Overhead Expense | Long Term Disability Insurance | Florida Tampa Long Term Disability Lawyer

Have you purchased an overhead disability insurance policy? When’s the last time you read it?

Most policies agree to “pay benefits to during a period of disability for covered overhead expenses which accrue while you are totally disabled after the elimination period.” These policies can define disability as the “inability to perform a substantial and material duties of your occupation.”

Overhead disability insurance policies also may pay benefits if you are partially disabled. “Partially” disabled can mean conditions where you are “unable to perform one or more substantial and material daily business duties” or are unable to do “usual daily business duties for as much time as you would normally take… to do them.”

An important provision in this policy was the definition of office expenses. “Covered overhead expenses” were defined as items of expense incurred by you, which are usual and customary in the operation of your business or profession. They must be generally accepted as tax-deductible business overhead expenses.”

There are lessons to be learned about these policies before you claim you are disabled and stop practicing.

In Uno v. Provident Life and Accident Insurance Company, Dr. Uno, a urologist, or became disabled and stopped practicing. He retired his medical license and canceled his medical malpractice insurance.  However, he continued to maintain his medical office, employing a part-time employee for the limited purpose of collecting accounts receivable, copying and mailing patient charts, paying bills and storing his financial and patient records.

Dr. Uno made a claim for benefits under the policy for expenses in maintaining is downsized medical practice. Provident ultimately denied his claim on the basis that is overhead expenses weren’t covered. Provident argued that Dr. Uno was essentially operating a collection agency

The trial court agreed saying that the office expenses were not incurred in the operation of his business or profession, reasoning that he had to be currently active in his urology practice.

The parties differed on whether the costs associated with continuing his business during his disability where items of expense incurred in the operation of his business or profession.

The appellate court found that the plain meaning of operation of the business in the context of an insurance policy included performing actions to continue the business, without regard to whether patients were still being treated. The court found that billing and collection efforts are normal activities that are part of a professional practice, and that the policy contemplated incurring expenses by disabled insurer over a long period of time.

The result would have been different if Dr. Uno had sold his practice or had entered into a stock purchase agreement over time. The court, most likely would’ve found that he was not conducting a business or profession after he sold his stock.

It is crucial that you secure the services of a experienced long-term disability/ERISA attorney to review both your disability and overhead expense disability insurance before you decide to stop practicing. You need to understand what long-term disability benefits your policy provides and what overhead disability coverage you have before making a crucial mistake that could destroy or limit your entitlement to benefits.

Nancy Cavey specializes in representing professionals, such as physicians, in the long term disability and overhead expense disability insurance claims. She has written extensively on the terms that you do not want to see in your long-term disability policy and pre-disability planning, including the 7 Tips for Long Term Disability Policy Holders Before Applying for Benefits.

If you have any questions, please give us a call at 727.894.3188 or contact us online by clicking here.

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