Insurers Get Hoodwinked Too, but Bad Faith Insurance Still Reigns

Los Angeles, CAWithout a doubt, there are those who try to pull the wool over the eyes of insurance companies and collect benefits under fraudulent circumstances. For that reason, insurance companies must remain diligent in order to root out the fraudsters while maintaining a welcoming stance for legitimate claimants who have paid their premiums faithfully and are in need of long-term disability benefits through no fault of their own. And yet, Wrongly Denied Disability Claims continue to cloud relationships between policyholders and their insurers.

An example of what can go on from both sides of the fairness ledger is best illustrated through recent events involving Unum, one of the largest insurers in the country with a 16.2 percent market share. Unum got there by being a leader in the insurance industry. But the company has also been dogged by allegations of bad faith insurance that go back years. It’s an example of behavior generally observed by all insurance companies in one form or another, typified by the blanket denial of an insurance claim unless the claimant can prove beyond a reasonable doubt that the claim is legitimate.

It’s akin to the notion that any American charged with a crime is presumed guilty unless proven innocent. That’s not the way juris prudence works, which holds that an individual shall be presumed innocent unless proven guilty. The insurance industry, it seems, turns that basic tenet on its head.

That said, insurance companies get taken to the cleaners too, which can be illustrated by what recently happened to market leader Unum. Recently, detectives with the California Department of Insurance (CDI) arrested two individuals over charges of health care disability fraud. According to States News Service (3/19/15), a Los Angeles-based doctor and his adopted son, proprietors of a dermatology center, were alleged to have collected in excess of $1.8 million in disability benefits while continuing to work and practice medicine.

According to the report, Dr. Glenn Neil Ledesma submitted a disability claim to Unum in 1997 over an inability to treat patients due to a medical condition. At the time, Unum told Dr. Ledesma that in order to receive benefits he could not treat patients or practice medicine, but that he could continue to operate his clinic, California Dermatology Center Inc. The report assumes that Ledesma successfully collected disability benefits under those terms until 2008, when it has been reported that he resumed his practice while continuing to receive benefits. It has been reported that between 2008 and 2013 he collected $1,605,464 in disability benefits from Unum under false pretenses. Ledesma’s adopted son was also accused of collecting in excess of $200,000 in benefits fraudulently.

And so, it seems insurance companies get hooked too.

Yet there remain accusations of bad faith insurance and Denied Disability Claims amongst insurance providers.

With Unum, a resident of Michigan filed a Long term denied disability lawsuit against Unum when his LTD benefits were stopped. The plaintiff, the owner and operator of an auto parts business, experienced a series of economic hardships that led to chronic depression requiring hospitalization. Two psychiatrists independently pronounced the plaintiff as permanently disabled and unable to work.

The bad faith insurance lawsuit claims that Unum commenced LTD payments in 2009 upon the plaintiff’s release from the hospital, only to abruptly stop benefits in 2013, claiming the plaintiff was not, in Unum’s view, disabled and thus could duly perform the duties of his occupation. The plaintiff’s appeal to Unum, in spite of sound medical evidence, was not successful.

Unum is not the only bad guy. Bad faith insurance lawsuits abound, against dozens of well-known insurers.

The plaintiff’s Long term denied disability lawsuit is Case No. 1:15-cv-00238-GJQ, in the US District Court for the Western District of Michigan, Southern Division.