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Why mental illness provisions can hurt your case.Any policy that sets limits on benefit payments for “mental” or “nervous” conditions is blatantly discriminating against the mentally ill. Once again, because the government refuses to regulate these policies, discriminatory clauses such as these are allowed.

Most of these clauses limit—or outright deny—benefits if mental illness is The Reason a claimant is unable to work. However, there are some policies out there with much, much more dangerous wording. Prudential Insurance Company, amongst others, actually limits disability benefits payments if “mental illness plays any part” in the disability. This means that if they see “depression” or any other mental illness anywhere in your medical record they can limit what they pay you.

Think about how common that is! If a person has such a terrible illness or injury that they become disabled from their job and now on top of their health issues they have to deal with the financial strain of being unable to work, how likely is it that they may become depressed or anxious? The mental illness is not The Reason they are disabled—it is caused by the disability! But still, under this clause, the insurance company can limit your benefits.

Once again, your physician may be trying to help you by acknowledging your depression or treating your for it but that one mention of “depression” in your medical records makes the insurance company ecstatic—they just found their ticket out of paying you.

Ivan Kimber suffered from insulin-dependent diabetes. After he lost vision in one eye, he was transferred from his job as a heavy equipment operator to a desk job. Over the next three years, his condition worsened. After suffering several incidents of diabetic shock, his doctors recommended that he take medical leave and apply for disability under his company’s long-term disability plan.

At first, the plan granted him benefits “indefinitely.” Later, the plan changed its mind and terminated those benefits. Kimber submitted reports from three doctors, one of whom was a psychologist who noted that Kimber was “suffering from symptoms of depression and perhaps even mild dementia secondary to his diabetes.” The plan again started to pay, but stopped after Kimber reached 24 months of benefits, citing the 24-month Mental and Nervous provision in the policy.

Kimber took his insurance company to court. Even after looking at all the evidence that Kimber 1) was disabled and 2) that his disability was caused by his diabetes, and even 3) noting that his mental conditions were caused by his diabetes, the court still ruled against Kimber. The court said that under ERISA and the plan’s discretionary clause, the insurance company did not have to be correct to win. The insurance company’s reasoning for denying the claim only had to be “slightly reasonable.” The court also said that if the policy was ambiguous, the insurance company could interpret it anyway it wanted.

The Court looked at all of the facts in the case and said that “although we might have come to a different conclusion, the plan administrator acted within his discretion in [denying the claim].”

Kimber v. Thiokol Corp., 196 F.3d 1092 (10th Cir. 1999)

Ben Glass
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Ben Glass is a nationally recognized ERISA disability & life insurance attorney in Fairfax, VA.