
The plaintiff in Foley not only received many months of unpaid benefits, but the Court also determined he was entitled to attorney’s fees, costs and prejudgment interest.
Here is the million-dollar question: Do you think insurers will finally stop making this frivolous argument in the future? Not likely. Why? Because many insureds will simply accept that denial and never challenge it, even though the denial is wrongful and can be reversed by the Court. Therein lies the problem: If many insureds don’t push back and challenge these wrongful benefit denials, why would any insurer stop issuing them?