Doctors Paid to Aid Insurers in Disability Claim Denials

October 13, 2009 Labor/Employment

By Evan George, Daily Journal Staff Writer

Every year, millions of Americans seeking to buy a safety net for their middle class lifestyles enroll in group disability insurance. If they fall sick or are injured badly enough that they can't work, the insurers promise to pay part of their salaries.

But legally denying these costly claims has proven remarkably easy for insurers. All they need is a single doctor's opinion that the insured is able to hold a job.

As a result, insurers hire a cadre of doctors to write reports on claims they don't want to pay.

These doctors are not required to see the patient. They can receive hundreds of assignments per year in repeat business from insurance companies. And they do not - unlike in many health insurance disputes - have to be part of an independent panel overseen by regulators.

The opinions of these insurance company-hired doctors carry more weight in court than those of the treating physicians, employers and Social Security Administration administrative law judges combined. That's because decades of high court decisions have nurtured an insurer-friendly playing field where the companies are free to deny any disability claim as long as they weren't "arbitrary or capricious" - in other words, as long as they have a reason. That has translated into big business for doctors like Harvard-trained psychiatrist Stephen Gerson.

Gerson, who declined to be interviewed, made well over $1 million in four years writing reports part-time for several insurance companies and medical firms that arrange the reviews, court records show. Most of it, about $900,000, came from a single insurer, Gerson revealed in a 2006 deposition.

"To work from home, in pajamas and some fancy slippers, denying legitimate claims by cherry-picking medical records is as low as it gets," said Frank Darras, an Ontario attorney who represents hundreds of group policyholders who were denied disability benefits.

The insurers dispute that, saying the reviews are fair, and meant only as protection from workers filing bogus claims or otherwise receiving benefits they're not owed.

"The physicians who conduct external file reviews... are independent of the carrier," said Whit Cornman, a spokesman for the trade group American Council of Life Insurance. "There is not a common practice of using captive physicians or physicians with a conflict of interest."

But insurers have fought tooth and nail to keep information about these doctors under wraps.

Documents Paint a Picture

The Daily Journal reviewed dozens of court cases nationwide where federal judges have taken the rare step of allowing discovery. Those documents, including depositions and internal memos, painted a portrait of the role doctors and medical review companies play in claims denials.

Based on those records, here's how it works:

A worker who has paid for benefits files a claim. In most cases, the insurer will review it and pay.
Some cases - markedly those where the insured reports suffering from back, neck and spine injuries, chronic pain, and other "complex" symptoms - are denied, even if treating physicians and the Social Security Administration find them disabled.
If the worker appeals, the insurance company will send the files to what they call "independent" medical reviewers, a handful of specialized firms scattered across the country.
The firms that set up the reviews collect several millions of dollars a year, sometimes from a single insurer, and aggressively market their services.
These firms coach their doctors to never use the word "disabled" in reports and to use strict medical definitions they provide to determine a person's ability to work.
The doctors rarely examine the patients, but rather base their opinions on limited medical evidence selected by the firm. At times, they have no expertise in the field in which they give an opinion.
They are regularly paid more than $100 per hour, often earning $100,000 a year for part-time work. Some make all of their income from the insurance industry.
And a handful of these doctors, whose records were revealed in court documents, sided with the insurer in 90 to 95 percent of the cases.

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