Labor & Employment Law

Pre-existent medical conditions may limit payment of disability insurance benefits

By Harvey Randall, Esq.

Pre-existent medical conditions may limit payment of disability insurance benefits
Mitchell Benesowitz v Metropolitan Life Insurance Company, &c. and Honeywell Long

Term Disability Income Plan, 2007 NY Slip Op 05580, Decided on June 27, 2007, Court of Appeals

Many public employees have enrolled in a group disability insurance plan through their employer or through an employee, fraternal or professional organization. The Court of Appeals? response to a question certified to it by the United State Court of Appeals for the Second Circuit concerning eligibility for such benefits in cases involving disability caused by a preexisting medical condition may be of interest to such persons.

The Second Circuit asked the Court of Appeals to advise it as to how Insurance Law §3234(a)(2) affects an employee?s eligibility to receive benefits under an employer?s group disability insurance plan in the event the disability is caused by, or results from, a preexisting medical condition.

The Court of Appeals concluded that the statute allows insurers to toll the payment of benefits during the first 12 months of coverage, but does not permit an insurer to impose an absolute bar to coverage for disabilities stemming from preexisting medical conditions or disabilities that arise during that 12-month period.

In the words of the court:

New York Insurance Law §3234(a)(2) means that a policy may impose a 12-month waiting period during which no benefits will be paid for disability stemming from a pre-existing condition and arising in the first 12 months of coverage.

The court noted that Insurance Law §3232(b) provides, in relevant part:

No pre-existing condition provision shall exclude coverage for a period in excess of twelve months following the enrollment date of coverage for the covered person.

However, said the court, although, Section 3234(a)(2) allows insurers to impose a tolling period in contrast to imposing an absolute bar to such benefits, this provision does not prevent insurers from excluding or limiting disability insurance coverage based on an individual?s prior medical history.

Full post as published by New York Public Personnel Law on April 08, 2008 (boomark / email).