Frances applied for an Unumprovident short-term disability policy through her employer but the company—one of the largest disability insurance providers in the United Sates—said she had a pre-existing condition so Frances was denied benefits. Interestingly, she also applied to another insurer who accepted her.Unum denied Frances because she went to her doctor for back pain and was prescribed a pain medication one month prior to applying for an Unum policy. "In 2000, I had emergency surgery for a herniated disc and the day after surgery I was back at work with my walker," Frances explains, "and I have been working ever since, even with neuropathy and chronic pain.
But this June she was diagnosed with Cauda equine syndrome, a very rare and serious neurologic condition in which there is acute loss of function of the nerve roots of the spinal canal. "I am an incomplete paraplegic," says Frances, "and my original neurosurgeon neurosurgeon obviously didn't know about, or recognize this syndrome. The final diagnosis was from the social security benefits doctor. How could I have had a pre-existing condition when they didn't know what it was? And I worked up until February 25th, 2008. I worked 40 hours a week. How can they deny me?
"Unum's policy states this: If your doctor treats you within 6 months of your application, they consider it a pre-existing condition. But if you don't see a doctor, it is also considered a pre-existing condition. So I am in a Catch-22 situation because to maintain my health I had to see a doctor for back pain and they used that as a pre-existing condition.
I sent Unum the application for short term disability (STD) benefits and they denied me just 6 hours later. Then appealed their denial and they denied my appeal. I believe they were angry because I have full medical evidence that I had a congenital problem that led to this syndrome. And a genetic condition cannot be held against someone; a policy cannot be turned down for congenital conditions. But they ignored that.
They also told me my policy wasn't valid for the HIPPA (The Health Insurance Portability and Accountability Act) because I fall under ERISA, except when I did some research, ERISA has an exception: if you meet four conditions, it is covered under state law. Under ERISA a company can deny your benefits and it can take up to 8 years to get them reinstated but all you get is what the company didn't pay originally—in other words there are no penalties. This means it is cost-effective for an insurer like Unum because how many people will pursue their claim after being denied for 8 years? Unum bets that you will just give up."
Frances has done her homework: she cites the following exceptions to ERISA:
- No contributions are made by an employer
- Participation in the program is completely voluntary
- Sole function of the employer without endorsing the program to permit the insurer to publicize the program and to collect premiums through payroll deductions
- Employer receives no consideration
In August Unumprovident lost a $60 million lawsuit in Nevada because it had denied an individual's long term disability policy. That was the same day I got my denial. [A Nevada jury first returned a verdict of $11.65 million in Paul Revere's case, but Unum appealed and a new trial was ordered "based upon certain legal errors. The second trial focused solely upon the proper punishment for Unum and Paul Revere, based upon their longstanding scheme to improperly deny and terminate legitimate disability claims."]
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Regarding her pre-existing condition, Frances has again done her homework:
"Preexisting condition" means a condition, regardless of the cause of the condition, for which medical advice, diagnosis, care or treatment was recommended or received during the 6 months preceding the effective date of the new coverage. The term does not include genetic information in the absence of a diagnosis of the condition related to such information."
On what legal grounds can Unum deny Frances?