In a decision from the United States Court of Appeals for the Second Circuit, the Court reversed a decision on a disability matter that is interesting for its fact pattern as well as result. An extreme simplification of the decision: because of specific tenants of law in Pennsylvania, if an insurance agent makes representation about a policy and says it provides certain types of coverage that is later found to be inconsistent with the policy, the insured is entitled to that coverage. It does not matter whether or not the insured’s actually read the policies to ensure that the coverage was in place.
In the matter of Nunn v. Massachusetts Cas. Ins. Co., No. 12-3712-cv (2d Cir. Feb. 24, 2014), Ronald Nunn and Donald Vaden, both National Basketball Association referees, purchased disability insurance at a union meeting that took place at a refer training camp hosted by the National Basketball Referees Association. The Massachusetts Casualty Insurance representative gave a presentation on a supplemental disability policy offered by Mass Casualty, and described a supplemental disability policy that he had implemented for umpires with Major League Baseball.
Presented as a disability insurance expert with many years of experience, the agent made it very clear that the coverage included “own occupation” – if policy owners were unable to work as NBA officials, regardless of the extent of disability. The point was repeated several times before the group. The representative helped Nunn and Vaden complete their policies by telephone, and signed both.
Neither man read the policies to find out whether or not the coverage was as Lucas had stated. It’s fair to say that most people do not read complex insurance policy contracts, particularly when a representative presented as an expert has explained what they contain.
The policies that were actually purchased contacted a completely different definition of what “total disability” was. The coverage provided for “own occupation” was only good for five years, not until age 65. At that time, it became an “any occupation” policy.
Both men subsequently suffered injuries and after five years, the payments stopped and litigation began. The Court’s decision emphasized that Pennsylvania law has a strong reasonable expectations doctrine that protects policyholders when making determinations of insurance coverage. These doctrines are not limited to Pennsylvania – New York, New Jersey and Louisiana courts all recognize this doctrine and use it routinely to protect policy owners. In our experience, this is not an easy legal theory to defend, particularly in disability insurance matters, but it is an important one. Courts recognize that people often purchase insurance based on the representations of agents and companies, and when the terms of the policy are not accurate, the expectations doctrine may arise.
If you have purchased a disability insurance policy based on verbal assurances that turned out not to be included in the policy, call our office at 877-LTD-CLAIM (877-583-2524). Bear in mind that there are now severe time limits on disability insurance policy claims, so if you think you may have a problem, don’t delay.
Justin C. Frankel is committed to fighting for the rights of clients when their long term disability insurance claims have been denied, delayed or terminated.
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