Articles appear everywhere on the Internet accusing disability insurers of “targeting” claims. “Do insurers really do that?”, I’m frequently asked. Sadly, the answer is, “Yes, they do, and they’ve nailed it down to a science.”
Unum and CIGNA are perhaps the only companies that have been publicly chastised in part for “targeting” claims. However, other insurers are successfully hiding their target strategies because they’ve never been “outed” for the process. Still, “targeting” claims for denial is an unfair claims practice and deprives insureds of fair and equitable reviews and payment decisions.
Perhaps a good definition of insurance claim “targeting” is: “Purposeful identification of specific claims for the purpose of maximizing financial profitability by the reduction of financial reserves and denial of benefits legitimately due to insureds.” (This is MY definition.)
For those who do not know, here is the list of claims Unum and other insurers “target” to deny. The targeting takes place immediately when claims are submitted; a Primary Plan Direction is documented officially describing how claims will be denied, and all investigation from that point forward moves in the denial direction.
“The Biggest Bang for the Buck” – According to Unum’s ex-employees, claim managers maintain spreadsheets sorting information by financial reserve. Of course, Unum emphatically denies that financial reserves are used to target claims, but former claims handlers say, “No” that’s not correct.
Apparently, Unum managers identify claims with the largest financial reserves (benefits) and work toward denying those, hence, “the biggest bang for the buck.” Managers appear every morning in the cubicles with spreadsheets in hand, directing claims handlers to spend their time on specific high reserve claims. “Targeting” has absolutely nothing to do with the merits of each claim, but rather the degree of profitability that can be gained by reducing financial reserves with denials.
This time of the year, Unum is “targeting” high-benefit claims for no other reason than getting the “biggest bang for the buck.” Internal investigative resources are then dedicated to those claims with the most profitability potential.
“Impairment Bias” – Unum and other insurers predetermine the outcome of claims by “targeting” impairment category groups such as FMS, CFS, Migraine, Lyme disease, Chronic Pain, HIV, MS and Depression. These are the most easily denied claims because they can be alleged to be “self-reported” and subjective. Unum makes money on these claims either by denying outright, or limitiing benefits to 24 months. This time of year the preference is to deny outright and take the immediate hit to profitability.
“Vulnerable Claims” – These are claims with weak, incomplete, unclear, or missing medical support of claim. Managers will designate “focus” days for file review to locate claims that can quickly and easily be denied. Given the “new normal” for claim investigation increasing numbers of “vulnerable claims” are identified and quickly eliminated. Claimants/Insureds should always be sure that treating physicians document claims well, refuse doc-to-doc calls, and require insurance companies to request information in writing. This also forces physicians to actually pull and review files before handing over information that is inaccurate or incomplete.
“Reservation of Rights” – Unum places more claims on Reservation of Rights at the end of profitability reporting periods than at any other time. Although the company disavows integration of ROR status and financial reserves, there is no other explanation as to why claims are placed on ROR just prior to profitability periods other than to realize profit. Reservation of rights status is usually given to lower benefit claims when it is presumed (for no reason) the company won’t have future liability for claims. Unum abuses the ROR status since I’ve really had very few other insurers use ROR for any reason. In any event, ROR letters go out in droves during 4th Qtr.
I hope that my readers are beginning to realize what “targeting” claims for profitability is all about. Disability insurers, using a “new normal model” are not looking to pay claims fairly, but to deny claims by creating the illusion of credibility. Insurers do this in various ways.
For example, The Hartford and Guardian go overboard with investigation and surveillance to create its illusion of making the right denial decision by destroying reputations and personal credibility. Aetna and CIGNA play the percentage numbers by denying so many claims that some of them actually survive appeal. Prudential and Sun Life continue to hire aging “claim killing” physicians who used to work for insurance companies, have retired, but continue to work for the insurance industry helping insurers refuse benefits.
Smart insureds who buy IDI policies from Northwestern Mutual or Principal generally survive the onslaught of unfair denials.
Targeting of claims to deny is as much an unfair claims practice now as it was 20 years ago when Unum had internal fish bowl lotteries, blue memos, and thermometer denial tallies on the wall. “Targeting” is deliberate…it’s a pattern of practice to deny legitimate payable claims … for IDI insureds, it is a sign of “bad faith”, and most importantly, it violates ERISA fiduciary duty and accountability.
It is extremely important for insureds to know that they are dealing with stacked decks especially at this time of the year. This is a very serious issue because targeting of claims denies all insureds of fair, objective and equitable claims review.
I hope the last several articles have at least gained your attention, because if your claim has been “targeted”, you may need all the help you can get.