Decoding Preexisting Conditions: A Comprehensive Guide for Disability Claimants – Employment Benefits and Compensation

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Group disability insurance offers financial protection by providing income replacement when an individual is unable to work due to illness or injury. Still, these policies can be tricky to navigate, especially because of what is often included pre-existing condition exclusions. These exclusions limit coverage for conditions that existed prior to the policy’s effective date, often leading to unforeseen obstacles and claim denials. In this article, we aim to demystify the nuances of pre-existing disability exemptions and provide you with basic knowledge and advice on how to effectively navigate these challenges.

What are the preconditions?

A pre-existing condition refers to any health problem, injury or illness an individual had before obtaining insurance coverage. The goal of pre-existing policy exclusions is to prevent individuals from securing coverage after discovering or expecting a condition that could result in a disability claim.

Pre-existing condition exclusions feature

Exclusion of Preexisting Conditions serves insurance companies as a means of risk management. They help prevent adverse selection, where individuals may obtain coverage knowing they are at imminent risk of disability due to a pre-existing condition.

These exclusions can usually limit coverage to a certain period after the effective date of the policy. During this period, the policy may not cover disabilities caused by pre-existing conditions. However, once this waiting period has passed, coverage for pre-existing conditions can begin.

Ambiguity in pre-existing condition exclusion language

One of the main points of contention in legal cases involving pre-existing condition exclusions is the ambiguity of policy language. If the wording of the exclusion is vague or open to interpretation, courts tend to favor the insured.
Ambiguous language could lead to a broader interpretation of the coverage, which could favor the insured’s claim.

The pre-existing condition must be known or suspected

Disability insurers will sometimes try to expand the pre-existing condition exclusion language to include treatment for conditions that were not diagnosed or suspected during the lookback period. For example in Lawson ex rel. Lawson v. Fortis Ins. spol.301 F.3d 159, 165 (3d Cir. 2002), defendant insurer denied coverage to plaintiff cancer diagnosis because during the look-back period she received treatment for a respiratory infection that later turned out to be related to her cancer diagnosis. The Third Circuit Court of Appeals held that the insurer abused its discretion because a patient cannot receive treatment “for” a condition that is neither diagnosed nor expected, and where the treatment offered was wrong for the cancer patient.

Similarly in Jug v. Main Mut. LifeIns. spol.93 F.3d 407 (7th Cir.1996), the Seventh Circuit held that an insurer abused its discretion when denied disability benefits of a breast cancer patient who underwent a mammogram during the look-back period, finding that the mammogram was not “for” breast cancer, but rather to monitor her long-term fibrocystic breast condition. The court further noted that mammograms are not “treatment” but rather a diagnostic procedure.

Proximate causation is required

Disability insurers cannot interpret a pre-existing condition exclusion in an insurance policy so broadly as to include complications arising from the pre-existing condition. in Fought v. UNUM Life Ins. What. of Am., 379 F.3d 997 (10th Cir. 2004), the defendant insurer denied coverage to the plaintiff because of a staph infection that resulted from elective heart surgery she underwent during the lookback period. The Tenth Circuit held that the prior decision was an abuse of discretion because it relied on the classic but/for causation when proximate causation is required.

Policyholders’ Responsibilities Related to Pre-Existing Conditions

Policyholders are required to disclose their medical history exactly when application for disability insurance. Failure to disclose pre-existing conditions may result in claims being denied if those conditions result in disability during the exclusion period.

Get legal advice about pre-existing disability exemptions

In cases where disputes over disability benefits arise as a result of the application of pre-existing exceptions to the terms and conditions, seeking legal advice is essential. Year experienced disability insurance attorney can help interpret policy language, assess the validity of claim denials, and defend policyholder rights.

Exclusion of Preexisting Conditions in group disability insurance, it serves as a key element for insurers in risk management. However, the interpretation and application of these exceptions can be contentious, particularly in cases where the language is ambiguous or subject to multiple interpretations. Policyholders should carefully review policy terms and seek legal assistance when faced with a denial of a claim based on pre-existing exclusions to ensure fair treatment and a proper understanding of their coverage rights.

Originally published on December 19, 2023

The content of this article is intended to provide a general guide to the issue. Professional advice should be sought regarding your particular situation.

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