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Insurance Bad Faith: Distinguishing Accident From Sickness

Disability Claim Denials, Insurance News

Disability insurance plans include different policy provisions that determine benefit payments based on whether your disability was caused by sickness or accidental injury.  As  we have previously discussed, the difference in benefits payments under the sickness and accident provisions is substantial.  For example, a typical disability insurance plan provides that benefits for disability caused by “sickness” are payable for 24 months, whereas benefits for disability caused by “accidental injury” are payable for life.  Therefore, how the disability insurer defines the cause of disability (sickness vs. accident) significantly affects the amount of disability benefits you are entitled to receive.  Disputes often arise over which classification is appropriate when insurers try paying benefits under the sickness provision for 24 months rather than for life.

In a California case, McMackin v. Great Am. Reserve Ins. Co., a highway patrol officer sued his disability insurance company, Great American, after it misclassified his disability as one resulting from sickness rather than accidental injury.  22 Cal. App. 3d 428 (1971).  While lifting heavy cartons of citation forms at work, the officer experienced sharp pain and numbness in his back.  The pain progressively worsened until it became so severe that he was unable to continue working, so the officer filed for disability benefits.  Because the officer had an extensive history of back injuries, Great American concluded these pre-existing medical problems were the cause of the sharp pain and numbness in his back, not the act of lifting heavy containers at work.  Accordingly, it refused to pay the officer disability benefits for life under the “accidental injury” provisions of his plan, but instead classified the injury as one resulting from sickness.

By paying the officer’s disability benefits under the sickness provision, Great American would only pay for 24 months.  The officer sued and argued that Great American wrongfully categorized his injury—that his disability resulted from accident, not sickness.

The California court agreed. In this landmark case, the California court held that a pre-existing disease or infirmity does not relieve an insurer from liability under the accident provision of a disability plan, so long as the accident is the proximate cause of disability.  Here, the court required Great American to pay disability benefits for life under the accident provision because substantial evidence demonstrated that the heavy lifting was the cause of the officer’s disability.  Therefore, the officer’s pre-existing back problems did not relieve Great American from paying disability benefits under the accident provision.

This California case is important because it explains the law surrounding accident vs. sickness; it also provides an illustration of how disability insurance companies distort favorable contractual provisions to pay disabled persons less than they deserve.  Unfortunately, the distinction between what constitutes accident and what constitutes sickness can be so fine that some courts still struggle distinguishing.  This can result in improper outcomes for unprepared disability claimants.  For these reasons, you should consult with an experienced disability insurance lawyer when you file a disability claim.

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