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Exercising Discretion

A Weekly Check on Health Care Costs and Coverage

Tuesday, March 8, 2005; Page HE02

Back when she was selling disability insurance, Roberta Glick was covered by one such policy sponsored by her employer. Glick said she knew a group policy was less consumer-friendly than individual coverage; still, her plan promised to replace half of her income for two years if she was unable to return to her profession and until age 65 if she was unable to work at all.

Glick, a District resident who is 64, said she stopped working early in 2001 due to osteoporosis, spinal stenosis, fibromyalgia, chronic fatigue and other ailments.

Four years later, "I find that I am unable to sit or stand for more than 20 or 25 minutes at a time," she said. "There certainly isn't any job that I can hold down." Social Security agreed, she said, promptly approving her claim for disability assistance.

According to a suit Glick filed in federal court, her insurer began paying her benefits in September 2001 but stopped two years later. (Many disability policies allow payments to end after two years if the policyholder is deemed employable anywhere, even outside the person's prior profession.)

Marni E. Byrum, the Arlington lawyer who filed suit on behalf of Glick, said she is repeatedly seeing clients who have been "denied coverage once they reach the end of that initial period." Glick and her insurer, Liberty Life Assurance, ended their dispute last week with a confidential agreement ("This matter has been settled to the satisfaction of all parties," said Adrianne Kaufmann, a Liberty spokeswoman.)

"Group policies are almost not worth the paper they're written on," said Fairfax lawyer Ben W. Glass, because they usually give the carrier "discretion" in handling claims and because dissatisfied consumers can overturn a denial only by convincing a federal court the insurer's decision was "arbitrary and capricious."

Discretion clauses "offer a complete shield" to insurers, said Mila Kofman, an assistant research professor at Georgetown University's Health Policy Institute. "Insurance companies can deny a claim really for any reason . . . and they know it's a free pass in court."

In November, UnumProvident, the country's leading disability carrier, resolved a national investigation of its claims-handling practices by paying a $15 million fine and agreeing to reconsider up to 215,000 denials. While noting that the probe "did not make any findings of violations of law," the company estimated that the settlement would cost it $127 million before taxes.

"The biggest mistake consumers make is to believe that simply filling out the [claim] form, and having the doctor fill out the form" is adequate to guarantee coverage, said Glass. Filing a claim without strong supporting evidence from a doctor "doesn't work because the insurance companies legitimately want, legitimately need, objective information."

-- Tom Graham

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