Misrepresentation By Claimant Results in Unum Disability Claim Denial

Unum disability claimants need to be aware that when filling out an application for disability insurance benefits it is necessary to disclose your medical history accurately and to make sure your insurance agent is doing the same. Should the insurance company discover a material misrepresentation, the policy could be rescinded, and the claimant could be required to pay back any and all benefits previously paid and then be subject to a fraud investigation. The disability carrier must be able to prove that a misrepresentation was fraudulent. Let’s take a look at recent court decision from Michigan in which a Unum disability claim denial was upheld due to a misrepresentation while applying for a UNUM disability policy.

Plaintiff applied for disability insurance with help from his insurance agent. Plaintiff initially left unanswered the medical portion of the application. Subsequently, the application was filled out by the agent answering all questions “no” except for one which asked “have you ever been diagnosed or treated for disorders of the spine.” Unum’s representative called the Plaintiff and asked him what the answer was to that question and he stated the answer was “no”. Based on that info, Unum issued the policy to the Plaintiff. The policy contained an “incontestability clause” which prevented Unum from denying benefits because of a misstatement or omission on the application 2 years after the policy effective date, with an exception for fraudulent misstatements or omissions. Plaintiff filed a claim 2 years and 3 weeks after effective date for a disease of the spine. The APS from his physician revealed that he saw the Plaintiff nearly a year before he applied for the policy. Unum’s investigations revealed that the claimant had sought treatment back in 2008. Unum denied disability benefits and rescinded his policy.

Plaintiff hired a Michigan disability attorney (not Dell & Schaefer) and sued Unum for his benefits and the agent for malpractice. The District Court granted summary judgment to Unum agreeing that there was material misrepresentation as well as to the agent (Correa) as the suit was filed beyond Michigan’s statute of limitation. The Michigan Court of Appeals affirmed the lower court’s decision stating that Unum would not have issued the policy had it known about the Plaintiff’s medical history as Unum suffered an injury when it relied on Plaintiff’s misstated medical history.

Our firm handles Unum disability claim denials on a daily basis and we always offer a free consultation to discuss your claim options.

Comments (2)

  • Willette,

    Pre-existing condition is a very common reason for a disability insurance company to deny benefits. You must file your appeal within 180 days and that deadline appears to be approaching quickly. Please contact us immediately and we will take a look at your denial letter to see if we can help you.

    Gregory Dell Dec 11, 2012  #2

  • I took out a short/long term disability policy 11/2011 (during my employment and early enrollment) and was not required by the insurance company to provide my medical history/background at the time. Premiums were deducted from my payroll beginning 01/2012 through 05/2012. However, I became disabled in 05/2012 (with emphysema) and could no longer work; prior to that I was working full time with the company but was unaware that I had emphysema until I began experiencing breathing problems and sought medical treatment for my symptoms which ultimately led to my resigning from my job because of the emphysema. I filed my disability claim with the insurance company in August 2012 but was denied because the company felt my condition was pre-existing. Am I entitled to those disability benefits or a refund for all funds deducted from my payroll while I was employed? I have 180 days to appeal the decision which I anticipate doing. It has now been 120 days. Your response is greatly appreciated.

    Willette Graham Dec 10, 2012  #1

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Dell & Schaefer Client Reviews   *****

Pat (Florida)

My experience with Dell & Schaefer, especially attorney Cesar Gavidia and his staff was excellent. I contacted Dell & Schaefer when I needed help as my disability insurance carrier terminated my benefits at the 2 year mark of my disability. I spent about 2 months putting together what I thought may be a decent appeal of that decision. However, the further I got into the workings and gaining some understanding of how the appeals worked under ERISA, I realized there was a lot at risk and only had one shot at it. I sought advice from an immediate family member who is also an attorney and was advised “get a firm that specializes in this type of work, then get the best”. Hence my decision to chose Dell & Schaefer.

Upon acceptance of my case, I felt that I was the center of attention for Attorney Gavidia. I had already used up 1/3 of the 180 days allotted to file the appeal working on my own so we were in a bit of a time crunch. Hundreds of pages of medical records the detail of the termination of benefits, my disability policy and several other different documents were delivered to attorney Gavidia. In short order those documents were reviewed and our strategy of appeal was discussed and developed. Necessary appointments and evaluations were coordinated and our appeal was submitted before the 180 days had expired. At the 45 day mark my insurer requested a 45 day extension on the decision. I was advised by Mr Gavidia’s assistant Michal who reassured me that this happens in most appeals. At the 90 day mark we received a favorable decision on the appeal, benefits were reinstated and back pay was awarded, but the story was not over.

After the initial termination of benefits by my insurer, I was alienated and expressed my desire with attorney Gavidia to try and find an amicable separation for all parties. Attorney Gavidia tactfully used some facts and disputes of the initial claim to open conversation with the insurer’s attorneys. He developed a dialog proposing, although I remain totally disabled as defined by my plan, a lump sum buy out of my future monthly disability benefits. Attorney Gavidia was successful in reaching an agreement that was acceptable to all parties and made sure that I had the final say on acceptance or not.

Thus, working with Dell & Schaefer I had my benefits, which had been terminated, restored, received back-pay for benefits that were withheld and missed, and successfully and satisfactorily “divorced” from my insurance provider in the form of a lump sum buy-out of my future disability benefits.

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