In an August 6, 2018 decision the District Court in Massachusetts determined that Aetna Life Insurance Company wrongfully denied Mr. John Lavery’s long-term disability benefits. The Court ruled in favor of Mr. Lavery and held that Aetna had misapplied the pre-existing condition exclusion.
What is a Pre-existing Condition Exclusion?
Most group long-term disability benefit policies contain a pre-existing condition exclusion. This provision in the policy usually states that any disability that occurs within one year of a person’s enrollment in the plan, is not payable if the person pursued treatment for that condition in the three month period before coverage began.
So, if you start a job at Acme, Inc. on July 1, 2018 (and your LTD coverage begins on the same date) and in September of 2018, you leave work due to a disabling medical condition, then the pre-existing condition exclusion is triggered. If you treated for your same disabling condition any time between April 1, 2018 through June 30, 2018 (the three months before your coverage became effective), your claim would be denied under the exclusion.
Generally speaking, these provisions prevent people from taking a job and enrolling in a LTD coverage knowing they have a disabling condition and will be leaving work soon after taking the job. It’s meant as a protection for employers and insurance companies alike.
Cases involving the pre-existing condition exclusion are fairly common. There is some variance in how the exclusion is worded in LTD policies and this leads to many interpretations.
Was Mr. Avery’s Condition Pre-Existing?
In Mr. Avery’s case, the only treatment he received in the three months before his coverage began (commonly referred to as the “look back period”), was to visit his dermatologist with a skin lesion. No diagnosis was made at that time.
Later, outside the look back period, Mr. Avery had the lesion tested and it was discovered that his lesion was a malignant melanoma, which would require significant testing, treatment, and time away from work.
Aetna argued that Mr. Avery’s first visit where the lesion was discovered counted as services or treatment for the disease/ injury causing disability. Mr. Avery countered that he could not have treated or received services for a disease/ injury that he did not even know existed at the time.
Ultimately, the Court ruled in favor of Mr. Avery. Not only did the Court seem to agree with Mr. Avery’s interpretation of the pre-existing condition language (there is significant case law on just this type of language), but the Court also took issue with Aetna’s flip flopping.
The claim file revealed that multiple medical professionals and Aetna representatives had viewed Mr. Lavery’s claim and determined that his condition was not pre-existing. Aetna, without receiving any new medical evidence, reversed those decisions and issued a denial. The Court found Aetna’s “two unexplained reversals” in the absence of new information to weighed towards a finding that Aetna acted unreasonably.