Northwestern Mutual’s Website Shows How Disability Insurers Interpret and Apply “Own Occupation Coverage”

Northwestern Mutual Life Insurance, a major disability insurer for dentists and physicians, has recently created a new website, the “Disability Income Insurance Knowledge Center.” Northwestern claims that this website will assist policyholders in understanding the terms of their own-occupation disability insurance coverage.

These “own occupation” policies are often marketed as allowing physicians and dentists to receive their full insurance benefit even if they continue working in another occupation, as long as their disability prevents them from practicing medicine or dentistry. They even often specify that the insured’s specialty is considered his occupation and if he can not longer perform the duties of his specialty, he can collect on the policy even if he can practice general medicine or dentistry.

For example, a pediatric surgeon who develops a hand tremor may remain a capable doctor but is no longer capable of performing surgery. His principal medical duty of pediatric surgery (i.e. surgery) is now impossible. Logically, he is disabled from his occupation as a pediatric surgeon. Northwestern’s new website, on the other hand, features a “Fact or Fiction” quiz where it offers a unique interpretation of what own occupation provisions mean. Northwestern’s conclusions do not consider the nuances of a disability claim and are gross simplifications. They ignore differences in policy language and the Arizona law which has interpreted these provisions. It appears that Northwestern’s website is intended to dissuade insureds with legitimate disability claims from pursuing their benefits.

This website offers insight into how disability insurers view an insured’s occupational duties and deny claims. One sample question and answer:

Statement: If I could not perform my principal medical duty, the one that’s my “bread and butter,” I’d be considered totally disabled under an “own occ” policy.

Northwestern Mutual: FICTION. “To be totally disabled under traditional ‘own occ’ disability income insurance definitions, you would have to be unable to do ALL of your principal duties.”

Arizona law begs to differ. Depending on the policy’s terms, a physician or dentist may be considered totally disabled if he cannot perform any substantial part of his ordinary duties in his usual and customary manner. In one case, an invasive cardiologist who was no longer able to perform invasive procedures—a substantial part of her original duties—but who continued to work in non-invasive cardiology was found totally disabled under an own occupation policy. For its bad faith denial of her disability claim, the jury awarded the cardiologist $84.5 million.

This raises an important issue, however. Many words and phrases are defined in a policy, but “principal duties” is generally not defined. Insurers use this to claim that incidental duties, such as patient consultation, are principal duties. They thus render worthless own occupation coverage, as absent a catastrophic injury, the insurer could always find that there was some duty of the insured’s prior occupation that the insured is still capable of performing. Thankfully Arizona courts have refused to permit insurers to manipulate the meaning of “principal duties” in this manner. As one court noted, “[f]ew specialty occupations could survive such piecemeal scrutiny. If separated into an hour-by-hour analysis, only asking the question whether these tasks are also performed in a more general setting, specialists who choose to continue to work in a more general practice after becoming disabled from their specialty could never qualify for total disability benefits, although the policy specifically allows for this.”

Statement: With a traditional “own occ” policy, if I was totally disabled and could not perform all of my duties, I would be able to work in another occupation and make an unlimited amount of money.

Northwestern Mutual: FACT, but what type of disability would prevent you from doing all of your principal duties, and in what other type of occupation could you then work and earn a meaningful amount of income?”

Own occupation policies vary in terms. Some doctors and dentists can indeed build a successful career in another practice area while still collecting full benefits for total disability. Because the “total disability” requirement in fact does not mean an absolute inability to perform any and all principal duties, as Northwestern suggests in this question, Arizona physicians and dentists can be free to retrain in a practice area that accommodates their limitations while still collecting benefits.

Statement: If I can do some, but not all, of my principal duties, I can stop working and receive my full benefit with a traditional “own occ” policy.

Northwestern Mutual: FICTION. “One reality of traditional ‘own occ’ is you must continue to work in order to receive a benefit when partially disabled.”

The problem with this statement is that Northwestern is implying that physicians who can perform only some of their principal duties are partially disabled. Depending upon the policy’s terms, physicians may be entitled for full benefits under “total disability” if they cannot perform any substantial part of their ordinary duties in the usual and customary manner. They may indeed be able to stop working entirely and collect full benefits.

Physicians and dentists with own occupation disability insurance policies should not let themselves be misled by the insurance company. These policies are highly complex and contain a number of terms, each of which may be defined and is also subject to the laws of your state. Consult with an experienced attorney familiar with your state’s insurance laws, and don’t take your insurer’s word about your policy.

The disability insurance attorneys at Comitz | Beethe provide legal representation to protect the disability benefits of medical and dental professionals nationwide and throughout metropolitan Phoenix, Scottsdale, Tucson, Flagstaff and Yuma. We provide disability income claim advice, assistance with filing disability claims, including completion of disability claim forms and representation in disability insurance litigation.

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