How to Approach Long-Term Disability Insurers Evading Bans on Discretionary Clauses

People in Chicago and the rest of Illinois with long-term disability insurance receive great protection from the Illinois Department of Insurance banning discretionary clauses in disability and health insurance policies. 50 Ill. Adm. Code § 2001.3. The problem is that insurers always try to avoid its application, despite the regulation being around for a long time. They produce a certificate of insurance that shows the original issue date, and it often contains an anniversary date, but it never states when the policy renews, which would trigger the ban even in older policies. Plaintiffs and their lawyers all too often fail to show the policy renewed. But here are some easy steps to stop the long-term disability insurance company from evading the regulation.

Check the Policy and Certificate for Any Reference an Anniversary Date

If the policy or certificate contains any reference to an Anniversary Date, there is a high likelihood the policy renewed.

Check the Policy and Certificate for Any Reference to Future Renewal

If the policy or certificate contains any reference to a future renewal, even if it does not specify the date, there is a high likelihood the policy renewed.

Seek Discovery into Whether the Policy Renewed

This is the step where too many lawyers (even ones experienced in long-term disability litigation) often fall short. They assume just because the policy references an anniversary date or renewal, the Court will find the policy in fact renewed. This happened recently in Roebuck v. USAble Life, No. 19-1855, 2021 WL 1216217 (8^th Cir. Apr. 1, 2021). The lawyers merely argued the reference to a first renewal, without any date, was enough to trigger the regulation, but it wasn’t.

What Discovery to Seek

If the policy or certificate contains any reference to an Anniversary or possibility of Renewal, the lawyer must seek limited discovery into information regarding whether the policy renewed. In the insurance industry, insurance companies have to reprice the insurance periodically based on experience. Their underwriting department will review a claim history to determine if the premiums need to increase, and the employer may use this data to argue for a cost decrease. There is never a new document executed titled “Renewal.” So the lawyer must request targeted communications between the insurer’s underwriting department and the employer with any reference to Renewal.

How We Have Succeeded

Unlike most of our competitors who fall short, we accomplished this in one of our cases, Ferrin v. Aetna Life Insurance Co., 336 F. Supp. 3d 910 (N.D. Ill. 2018). Despite the insurer arguing the policy did not renew, we uncovered close 88 unique communications regarding a renewal date to reset the premium amount. We synthesized those communications in a table for the Court, equipping the court to easily find our client received protection from the regulation.

If your claim for long-term disability insurance has been denied, get the right long-term disability lawyer on your side who will go the extra mile to protect you.