A Federal judge in Missouri has determined that Sun Life acted unreasonably, where it sought to apply a pre-existing limitation clause in its long term disability insurance policy to deny coverage to a claimant. Often, ERISA group LTD policies have provisions which will serve to bar coverage for long term disability insurance, even where a claimant receives the full amount of short term disability coverage.
Here, the Sun Life policy had a pre-existing limitation clause, which permitted Sun Life to evaluate whether the claimant had received medical treatment, care or services, including diagnostic measures, or took prescribed drugs for the disabling condition during the three month “look back” period prior to the insured’s effective date of coverage, as the claimant became disabled within the first twelve months of coverage.
The claimant had suffered from a progressive eye condition, retinitis pigmentosa, for nearly twenty years prior to filing the disability claim. He had taken significant amounts of a non-prescribed over the counter supplement at his doctor’s recommendation, but had not visited any doctor or medical facility during the look back period.
Sun Life first determined that the claimant was not disabled, but then, after agreeing he was totally disabled, took the position that coverage was limited by the pre-existing limitation in the policy. Sun Life sought to rely upon the use of the supplement as evidence that the pre-existing limitation applied and benefits were limited.
The Court determined that Sun Life’s interpretation of the policy language to limit coverage was improper, and inconsistent with the language of the provision. The Court thus ordered Sun Life to pay benefits to the claimant, but kept open issues relating to pre-judgement interest and other relief.
If you are unable to continue working and have not completed twelve months of active employment with an employer, it is possible that your insurer will seek to apply a pre-existing limitation provision to bar or limit coverage. Careful consideration to these issues is of paramount significance.
Kutten v. Sun Life