Recently, we appealed a claim denial issued by The Standard. The claim had been denied because the insurance carrier had determined that the claimant’s condition was caused or contributed to by a pre-existing condition.
This is not an unusual basis for a long term disability claim denial. However, upon further review, we determined this pre-existing denial was a bit…unusual. The Standard attempted to apply the pre-existing condition exclusion despite the claimant not receiving treatment for the alleged “pre-existing condition” during the 90-day look-back period.
Reason for Denial
In short, although the claimant had not received medical treatment or services, prescribed drugs or medications, or medical consultations during the 90-day “lookback” period, the insurance company argued that a “prudent person” with the same condition would have followed up with their treating provider during the look-back period. The insurance company even had a “consulting physician” review the medical records and provide an opinion that the claimant “should have” obtained treatment during the “lookback” period.
The insurance company then said that the “pre-existing condition” exclusion would apply to deny the claim because the claimant did not follow up as recommended by the claimant’s treating provider, and a prudent person would have followed up for the same condition.
In its denial, The Standard concluded that the condition was considered a Pre-existing Condition and would not be covered by The Standard.
The Pre-Existing Condition Exclusion Does Not Apply
The Standard really went out of its way to apply the Pre-existing Condition exclusion from coverage clause here. The clause states:
C. Preexisting Condition
Preexisting Condition means a mental or physical condition whether or not diagnosed or misdiagnosed:
- For which you have done or for which a reasonably prudent person would have done any of the following:
- i. Consulted a physician or other licensed medical professional;
- ii. Received medical treatment, services, or advice;
- iii. Undergone diagnostic procedures, including self-administered procedures;
- iv. Taken prescribed drugs or medications;
- Which, as a result of any medical examination, including routine examination, was result discovered or suspected;
at any time during the 90-day period just before your insurance becomes effective.
This was a really stretched application of the “prudent person” standard. Without revealing the details of the claimant’s medical conditions, let’s say that someone in the claimant’s shoes would have sought treatment if they thought it would save their life.
Even if the clause may apply — all of the requirements to apply the exclusion were not met in our claim.
As the District Court for the Northern District of Alabama held in Morgan v. Standard Insurance Company, Case No. 4:08-cv-00504 (N.D. Ala. Apr. 30, 2009), “Because the definition contains no conjunction between part a. and part b., the court must assume that both parts are necessary to the definition. The court finds that Morgan’s hypertension also meets part b. of the definition because Dr. Bishop’s February 2006 notes refer to her hypertension, and he prescribed a drug during that month to treat her hypertension; thus, he had certainly discovered and/or suspected that she had hypertension based on a routine examination”. [Note: the February 2006 visit was during the lookback period.].
Under the definition above, the claimant must have a mental or physical condition “Which, as a result of any medical examination, including routine examination, was result discovered or suspected; at any time during the 90-day period just before your insurance becomes effective.”
Therefore, part b. has not and cannot be met under a pre-existing condition exclusion definition as set forth above when the claimant did not have a visit at any time during the lookback period.
Because both part a. and part b. are necessary to the definition of pre-existing, the pre-existing clause does not apply.
The Standard overturned its denial on appeal. The insurance company confirmed that it could not find that it can definitively state that a reasonably prudent person would have followed up during the specific 90-day time period in question.
As such, based on the documentation on file, The Standard found that the Pre-existing Condition Exclusion did not apply to the claimant’s disability.
In short, as a result of our efforts, the claim was approved, and the claimant received the long term disability benefits they deserved.