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 Should the insurance company discover a material misrepresentation, the policy could be rescinded, and the claimant could be required to pay back any and all benefits previously paid and then be subject to a fraud investigation.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 Unum denied disability benefits and rescinded his policy.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.