Anesthesiologist Receives Seven-Figure Settlement in Dispute Over Monthly Disability Insurance Benefits

Fighting on behalf of our client, an anesthesiologist, the Donahue & Horrow, LLP team was able to obtain a seven-figure settlement with a large national insurance company in a dispute over the proper amount of monthly insurance disability benefits he was entitled to.

Our client, an anesthesiologist, in the late 1980s, purchased three individual disability policies that promised to pay him monthly disability benefits should he become unable to work as an anesthesiologist. The policies included cost of living riders (provisions) that increased the amount of his monthly benefit each year. Critically to the case, the policy provided if our client was completely disabled prior to the age of 65, that he would receive monthly disability benefits for life. 

Unfortunately, in 1993, he became unable to perform the duties required of an anesthesiologist due to a variety of conditions, including Bell’s palsy and avascular necrosis. As a result of these conditions and related symptoms, despite not yet turning 40, our client could no longer work as an anesthesiologist. While he was able to continue working in a different medical specialty, under the specific terms of the policies, he was entitled to disability benefits. The insurance company approved and paid his claim for about 25 years.

However, prior to turning 65, our client was forced to stop working entirely. Under the terms of the insurance policies and riders, he was therefore entitled to receive full monthly benefits until his death. However, as our client approached 65, the disability insurer told him that while it would continue to pay him benefits until his death, his monthly payments would be slashed by almost 95%, leaving him with only a fraction of the monthly benefits he was entitled.

In making their decision, the insurance company relied upon a strained and misguided interpretation of the insurance policies and riders that was not only unsupported by the policies’ plain language and our client’s general understanding and reasonable interpretation of the policy language, but contrary to California law. Also of importance, the insurance company’s interpretation of the policies and riders were contrary to what our client was told about the policy and how the policies were marketed to him at the time they were sold to him by the insurance company’s agent.

Following the filing of a lawsuit in the Central District of California in Los Angeles, the parties engaged in written discovery before agreeing to a mediation. At the mediation, the insurance company agreed to pay our client a large settlement, which was effectively an admission that its position that our client was only entitled to about 5% of his previous monthly benefit was incorrect. With this settlement, our client was able to receive a lump sum, instead of a check from the insurance company each month for life, and because of the lump sum settlement the insured no longer was required to provide the insurance company with information regarding his ongoing activities and medical care.

If you believe that an insurance company improperly denied your claim for disability insurance benefits or is misinterpreting the terms of your policy as a way to underpay you, call the team at Donahue & Horrow LLP today at (877) 664-5407 for a free consultation.