Social networking has significantly impacted the area of disability insurance claims. Increasingly, insurance companies have been using the internet to investigate claimants on personal or professional websites to root out fraudulent claims. The insurers are looking for evidence to negate a claim of disability, or at least raise serious questions about the legitimacy of a claim. This evidence may be raised by the insurer when a claimant appeals a denial of benefits or later in the course of litigation.
In this law firm’s Employee Retirement Income Security Act disability insurance practice, we are seeing that insurers are downloading increasing amounts of materials about our clients (their insureds) from our clients’ Facebook, MySpace, LinkedIn, and other social networking sites. Some of the insurance files we have seen contain documents evidencing client activity on personal or commercial websites, including client discussions in chat rooms involving health or medical advice, a book review for a, merchant or information exchanges such as Amazon.com and About.com, and online news sources for higher-profile clients. For many sick and disabled clients who are unable to work, leave their homes, or have real concerns about their personal or professional reputations, the internet may be their only means of social engagement. Posting comments, sharing photos, and engaging in discussions with family, friends, and even strangers is often the best way that these otherwise physically-limited individuals can participate in necessary social or mental activity.
However, the social benefits of such online networking come with very real drawbacks, particularly when an insurance claim has been initiated, and this information may be used against the client. Take, for example the case of Quebec-based Nathalie Blanchard, who lost her long-term disability coverage when her insurer, Manulife, discovered photos of her on the beach and celebrating her birthday—activities which it maintained negated her claim of depression.
See Soraya Roberts, Nathalie Blanchard Loses Benefits Over Facebook Beach Photos, Daily News, http://subscript.bna.com/UTILS/lk.nsf/r/ddoe8desaq?opendocument.
For the unassuming client whose physical or mental condition is compromised and subject to scrutiny by a disability insurance company and its hired doctors during the months- or years-long claim process, the investigation by his or her insurer of social networking sites can be an additional emotional burden. Claimants are often already required to provide medical records, physical therapy notes, psychiatric records, financial records, and work performance records to prove their disability. The burden of knowing that your insurer may be conducting “big brother” style video and internet surveillance, all for the purpose of maintaining a file to support a claim denial, or for potential reference to local government officials (such as the district attorney for insurance fraud prosecution), can be a devastating prospect for disabled claimants.
This article will address some of the issues we frequently encounter in our practice at Kantor & Kantor LLP, issues of which other ERISA lawyers and their clients should be mindful. These include the pros, cons, and consequences of social networking and privacy concerns.
Is the Claimant Actually Disabled?
The primary purpose of harvesting information from social networking sites is for insurers to ascertain whether or not a person is truly disabled. Disability benefit attorneys and their clients should be ever mindful that engaging in any online activity should come with a low—or no—expectation of privacy. It is not uncommon for sick or disabled clients to be outraged that their insurer obtained copies of their discussions in chat rooms, photos from their personal Facebook pages, family members’ Facebook pages, and video surveillance in or around their homes or neighborhoods. While this may feel invasive to the client, the reality is that insurers have every right to ensure that they are not paying out on fraudulent claims.
Traditional video surveillance and now the internet, offer excellent tools for monitoring claimants’ activities. Social networking sites in particular have the added advantage of being cost-effective means to obtain information on details of people’s private and commercial activities. If claimants are posting comments or photos of themselves engaging in physical activities that are consistent with or run afoul of their claims of disability, then such evidence can provide all the proof needed to make or break a claim of disability.
While these sites can provide accurate information about the insureds, it has sometimes been the case that insurers identify the wrong individual, for purposes of surveillance or in monitoring social networking activities. In such cases, any “evidence” or information gleaned is unreliable or irrelevant.
As disability attorneys, we would advise other attorneys and their clients to keep in mind the following:
- Be aware that as soon as you have filed a claim, the insurer may be conducting surveillance, and this surveillance may continue even after your disability claim has been approved and paid by the insurer.
- All online activity may be traced to you as a claimant; there is not necessarily anonymity in cyberspace.
- Information online may be used as evidence to discredit a disability claim.
- Online presence and activity is not somehow separate from or unrelated to disability claims; it can help define a claimant and be very relevant to a disability claim.
- Evidence obtained from surveillance or online activity can drastically reduce the value of a case.
Own Versus Any Occupation Policies and Other Sources of Income
Insurance companies may search the internet to find evidence of any online businesses or online commercial presence, to ascertain whether a claimant is engaging in for-profit online activities. Virtual business activity is increasingly growing, and there are a number of possibilities for income-generating on the internet, entirely independent of one’s disability. Income earned from such online activity may affect the calculations of one’s disability benefits.
Disability insurance policies, whether group or individual, generally contain provisions allowing insurance companies to offset disability benefits paid with “other income” earned by the insured. Policies differ in the type of coverage offered, and all policies define terms such as “other income” differently. It is critical that attorneys and participants carefully read the particular policy at issue. Some policies insure against disability from one’s own occupation, others against disability from any occupation. In the case of both own or any occupation policies, if someone is earning income from other sources, e.g. investment income, rental income, or from an online business, the insurer may have a right under the policy to offset disability insurance benefits paid with the generated income, depending on the definition of income in the policy, and the type of income in question.
Therefore, while the insurer may agree that a claimant is totally disabled from her own or any occupation, if the policy so provides, disability benefits may be offset by “other income,” and the insurer reaps the financial benefit of the disabled person’s other income.
For example, under certain types of policies, if a claimant is entitled to a monthly disability benefit of $4,000 and earns $2,000 from another source, the insurance company may be able to offset its $4,000 benefit payment, and pay the claimant $2,000 per month.
“Other income” could potentially be earned from an internet business, information of which may be readily available online. In cases of “other income” offsets, an insurer will generally require copies of tax returns, pay stubs, and profit/loss statements to conduct an accounting before it will pay benefits. Alternatively, the insurer may pay benefits under a reservation of rights, until it has made a full accounting.
As insurance attorneys, we cannot stress enough the importance of reading and understanding the terms of the policy at issue. Understanding the insurance coverage and rights your clients may have under a particular policy is critical to successfully appealing or litigating a disability insurance claim, and setting reasonable expectations. Policies are frequently amended, so be sure to obtain copies of any such amendments to the policy at issue.
The Legal Landscape of Social Networking
It is unclear what limits exist for the government to utilize social networking tools, let alone what limits exist for private corporations, such as disability insurers. The limits of social networking and privacy are currently being questioned, tested, and litigated in the courts. Federal and state legislators are increasingly incorporating ideas and concerns about social networking into legislative debate and the text of laws. The concerns are primarily with privacy interests and rights of individuals where access to information via social networking sites is readily available to employers, government, or private entities.
The issue of employers’ access to employees’ family, medical, or social history (where photos or information related to personal background and/or family issues have been posted) through networking sites such as Facebook or MySpace was raised in the adoption of the Regulations Under the Genetic Information Nondiscrimination Act of 2008.
See, e.g., 2009 California Assembly Bill No. 632, an act to add Section 1708.9 to the Cal. Civ. Code; see also, 2010 New Jersey Senate Bill No. 326, Jan. 14, 2010, an act concerning social networking websites, supplementing Title 56 of the Revised Statutes, to be known as the “Social Networking Safety Act.”
Federal agencies, including the Securities and Exchange Commission (SEC), are exploring the possibilities offered by social networking for improving accuracy, reliability, transparency, and data collection and dissemination to a broad-based audience.
SEC requested comment from the International Corporate Governance Network (ICGN), a global membership organization of private and institutional investors, on Release No. 34-62495, relating to the U.S. proxy system. Social networking was recognized for facilitating information gathering about demographics, advancing communication, accuracy, reliability, transparency, and information dissemination to a broad-based population of shareholders potentially voting by proxy. U.S. Proxy System Release Nos. 34-62495, IA-3052, IC-29340; File No. S7-14-10, Oct. 11, 2010.
Other agencies, such as U.S. Immigration and Customs Enforcement, U.S. Citizenship and Immigration Services, and law enforcement agencies, such as police, the Central Intelligence Agency, and the Federal Bureau of Investigation, have used social networking websites as tools of investigation or surveillance, not unlike disability insurers. At least one lawsuit pending in the U.S. District Court for the Northern California involves requests made under the Freedom of Information Act (FOIA)Electronic Frontier Foundation v. Department of Homeland Security, 2010 WL 5122278 (N.D. Cal. 2010).
What we do know is that if attorneys or clients put information out into cyberspace, they should recognize that it may be obtained by private or public entities, as well as adversaries, and raised before or during litigation.
Attorneys and their clients should be vigilant about online or social networking activities. Behavior is not necessarily private or immune from scrutiny or attack simply because it is conducted in the privacy of one’s home on a computer. Attorneys should remind their clients that online activity can have very real consequences, regardless of where or when they might engage in it.
Conclusion
While the possibilities and limits of social networking continue to be explored and drawn, the internet is undoubtedly a powerful tool to be used or avoided, depending on what disability insurance attorneys and their clients hope to accomplish. There are great advantages to engaging in internet activities, but it is important to recognize that even using “privacy settings” in online activities may not ensure the level of privacy claimants and their attorneys may expect or want.
As such, keep in mind that whatever information attorneys and their clients put out into cyberspace is fair game. It is always a good idea to discuss with clients what kinds of social networking activities they are involved in, and what such activities could potentially mean for their case. For those clients who engage in a substantial amount of online activity, it is important that they notify their attorney(s) of any and all such activities, so that there are no “surprises” during the course of a claim, appeal, or litigation, which could adversely impact their case, or their sense of personal security. With information so readily accessible online, one cannot be too careful in monitoring one’s own professional and personal information available online, and attorneys should remind their clients that social networking can have very real consequences.
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