When the world’s largest disability insurance company gets a claim from someone whose professional license has been suspended, what happens? Can the policyholder collect disability insurance benefits? The short answer is: That depends. Disability insurance attorney Greg Dell and fellow lawyer Cesar Gavidia explain how a similar situation played out in a 2018 case against Paul Revere, which is now Unum Disability Insurance Company.

This particular case involved a private disability policy for a financial planner (rather than a group ERISA disability policy, which is commonly offered through employee insurance packages.) This type of insurance is common with financial planners, real estate agents, lawyers and others who have occupations requiring a license.

Greg Dell notes that he and other lawyers at disability insurance law firm Dell & Schaefer get calls for this scenario at least once a week, involving a professional who’s been having a medical issue. Subsequently, because of that medical issue, the person ends up potentially committing a crime or otherwise being unfit to practice his or her profession – which leads to losing the license to practice. The question then evolves into what kind of subsequent impact that has on the person’s ability to collect the disability insurance benefit provided through the policy.

It eventually leads to a determination of what’s known as “factual versus legal” disability. But first, it’s important to understand the conditions that lead to a valid disability claim in this kind of scenario.

Medical Conditions Leading to Inability to Practice

Disability lawyer Cesar Gavidia explains that these types of claims generally fall within the spectrum of psychological or mental health issues, specifically anxiety and depression claims as well as chemical dependency, drug abuse and alcohol abuse claims. Very often, the precipitating substance abuse results in the secondary depression or anxiety, notes Greg Dell, and yet these professionals continue to work in their occupations while battling these things.

“And then eventually, what I call an “event” happens. A disaster,” says Greg Dell. “Something like when a doctor has a bad event in the hospital, God forbid injures a patient or something like that. A financial planner starts to commit inappropriate acts. Whether they’re stealing from a client, or engaging in acts of fraud, or not doing things that they told the client they were going to do – because they’re not cognitively able to do their job because of the abuse.”

A pattern tends to develop in which the symptoms increase and worsen, resulting in a spiraling effect. The professional’s home life may start falling apart, a divorce or similar emotional event occurs, and life just starts to slowly crumble, explains Cesar Gavidia. But you typically don’t see treatment begin right way. “It’s after so long, when things have hit a point where it’s difficult to turn back, when it’s certainly almost impossible to function in their profession, that they start seeking treatment.”

Many of the professionals who seek legal advice from a disability insurance lawyer have not even seen a doctor or started treatment for mental health issues. Many are in denial that there are deeper issues that need to be addressed. But when it comes to making a disability claim, the biggest challenge that attorneys such as Greg Dell face is the fact that the client has never sought treatment for the condition.

Why is this such a big deal? Think about it, says Greg Dell: a disability insurer is going to see that you weren’t treating with anyone before the date of disability – but now that your license comes into jeopardy because you got indicted or investigated, you suddenly want to claim a disability.

For example, a financial broker gets a FINRA investigation or an SEC investigation, and then he calls a disability insurance attorney and says, “I can’t work. I got indicted. I have a long term disability insurance policy.” If the policyholder admits that he’s just a fraud, Greg Dells says that, obviously, his firm cannot help him. But if he reveals that he had a severe alcohol problem or pill addiction and didn’t know what he was doing, it changes the equation.

Factual Versus Legal Disability

A disability insurance law firm such as Dell & Schaefer can now take the position that the policyholder is “legally disabled” even if he is not “factually disabled.” The distinction needs clarification, especially because the insurance company is going to immediately hone in on a license revocation or incarceration or even a disciplinary investigation by a licensing board. Flags are going to go off, warns Cesar Gavidia, and they will investigate that to its core.

“A factual disability under the law is defined basically as an illness or injury that leads and causes the disability,” states Gavidia. “A legal disability is when something involving the law or a license revocation causes the disability.”

That’s why it’s so important to establish, through medical records and treating doctors, that the claimant has these symptoms, he stresses. And it must show that the symptoms led to the disability, which is an inability to perform the occupational duties of his profession. It’s not a licensing issue then; it’s a disability.

Greg Dell notes that sometimes an insurance company can be made to understand that you may have, for example, a doctor who’s been practicing for 20 years, and all of a sudden gets addicted to fentanyl. He doesn’t get any treatment and then loses his license because he’s high doing surgeries. He was normal for 15 years, but suddenly has a problem.

He gets caught, the hospital suspends him, and the medical board is investigating him. He, therefore, has had “an event” that forces him to accept his problem, and he starts to get treatment. Though the treatment begins after he gets caught, a competent disability insurance lawyer can make the argument that he was factually disabled before he was legally disabled. It will still be a major issue in many jurisdictions that the claimant did not seek treatment until he was caught, stresses Cesar Gavidia – so it’s crucial to be under a doctor’s care before filing a claim, if you possibly can.

Staying on Claim

In the particular case of the financial planner, he eventually was indicted by the SEC and his license was suspended. However, he did actually receive some treatment beforehand, due to his known substance abuse. This helped him with the case, and Unum actually approved the claim of being factually disabled and paid him for three years. Even though he was subsequently indicted for stealing thousands of dollar from his client, Unum continued to pay him.

However, according to Greg Dell, Unum then denied him after three years because his treating doctor said he was in remission from the substance abuse. So, his license was suspended, he couldn’t return to work, but he was no longer factually disabled. Thus, continuing payments were denied.

Staying on claim is a big issue in these kinds of cases, but an experience lawyer can argue that the claimant cannot return to a high-pressure environment without risking a relapse. This is especially true with, for example, an anesthesiologist going back to the OR and being around all the drugs he was formally dependent on.

That’s when it’s essential that a treating doctor convey and reiterate the fact that the disabled claimant cannot return to his prior occupation – and the attorney must consider the question of whether that high-stress occupation is an ongoing cause of the disability.

“The doctors have to understand what’s at stake for this person going back, “ says Greg Dell. “Meaning, can this person be a fiduciary to someone else in the future?”

The attorneys at disability law firm Dell & Schaefer have handled thousands of disability claims for clients all across the country. Whether it’s a denied disability claim, an appeal, a settlement offer or a lawsuit, the legal experts are ready and waiting to review your case. The initial phone consultation is immediate and free, so just give them a call or reach out via the website contact form.