Its tax time and the insurance companies are sending 1099's to those with whom it entered settlements last year.
At least one company is telling the IRS, via the 1099's that the settlements are taxable benefits, even if the benefit itself was not taxable! If you are getting disability benefits and you paid the premium for the policy, then any benefit you get is non-taxable. That's straight up federal tax law.
A major company is taking the position that "yes, you are right but since this is a settlement we are going to report it to the IRS as taxable."
Pure, outright fraud on the part of this company. The disabled insured is left paying more attorney and CPA bills to straighten out the mess...all because this major insurance company is either stupid as all get out or mean as the devil.
Take your pick. I've seen them both!