Disability Definitions: Don’t Be Fooled
For over 18 years I have been advising physicians to make sure that when purchasing disability protection that it has a true “own occupation” or “specialty specific” definition of disability for the entire benefit period of the contract. Recently, this advice has been challenged by one well known disability provider.
Traditionally, total disability means that, due to an injury or illness, as a physician you are unable to perform the material and substantial duties of your occupation. The best contracts go in more detail and state that if you have limited your practice to a recognized specialty in the medical community that specialty would be deemed your occupation. This means if you could not see patients in the same manner you do today, you would be entitled to receive full disability benefits. If you decided to work in another specialty or even another job outside the medical community earning the same amount or even more than you did prior to your disability, you would still collect full benefits.
A true own occupation or specialty specific definition of disability does not allow the physician to profit, however it does allow the physician to utilize not only his/her education, but also his/ her training and experience, to find joy within the workforce without being penalized for being intelligent, motivated, resourceful individuals. Some would argue that this is a form of “double dipping” or “profiting” from a disability, but that is just nonsense. Every physician has sacrificed time, money, and energy to build a career in the medical community. There are also student loans that may be lingering and possibly new debt due to the disability. Suffering a disability is difficult and your disability plan should protect your specialty without limiting your future mental and financial well-being.
A well-known insurance company which markets heavily to the medical community switched from true own occupation or specialty specific definition of disability in 1997 to what they now label as “medical occupation” definition of disability. Don’t be fooled by the clever wording, because things always aren’t what they seem. The medical occupation definition hinges on the fact that as a physician you may have several duties, and in order to collect full benefits, you would have to be unable to do all of those duties. For example, an OB/GYN who may not be able to do procedures or work in the delivery room, but would see limited patients in the office would not be considered totally disabled. This make the case that since most physicians will not satisfy the own occupation definition of total disability, they will be viewed as proportionally disabled and would only receive partial benefits. This is also true if a physician is working in any capacity, inside or outside the medical community.
There is a widely accepted court case, Dowdle v. National Life Insurance Company, tried in the 8th Circuit Court, which set precedent between the two definitions: own occupation or specialty specific and medical occupation. Dowdle, an orthopedic surgeon, purchased an own occupation plan. Prior to his unfortunate disability he devoted 3 full days a week to surgery and 2 half days of office consulting, seeing 15-20 patients each half day. Due to his disability he was unable to stand in the operating room for an extended period of time, making him unable to perform orthopedic surgery. Although he could still see patients in the office, he claimed total disability because he could not perform surgery. Unsurprisingly, his disability carrier argued that he was not totally disabled because he could see still see patients in the office. After hearing the case, the court agreed with Dowdle that he was totally disabled and should receive full benefits. They ruled that orthopedic surgery was his primary function and any non-surgical tasks were secondary.
Using this court case is a great way to compare the own occupation/specialty specific to the medical occupation definition of disability. Under the medical occupation definition Dowdle would have needed to either discontinue working altogether or con inue working earning less than 20% of his pre-disability earning to qualify for full benefits. However with the own occupation or specialty specific definition Dowdle had the ability to continue working in or out of the medical community and could earn unlimited income as long as his disability renders him unable to perform orthopedic surgery.
The devil is in the details, and after a disability has occurred is the wrong time to learn that your coverage is not what you thought it was. The ability to earn a living doing what you love is a wonderful gift which should be protected at all costs.
Calvin R. Rasey is president of Physicians Financial Services II, LLC.
Dowdle v National life Insurance Company, NO 04-2628, US 8th Circuit Court, May 19, 2005
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