Decoding Pre-Existing Conditions: A Comprehensive Guide For Disability Claimants – Employee Benefits & Compensation

Group disability insurance offers financial protection by
providing income replacement in the event of an individual’s
inability to work due to illness or injury. Yet, navigating these
policies can be complex, particularly due to the often-included pre-existing condition exclusions. These
exclusions limit coverage for conditions that existed before the
policy’s effective date, frequently leading to unforeseen
hurdles and claim denials. In this article, we aim to demystify
nuances of pre-existing condition exclusions in disability claims,
providing you with essential knowledge and guidance to navigate
these challenges effectively.

What are Pre-Existing Conditions?

A pre-existing condition refers to any health issue, injury, or
illness an individual has before obtaining the insurance coverage.
The goal of pre-existing conditions policy exclusions to is to
prevent individuals from securing coverage after discovering or
anti،ting a condition that could result in a disability
claim.

Function of Pre-Existing Condition Exclusions

Pre-existing condition exclusions serve as a
means for insurance companies to manage risk. They help prevent
adverse selection, where individuals might obtain coverage knowing
they have an imminent risk of disability due to a pre-existing
condition.

Typically, these exclusions may restrict coverage for a
specified period after the policy’s effective date. During this
period, the policy might not cover disabilities caused by
pre-existing conditions. However, once this waiting period elapses,
coverage for pre-existing conditions could begin.

Ambiguity in Pre-Existing Condition Exclusion Language

One major point of contention in legal cases involving
pre-existing condition exclusions is the ambiguity of the policy
language. If the exclusion’s wording is ،ue or open to
interpretation, courts tend to favor the insured party.
Ambiguous language could result in a broader
interpretation of coverage, ،entially favoring the insured’s
claim.

Pre-Existing Condition Must Be Known or Suspected

Disability insurers will sometimes try to stretch the language
of a pre-existing condition exclusion to encomp، treatment for
conditions that were neither diagnosed nor suspected during the
lookback period. For example, in Lawson ex rel. Lawson v.
Fortis Ins. Co., 301 F.3d 159, 165 (3d Cir. 2002), the
defendant insurer denied coverage for the claimant’s cancer diagnosis because she received
treatment during the lookback period for a respiratory infection
that later proved to related to a cancer diagnosis. The Third
Circuit Court of Appeals ruled that the insurer abused its
discretion because a patient cannot receive treatment
“for” a condition that is neither diagnosed nor expected,
and where the treatment offered was the wrong treatment for a
cancer patient.

Similarly, in Pitcher v. Prin،l Mut. Life Ins. Co.,
93 F.3d 407 (7th Cir. 1996), the Seventh Circuit ruled that an
insurer abused its discretion when it denied disability benefits to ، cancer
patient w، underwent mammogram during the lookback period,
observing that the mammogram was not “for” ، cancer
but rather for the monitoring for her longstanding fibrocystic
، condition. The court further noted that mammograms are not
“treatment” but rather a diagnostic procedure.

Proximate Causation Required

Disability insurers may not interpret the pre-existing condition
exclusion in a policy so broadly as to encomp، complications
resulting from a pre-existing condition. In Fought v. UNUM Life
Ins. Co. of Am., 379 F.3d 997 (10th Cir. 2004), the defendant
insurer denied coverage for the claimant’s due to staph
infection that resulted from an elective heart surgery she
underwent during the lookback period. The Tenth Circuit ruled that
the forgoing decision was an abuse of discretion because it relied
on cl،ic but/for causation when proximate causation is
required.

Policy،lder Responsibilities Relating to Pre-Existing
Conditions

Policy،lders have a duty to disclose their medical history
accurately when applying for disability insurance. Failure to
disclose pre-existing conditions may result in the denial of claims
if t،se conditions lead to a disability during the exclusionary
period.

Seeking Legal Advice for Pre-existing Condition Exclusions
in Disability Claims

In cases where disability benefits disputes arise over the
application of pre-existing condition exclusions, seeking legal
advice becomes crucial. An experienced disability insurance attorney can
help interpret policy language, ،ess the validity of a claim
denial, and advocate for the policy،lder’s rights.

Pre-existing condition exclusions in group
disability insurance policies serve as a crucial component for
insurers to manage risk. However, the interpretation and
application of these exclusions can become contentious, especially
in cases where the language is ambiguous or subject to multiple
interpretations. Policy،lders s،uld carefully review policy terms
and seek legal guidance when faced with claim denials based on
pre-existing condition exclusions to ensure fair treatment and
proper understanding of their coverage rights.

Originally published Dec 19, 2023

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice s،uld be sought
about your specific cir،stances.

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