If You Can Afford It, Then You Should Only Buy An Individual Disability Insurance Policy

In the case of Fleisher v. The Standard Insurance Company filed in New Jersey Federal Court, the court recently rendered a decision which can have a negative impact for numerous physicians and other business professional that have Group Association Policies and also have an ERISA governed group policy from their employer. Numerous medical, dental, legal, accounting, nursing and other professional associations across the country offer a group disability insurance policy to all of their members. These policies are almost always exempt from ERISA, which is a great, but these association disability policies according to a recent New Jersey Federal Court opinion are not considered individual disability policies and can be considered a deductible source of income against other disability policies. Whenever possible a person looking for disability coverage should buy an individual policy from a licensed insurance agent. The price may be higher, but you always get what you pay for. Disability insurance policies sold by associations can still be good, but the case I will discuss below is a limitation that must be considered when buying disability coverage.

This article summarizes a disability Case where the court was asked to determine whether a “franchise insurance” policy can be considered “group insurance” and thus be used as an offset by the insurance company. Court agreed with Standard that the plaintiff’s other policy can be deducted.

Case Facts

Plaintiff alleges that Standard improperly reduced disability benefits by subtracting benefits he received under a separate policy issued by North American Insurance. Standard claims the deduction was proper b/c the policy provides for the subtraction of benefits received under “other group insurance coverage,” and the North American policy qualifies as “group insurance.”

Standard’s Policy provides that Standard has “full and exclusive authority to control and manage the Policy, to administer claims, and to interpret the Policy and resolve all questions arising in the administration, interpretation, and application of the Policy.” In that regard, Standard’s “authority includes, but is not limited to,… the right to determine: …eligibility for insurance; …entitlement to benefits; …the amount of benefits payable; and… the sufficiency and the amount of information Standard may reasonably require to make those determinations.”

Plaintiff argues that the North American policy, which was issued through the American Association of Endodontics, is most appropriately characterized as “individual insurance,” b/c (1) it was individually underwritten for Plaintiff; (2) Plaintiff paid the premiums directly; (3) Plaintiff “enrolled directly”; (4) Plaintiff submits claims directly to North America; (5) North American issues Plaintiff individual billing statements; and (6) the policy automatically renews at the end of each term.

Plaintiff asserts individual and class claims for breach of contract and breach of fiduciary duty under ERISA.

Insurers have developed two subsets of collective insurance products: (1) Group Insurance: an arrangement by which a single insurance policy is issued to a central entity-commonly an employer, association, or union-for coverage of the individual members of the group; and (2) Franchise Insurance: where all members of the group receive individual policies.

Holding: Because the North American policy bears the characteristics of a kind of collective insurance called “franchise insurance,” and because the phrase “group insurance coverage” can reasonably include franchise insurance, the Court finds no basis to disturb Standard’s interpretation or application of the Standard policy.

The North American policy is certainly not a pure individual policy because it plainly states that it was issued pursuant to a group policy held by AAE. Thus, it was not unreasonable for Standard to conclude the North American policy was not an “individual policy” exempt from deduction.

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We represent Standard clients nationwide and we encourage you to contact us for a FREE immediate phone consultation with one of our experienced disability insurance attorneys.

Can you help with a Standard disability insurance policy?

Our disability insurance lawyers help policy holders seeking short or long term disability insurance benefits from Standard. We have helped thousands of disability insurance claimants nationwide with monthly disability benefits. With more than 40 years of disability insurance experience we have helped individuals in almost every occupation and we are familiar with the disability income policies offered by Standard.

How do you help Standard claimants?

Our lawyers help individuals that have either purchased a Standard long term disability insurance policy from an insurance company or obtained short or long term disability insurance coverage as a benefit from their employer.

Our experienced lawyers can assist with Standard:

  • ERISA and Non-ERISA Appeals of Disability Benefit Denials
  • ERISA and Non-ERISA Disability Benefit Lawsuits
  • Applying For Short or Long Term Disability Benefits
  • Daily Handling & Management of Your Disability Claim
  • Disability Insurance Lump-Sum Buyout or Settlement Negotiations

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Yes. We are a national disability insurance law firm that is available to represent you regardless of where you live in the United States. We have partner lawyers in every state and we have filed lawsuits in most federal courts nationwide. Our disability lawyers represent disability claimants at all stages of a claim for disability insurance benefits. There is nothing that our lawyers have not seen in the disability insurance world.

What are your fees?

Since we represent disability insurance claimants at different stages of a disability insurance claim we offer a variety of different fee options. We understand that claimants living on disability insurance benefits have a limited source of income; therefore we always try to work with the claimant to make our attorney fees as affordable as possible.

The three available fee options are a contingency fee agreement (no attorney fee or cost unless we make a recovery), hourly fee or fixed flat rate.

In every case we provide each client with a written fee agreement detailing the terms and conditions. We always offer a free initial phone consultation and we appreciate the opportunity to work with you in obtaining payment of your disability insurance benefits.

Do I have to come to your office to work with your law firm?

No. For purposes of efficiency and to reduce expenses for our clients we have found that 99% of our clients prefer to communicate via telephone, e-mail, fax, GoToMeeting.com sessions, or Skype. If you prefer an initial in-person meeting please let us know. A disability company will never require you to come to their office and similarly we are set up so that we handle your entire claim without the need for you to come to our office.

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When you call us during normal business hours you will immediately speak with a disability attorney. We can be reached at 800-682-8331 or by email. Lawyer and staff must return all client calls same day. Client emails are usually replied to within the same business day and seem to be the preferred and most efficient method of communication for most clients.

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