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Dawson and Rosenthal
Dawson and Rosenthal

Insurance company cuts off man’s disability benefits after 7 years

Sometimes, it can seem like an insurance company’s decisions come out of nowhere. While it may provide some kind of explanation for denying or cutting off your disability benefits, often it has little evidence to back up its claims to be acting in good faith.

In a recent example, a longtime entertainment industry executive who is battling depression is suing Berkshire Life Insurance Co. for inexplicably cutting off his disability benefits after seven years. At issue is whether a clause in the plaintiff’s insurance policy allowed Berkshire to stop paying benefits after two years.

The plaintiff has worked in the animation industry for 30 years. He purchased an income disability policy from Berkshire in 1995. He later developed depression, and by 2008 was unable to continue working.

Berkshire approved his claim and began paying him $9,553 per month. These payments continued for seven years, until August 2015, when Berkshire suddenly ended them. The insurer informed the plaintiff that a clause in his policy limited claims based on a mental illness to just two years of benefits.

However, neither Berkshire nor the plaintiff could find an original copy of the policy. The company said a “duplicate” copy supported its claim.

The plaintiff says he never heard of any time limit on his claim. A 2011 letter Berkshire sent him says he was entitled to “benefits for life, provided that you continue to remain totally disabled per [the] terms of your above referenced policy.” His lawsuit also argues that, even if the two-year clause is real, the fact that Berkshire continued to pay benefits for another five years should invalidate the clause.

Berkshire’s alleged violation of the terms of the policy has forced the plaintiff to withdraw money from his retirement savings, and worsened his depression, he says.

Insurance companies have deep pockets and a team of lawyers to defend themselves against charges of bad faith. To even the odds, you need a skilled bad faith insurance attorney representing you.

Source: Rae Theodore, Cartoon Company’s Exec Sues over Cutoff of Benefits for Depression, 12 Westlaw Journal Insurance Bad Faith 3 (2016)