How Disability Insurance Companies Use the “Dual Occupation” Defense to Dilute Claims Under Professional’s “Own Specialty” Disability Coverage – and How You Can Fight Back

The majority of Robinson Warncke’s clients are successful, motivated professionals. Most are doctors, dentists, attorneys, and high-level executives. Of this clientele, many are specialists within their fields, i.e.,

• Not just generalist attorneys but trial attorneys, patent attorneys or commercial real estate attorneys.
• Not just generalist doctors, but board-certified specialists in emergency medicine, oncology, neurology, rheumatology, otolaryngology, ophthalmology, orthopedic and neurosurgery, just to name a few;
• Not just general dentists, but specialists in orthodonture, pediatric dentistry, or oral and maxillofacial surgery.

In the world of disability insurance professional specialists are in a distinct class in every way. They tend to buy more expensive and better insurance products even as compared to non-specialty professionals.

Specialist’s income tends to be high, and the amount of monthly disability benefits tends to be proportionally high. So, the financial stakes when a claim is presented are proportionally higher-than average. Disability insurers scrutinize these claims very closely, to put it diplomatically.

In short, specialist disability claims present unique challenges and opportunities. If you are facing such a claim, you almost certainly need legal representation to navigate your high stakes claim to its most favorable outcome.

This article deals with a hidden  aspect of specialist disability claims, which is the insurance industry’s use of policy fine print and the “dual occupation” defense. Insurer use this hidden defense to dilute or defeat policyholder expectations of high-premium “own specialty” coverage. This is an industry-wide practice, having been employed in reported cases by, Unum, Paul Revere, Provident Life, MassMutual, Ameritas, Guardian/Berkshire, Lincoln National, Equitable Life, and others.

Without exception, every client we have spoken to who has encountered the “dual occupation” defense has been surprised and disappointed by the claim outcome. Some have felt that their insurer pulled a “bait and switch” compared to how their policies were marketed.

With the “dual occupation” tactic being so common and the outcomes so surprising, we felt it was time to write an articlae explaining what it is, the limits of its applications, and how an insured might fight back to ensure that their coverage delivers the protection they reasonable expect. In short, insures sometimes make mistakes and/or overreach when it comes to this defense.

What is the “Dual Occupation” Defense?

We see insurance companies primarily asserting this defense with respect to “own specialty” disability coverage, but sometimes, too, with lesser “own occupation” coverage. To understand the defense, it is necessary to know a little about the different types of protection disability insurers offer. It also helps to revisit how these policies are marketed, which tends to influence policyholder expectations. As discussed below, this can be quite relevant to dealing with this defense.

Broadly speaking, disability insurance is sold in three classes. The higher the level of protection, the more likely the policy is to pay out and, so, the higher the premiums.

More Protection = More Expensive to Buy.

Most people understand the three tiers of disability coverage in this way:

• The lowest and cheapest form of protection is “any occupation” coverage. This policy often does not pay benefits even if you are disabled from your current job. The policy only pays income benefits if the policyholder proves he cannot perform “any occupation for which he/she is reasonably qualified by education, training and experience.” For example, if you are an outside salesperson whose disability prevents work travel – meaning you can’t perform your chosen occupation – you would still not be entitled to benefits under “any occupation” coverage if you can perform a full-time office job. It doesn’t matter whether you find alternative work; it is the theoretical ability to do such work that defeats the claim.
• The next level of protection is “own occupation.” “Own occupation” coverage is significantly better and significantly more expensive than “any occupation.” If your health prevents you from performing your occupation the policy should pay the maximum monthly total disability benefit – even if you could theoretically perform alternate work.
• The highest level of protection is “own specialty.” This is marketed to board certified physicians and for dentists with an active patient load. It is also sold to attorneys who limit their practices – as most do nowadays – to things like personal injury, trial work, appeal work, criminal defense, patents, commercial real estate, mergers, or any other subspecialty of law. “Own specialty” coverage is marketed mostly to young, healthy professionals just building their careers and practices. The coverage is very expensive.

Insurers sell “own specialty” coverage telling us that if we cannot do the specific subset of our profession that we have built our careers around, the policy will pay its maximum monthly benefit. This is true even if we might be able to and actually are practicing a different kind of law, medicine or dentistry . A classic example would be a doctor or lawyer who can no longer practice but can teach. “Own specialty” coverage would typically pay the full monthly benefit in addition to whatever income the policyholder earned from alternate employment in his or her field.

Insurance industry marketing sets up very high policyholder expectations for “own specialty” coverage. Here is an excerpt from a MassMutual marketing brochure:

We recognize that some individuals through additional training and experience have narrowed their work to a specialty or sub-specialty, and may have individual certification from nationally recognized accreditation groups such as the National Board of Trial Advocacy, American Board of Medical Specialties, American Osteopathic Association or the American Dental Association. Your Occupation at claim time is based on your main work duties immediately prior to the start of your disability.

EXAMPLES:

1. You are an attorney, and our occupational analysis shows that your main work activities immediately prior to disability were limited to those related to trial work. We would consider your Occupation for this claim to be a trial attorney.”

2. Perhaps you are a physician. An occupational review of your main duties just prior to the start of disability shows that they were limited to those associated with nuclear radiology. For this claim, we would consider your Occupation to be a nuclear radiologist.

The coverage from your Policy and Riders, including the Own Occupation Rider, is portable from one job or occupation to the next. The benefit coverage under your Own Occupation Rider does not change because of a switch to a new job or occupation. … If you have an occupational change, it is always a good idea to review your insurance coverage with your agent to make certain that your income protection matches your current needs.

Some specialist policyholders would thus conclude that unless they outright change occupations, their “own specialty” policy will pay benefits based on the inability perform the duties of the specialty – even if they are able to work in some lesser capacity.

And here is where the “dual occupation defense often surprises and disappoints.

So, what is the Dual Occupation Defense?

In short, the “dual occupation” defense is a tactic by which:

1. The insurer puts you through an exasperating, months-long claim investigation asking for ever-broader and deeper information about your various work activities, including time spent on each duty and income generated from each. They might ask for monthly billing records before and after you got sick.
2. The insurer employes a “vocational expert” – either an outside consultant or an in-house employee – to classify your work activities. Rather than treating all your duties as part of your overall medical, legal or dental practice, the vocational expert classifies your work into two (or more) different “occupations” as defined by the Department of Labor or some other resource.
3. Recognizing that you can’t perform the unique physical and/or cognitive demands of your specialty, the other “occupation” is always something with comparatively lower demands. The secondary occupation is likely to be something like “practice owner,” ”administrator” or “consultant/advisor.”
4. The insurer admits you can’t perform your specialty, but asserts that you can still perform this other, lower demand “occupation.”
5. The insurer then treats you as “partially’ rather than totally disabled despite not being able to perform in your insured specialty.
6. Depending on other circumstances, this leads to other reduced benefit payout or no payout at all.

Examples we have recently seen:

• A board-certified emergency medicine physician who worked full time in a hospital ER and worked part-time training mid-levels and reviewing their charts in an urgent care setting. The insurer classified her as dual occupied as an “administrator” based the urgent care position.
• A dentist with an active, single-office clinical practice employing other dentists and technicians. The insurer classifies him as dual occupied as dentist/business owner.
• Transplant surgical specialist who also does other forms of surgery. Insurer asserts he is dual occupied also as a general surgeon.

None of these professionals considered themselves as having anything but one occupation, namely the medical or surgical specialty for which they took out “own specialty” disability coverage. All of them paid their expensive premiums for decades hoping they would never get too sick to work.  And when that unfortunate thing happened, they were all dismayed when their coverage did not operate as expected.

Policy Language and Policyholder Expectations Are the Key to Fighting Back.

The dual occupation defense arises from fine print that no policyholder ever notices or understands when buying coverage. Certainly, the insurance industry doesn’t go out of its way to highlight this fine print. And, interestingly, this is very much relevant to how you can fight back.

The dual occupation defense arises from just two words – “or occupations” – commonly buried in the policy definitions. Your policy was marketed to you with the focus being entirely on its high level of protection in your specialty. The policy is then delivered with language like this (or something functionally alike):

Total Disability or Totally Disabled means that, solely due to sickness or injury, you are not able to perform the material and substantial duties of your occupation.

Your occupation means the occupation or occupations that you were engaged in, based on the duties you were performing for wage or profit, at the time disability began. If you are not employed at the time of disability, your occupation means any occupation you are able to perform based on your education, training and experience.

If you are a physician or dentist and have limited your duties to the performance of the usual and customary functions of a specific, professionally recognized medical or dental specialty, we will consider that specialty your occupation.

It is the two-word phrase “or occupations” that insurers seize on to assert the dual occupation defense. Policyholders rarely, if ever, see it coming.

Reported cases confirm that sometimes insures get this right, but they often overreach and misapply the “dual occupation” analysis.  For instance, most professional who own small practices have some administrative and management responsibilities related to running the practice. That does not necessarily make them “dual occupied” as “business owners” if these duties are simply ancillary to the insured specialty.

Likewise, many physicians take on teaching responsibilities, sometimes in a hospital setting, other times in a university setting. That does not necessarily make them dule occupied as “professors.” Reported cases recognize that teaching is within the “usual and customary functions” of many medical, dental and legal specialties.

Determine whether your various work activates should be classified as within your specialty or as a separate “occupation” is very fact-specific and requires some serious digging into your before and after work activities, in terms of time spent, money earned, and relationship of the duties to the specialty.

Just as the insurance industry routinely uses vocational experts to analyze these issues, so can the policyholder. Oftentimes the insurance vocational expert has missed something, whether innocently, negligently or intentionally. Having your own vocational expert can be invaluable.

Another wild card with the dual occupation defense is just how differently different states have analyzed the issue. Some states have developed insurance law that is much more protective of policyholder rights. Others have let insurers run roughshod with the dual occupation defense. Knowing where your state law stands is a necessary step to knowing whether and how hard to push back.

All states recognize a few basic legal principles that can be helpful in defeating a dual occupation defense. First and foremost, insurance contracts are not interpreted according to what the insurer “meant to say” when it buries “or occupations” into your policy definitions. Insurance policies are interpreted according to the reasonable expectations of a reasonable layperson policyholder. And if the policy language is unclear as to how it applies in a given situation, the courts will always enforce a reasonable reading that affords the broadest possible coverage. These principles can be very valuable to bring the dual occupation defense back in line with reality.

Call Robinson Warncke if You Need Help With a Dual Occupation Issue.

Our firm has dealt with dual occupation situations dozens of times. The “dual occupation” defense can be challenging even for those of us who live in the world of disability insurance every day. These disputes tend to be complex. It always takes a great deal of time and effort to resolve these disputes. But, with careful attention to detail and a thorough workup, it is possible to convince an insurer to reverse course and pay full value on a claim. And if that effort fails, you want a law firm with a proven track record of successfully suing disability insurers. We are here to help in either case.