Verdict Against Disability Insurer for Requiring Recipients to Apply for Social Security Disability
Section 440.15(1)(f)2.b, Fla. Stat., provides in part that an employer/carrier is not required to make any payment of permanent total disability benefits to an injured worker "if the employee refuses to apply for or cooperate with the employer or carrier in applying for social security disability benefits." Now comes word from this article in the 10/23/2008 edition of the New York Times that a similar provision in a disability policy has landed a major disability insurer in hot water. According to the article, a federal jury sitting in Boston has found Unum, the nation's largest disability insurer, guilty of committing fraud in some cases by requiring disability recipients to apply for social security disability benefits knowing that they were not eligible for those benefits. The suit was brought by a whistleblower under the federal False Claims Act, 31 U.S.C. §§3729, et seq. You can view the amended complaint here.
Could this type of lawsuit become a problem for Florida's workers' compensation insurers if they insist on requiring a permanent total disability recipient to apply for Social Security disability benefits? Possibly, but I really don't think so. As the article correctly notes, the Social Security Administration defines "disability" more strictly than Unum's policy does. [Unum's policy pays disability benefits in cases where the recipient is unable to perform his "own occupation," while the Social Security Administration requires a recipient to be unable to perform any occupation]. From 1994 through 2003, the Florida Workers' Compensation Law expressly tied the standards for an award of permanent total disability to the standards for an award of Social Security disability benefits. And after 2003, at least by legislative design, the standards for an award of permanent total disability benefits in Florida have become even stricter.
