Texas Insurance Commissioner eliminates discretionary clauses in disability insurance policies

On December 6, 2010 the Texas Commission of Insurance adopted a new rule which prohibits discretionary clauses in disability insurance policies. This is a major victory for disability insurance claimants and hopefully a trend that will continue in every state. The discretionary clause is a contractual term in a disability insurance policy that provide insurers with sole discretion in deciding if, when, and what benefits are due under the insurance policy. These clauses are only detrimental to a claimant if the policy is governed by ERISA. The existence of a discretionary clause limits the way that a Court can review a disability claim denial and makes it extremely difficult for a court to conduct a fair review of a disability claim. The Texas Insurance Commissioner stated, “the discretionary powers of insurance companies are unjust, encourage misrepresentation and are deceptive because they mislead consumers regarding the terms of coverage” in their policies.

The elimination of the discretionary clause will allow the courts to take a fresh look at any claim denial and make a determination without any deference to the disability insurance company. The elimination of the discretionary clause is not a cure of the ERISA restrictions, but it is certainly a major step in the right direction.

The new rules take effect on February 1, 2011 for some types of disability insurance, and June 1, 2011 for all other forms of health, life, and disability insurance policies issued in Texas. According to the Texas Office of Public Insurance Counsel twenty-three states and the National Association of Insurance Commissioners have now adopted statutes, rules, or policies prohibiting discretionary clauses.

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  • Hello: I contacted my current employer’s private disability for the purpose of providing funds in case my current disabilities (for which I have an ongoing workers comp.case). I spoke with a rep where I shared that I had both the pre-existing injuries and an ongoing workers comp.case. He told me that The Hartford Ins. accepts clients like myself. Premiums were deducted from my salary. When my injuries got so bad, my M.D. wrote a letter stating that he ordered me to go on short -term disability. I provided this note to HR. Soon afterward, I was denied my benefits because of my ongoing workers comp. against my former employer. (1) I want a total refund of my premiums (2) I want the monies I promised. Because I did not receive such funds, I had a short-sale, and now a poor credit score. Much later, they send me a print-out regarding the denial. It states that one cannot collect if there’s an ongoing w/c case. However, it requires interpretation. This makes sense only if the ongoing w/c is with my current employer, not my former. Texas changed its disability law to allow those with my situation to collect if the w/c is with another employer, like mine.

    Deborah SheimanFeb 11, 2011  #1

FAQ

Do you work in my state?

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.

How can I contact you?

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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Beverly M. (Virginia)

I live in rural south side Virginia and it was impossible for me to locate a firm that would be able to help me appeal my employee long term disability claim denial. After numerous attempts and failures to locate someone who would take my case, I took my search to the internet. I was hesitant in contacting a law firm via the internet, considering the ones qualified to take my case were all out of state. The search was time consuming, but after searching numerous law firms, contacting some of them and rejecting them, I decided to call Dell & Schaefer.

By the time I contacted Dell & Schaefer I only had three months left to file my appeal. I was promptly interviewed, accepted as a client and Rachel Alters was assigned as my lawyer. Ms. Alters worked closely with me, and was diligent in completing my appeal, and was able to accomplish the submission in a timely manner. Approximately one month after the appeal was completed Ms. Alters notified me she had won the case without going to court.

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