Daily Journal investigation sheds light on disability insurance’s dark corner

Employees everywhere sleep a little easier knowing that their company covers the bulk of the cost of their disability insurance. If they are hit by a car or fall of their roof or incur some other injury that prevents them from working, they can count at least a modest income from their insurance policy.

At least that's how the insurance company's brochures make it sound.

Evan George at the Los Angeles Daily Journal has exposed the hollow promises made by insurance giants like Metropolitan Life Insurance Co. with an investigative series published earlier this month. The series is behind a paywall, but you can find two of the stories here and here.

Here are some of the key findings:

Insurance companies regularly deny, or terminate, benefits to people even after they are found disabled by the federal government and approved for Social Security checks. The companies hire contract doctors who routinely reject the opinion of treating physicians without ever having seen the patients.

Some insurers provide incentives to employees to deny and terminate claims, tying performance evaluations to meeting money-saving goals.

No regulatory agency has taken responsibility for these cases. Consumers who complain to the Department of Insurance are ignored or told to contact the federal Department of Labor because workplace benefits are controlled by federal laws. But the Department of Labor does not investigate, or track, the complaints either. Officials say the only thing the law provides is the chance to sue in federal court.

Those who choose to fight the insurance companies wait years. Plaintiffs waited two years and eight months on average from the time they became disabled before their cases resolved, the Daily Journal found. One man has been waiting 10 years for benefits.

In nearly half the cases reviewed by the Daily Journal that reached court, judges find that the insurance companies had no basis to deny benefits. Judges who consider the companies' patterns of practice side with workers even more often, one survey found, nearly 70 percent of cases.

Because federal law does not allow for any damages, there is no peril for the insurance companies to repeatedly deny legitimate claims. Judges often find that the insurers wantonly denied or arbitrarily stopped paying benefits to disabled workers. Yet the most the companies will have to pay is the original amount, plus, in some cases, legal fees.

George tells the story of victim after victim with dispassionate detail. One woman, Jocelyn Guevarra, worked for the insurance company CIGNA for 15 years, much of that time reviewing claims from people who were hoping to receive disability insurance payments. In a cruel irony, the company hired an investigator to help it deny Guevarra's claim for benefits after her doctors told her that her arthritis and chronic pain problems were too severe to allow her to continue to work. CIGNA said that footage of her helping her mother out of a car was proof-positive that she was not disabled.

Donald B., a 52-year-old military consultant, and retired soldier, suffers from a bowel disease that forced him to have his colon and rectum removed.

Five surgeries later, he had lost nearly a hundred pounds and said he was convinced that he was going to die.

"If I got any sleep it was because I decided to sleep in my own filth, which I did," B. said. "Psychologically I was wrecked. I was completely disabled."

His physicians and the Social Security Administration agreed.

His insurer, MetLife, did not. After initially paying the claim, it terminated his benefits saying he should be fully recovered.

The Daily Journal also provides powerful numbers to back up the story and quotes directly from company emails, memos and other internal records.

How did George get access to all this great material? He spent a lot of time in court, talked to attorneys and regulators on all sides of the issue and dug into the details of what these patients' policies promised and what they received.

It makes sense for a newspaper devoted to the legal industry to have strong connections in the legal community. But George went beyond what the lawyers told him. He took what he found in nearly 600 cases filed in federal court and made sense out of it by logging it in a database and calculating various trends. For example, he was able to show that MetLife had been sued more than any other company, 177 times between 2004 and June of 2009.

MetLife had 30 percent of the lawsuits filed recently against the seven most prolific disability insurers in the state, but only 12.2 percent of market share as measured by premiums this year.

The next most sued company was Unum with 109 complaints, 19 percent of filed against the busiest insurers and 17.8 percent of market share. The Hartford faced 95 lawsuits, 16 percent of the lawsuits reviewed, but 13.6 percent of the market.

Those three companies sell the most disability insurance policies nationwide, according to a 2008 study by industry research group JHA. George also found that, of the lawsuits that made it to a trial, judges found that insurers wrongly denied benefits in 45 percent of cases.

Disability insurance is a rich and mostly untapped area for health writers. The Daily Journal's investigation focuses on California. There are 49 other states. Go to it.