Courts don’t like it when insurers try to use technicalities to limit benefits.
Recent case: Carol had short-term disability leave insurance through her employer. When her son died, she sought a month’s leave under the policy, but was denied benefits.
She returned to work after about a month of unpaid leave, but suffered from depression. She reapplied for disability leave benefits, but was turned down again. The insurer said Carol’s unpaid leave was a service break, so her depression (now deemed a pre-existing condition) wouldn’t be covered for 12 months.
Carol sued, alleging abuse of discretion. The court agreed. It said that by the insurer’s reasoning, one day of unpaid leave could cause a service break. The court said that was an unreasonable interpretation of the policy language. It told the insurer to reconsider the claim. (Johnson v. Mutual of Omaha, No. 13-1708, DC MN, 2014)