The case of Jeffrey K. Laritz Vs The Prudential Insurance Company Of America filed by a Michigan disability attorney at the district court for the eastern district of Michigan deals with the pre-existing condition clause found in all disability insurance policies. The plaintiff Jeffrey K. Laritz was a participant in a welfare benefit plan that consists of a long term disability insurance plan and life insurance plan, sponsored by AutoZone, Inc. and underwritten and administered by The Prudential Insurance Company of America (Prudential) for the benefit of AutoZone employees.
Pre-Existing Condition Clause Under The Policy
Under the policy, there was a pre-existing clause that provides for pre-existing review within the first 12 months of coverage. In the lawsuit, the plaintiff stated that his long term disability benefits plan coverage under Prudential became effective on November 1st 2009.
Prudential defines a pre-existing condition as follows:
"You have a pre-existing condition if both l, and 2, are true:
1. You receive medical treatment, consultation, care or services, including diagnostic measures, or took prescribed drugs or medicines, or followed treatment recommendation in the 3 months just prior to your effective date of coverage or the date an increase in benefits would otherwise be available.
2. Your disability begins within 12 months of the date your coverage under the plan becomes effective."
Denial of Claim for Long Term Disability Benefits
In the plaintiff's claim for long term disability benefits, Prudential indicated that since the Plaintiff went out of work within the first twelve months of coverage under the long term disability policy, his claim was subject to a pre-existing review. The pre-existing period in question was from August 1, 2009 to October 31, 2009. Hence, Prudential denied eligibility for long term disability benefits on August 24th 2010.
On November 19, 2010, the Plaintiff filed an appeal of the determination to deny eligibility. On January 7, 2011, Prudential completed the review of the plaintiff's ERISA Appeal and denied the appeal on the ground that "we determined that the medical information received reflected you received treatment during the pre-existing period."
Although Prudential denied the plaintiff's calm for disability benefits, he managed to successfully rehabilitate himself after treatment and returned to full time employment at AutoZone Inc. on January 25th 2011.
Legal Basis For Lawsuit Against Prudential
The plaintiff argued that the pre-existing condition clause was over broad, overly preclusive, vague and unconscionable. The plaintiff's contention was that the pre-existing clause essentially precludes recovery for a beneficiary who has been treated or seen by a physician or who took prescription drugs or medicines during three months just prior to the effective date of coverage.
In short, any employee of AutoZone Inc taking any type of medication was precluded from coverage or payment of long term benefits during the first 12 months of coverage if they have been treated or seen by a physician for any reason during the 3 months prior to the effective date of coverage. Coverage is denied for any medical condition or treatment (i.e. cold, flu, headache, bronchitis, upper respiratory infection etc.) regardless of what medical condition may have caused the employee to stop working.
Legal Relief Sought In The Lawsuit
Based on the above mentioned reasons, the plaintiff requesting from the Court the following relief:
- That the Court enters judgment in favor of the Plaintiff against Prudential and order payment of long term disability benefits from November 1st 2009 through January 24th 2011.
- That the Court find that the pre-existing clause of the Prudential policy overbroad and unconscionable.
- That the Court order Prudential to pay the Plaintiff 2.553% in post-judgment interest on all benefits that have accrued prior to the date of judgment.
- That the Court award attorney's fees pursuant as provided for by ERISA
- That the Plaintiff recovers all relief to which he may be entitled, along with the costs of litigation.