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If you are, or have been, involved in a disability insurance claim, you are keenly aware of the pitfalls and difficulties in prosecuting and maintaining your claim. But, if you think the claim’s process is difficult, try being involved in a professional licensure action at the same time.

In most disability insurance cases that involve either a psychiatric, and/or an addiction component, there is often times a concurrent legal issue involving professional licensure. Both of these issues can be extremely complex in their own singular sense. The problem is, that in most cases, these issues can not be singularized and, in addition, your contractual requirements may often differ or even conflict with the regulatory and statutory mandates.

Your disability insurance policy requires that you establish that you are “factually disabled” in order to be entitled to either total or residual disability insurance benefits under your policy. It is more than likely that your policy will require substantiating that you are unable to perform the material and substantial; important; essential duties of your own occupation (specialty), along with satisfaction of the physician’s care requirement, as a result of a medical condition, in order to obligate your disability insurance company to pay you total disability benefits. In addition, it is also more than likely that your policy will require that you substantiate that you are unable to perform one or more of the material and substantial; important; essential duties of your own occupation (specialty), or that you can perform all such duties but for less time than prior to the onset of your disabling condition, satisfaction of a loss of income threshold (usually 20% or 25%) comparing your pre and post disability income, and satisfaction of the physician’s care requirement, as a result of a medical condition, in order to obligate your disability insurance company to pay you residual (partial) disability benefits.

The State Board of Medicine requires (amongst other things) that you establish that you are “fit to practice” medicine with reasonable skill and safety to your patients in order to maintain your license. While being medically “unfit to practice”, from a regulatory standpoint, can be consistent with the medical inability to perform the duties of your specialty, from a contractual standpoint, this is not necessarily the case. In addition, there are a multitude of other issues other than “fitness”, that require licensure action. Reconciling these concurrent issues, is in reality, not only complex, but can have debilitating consequences on your claim, and also, invariably involve your disability insurance company considering the “legal disability” defense.

In the licensure context, the State Board of Medicine may suspend, revoke or otherwise restrict a license to practice medicine when it determines that a physician is unable to practice the profession with reasonable skill and safety to patients by reason of illness, including psychiatric/ psychological and/or alcohol or drug abuse/dependency/addiction, or being convicted of certain crimes. Those crimes usually include violations of the drug laws, felonies and misdemeanors related to the practice of medicine. In addition, the State Board of Medicine may take action against a physician’s license because of the failure to adhere to, or otherwise satisfy, certain regulatory requirements, for example, failure to obtain/maintain medical malpractice insurance.

Also, the State Board of Medicine may be obligated to take reciprocal action as result of proceedings before another State Board of Medicine.

There are a line of specific cases upon which your disability insurance carrier will rely in trying to use the “legal disability” defense whenever any licensure action is involved. “Legal Disability”, as opposed to “factual disability”, means the loss of entitlement to practice your specialty, or medicine altogether, as the result of an intentional act. “Factual Disability” generally means the inability to perform one or all essential duties of your specialty as a result of a medical condition.

The “legal disability” defense, as employed by all disability insurance companies, has morphed, from its original specific holding in 1928, to now house a multitude of circumstances and applications to prevent the payment of disability insurance benefits, by establishing that the basis for the inability to practice is not medically-based. One of the continuum of more recent cases which clearly illustrates employment of the “legal disability” defense, by a disability company, is the case of Goomar v. Centenial Life Insurance Company, which was decided in 1996. Dr. Goomar, practiced medicine until his license was revoked in 1987 as a result of accusations of sexually molesting some female patients. Apparently, the molestation ended in 1984, but Dr. Goomar continued to practice without any such accusations between 1984 and 1987. Subsequent to his license revocation, Dr. Goomar received psychiatric care and ultimately filed a claim for disability insurance benefits as a result of his psychiatric conditions. However, the Court held that Dr. Goomar was not entitled to disability insurance benefits because he was “legally disabled” instead of “factually disabled”. In other words, the Court said that it was the criminal accusations and subsequent licensure action which caused Dr. Goomar’s inability to practice as opposed to his medical condition.

Besides licensure issues and commission of a crime, there are a host of other “legal” scenarios, that may prevent you from practicing. When these circumstances exist, you need to spend considerable time and effort in becoming extremely knowledgeable with all aspects of both actions. Otherwise, you will not be able to negotiate the potential mine field of negative consequences and ramifications that may flow, to either or both cases, as a result of the ineffective or ill-prepared presentation of your cases.

So, does the loss of your license disable your claim? The answer is: it depends; and not necessarily. Firstly, it depends on the type and basis of the licensure action. It depends on the underlying medical condition, both from a factual and severity standpoint. It depends on a documented factual and symptomological history, and chronology of the other facts. And, it certainly depends on the opinions of your treating doctors and other doctors that will be involved in both processes, including those sitting on the State Board of Medicine.

Secondly, the loss of your license will not necessarily mean that you do not have a viable disability insurance claim if you have properly appreciated the “mine field”. The bottom line is, make sure your medical condition is always driving your claim. Otherwise, you will probably not prevent your licensure action from becoming the legal disability defense that will be employed by your Company in order to defeat your disability insurance claim. Being impaired from practicing is a terrible truth to accept. Just don’t let the loss of your license also impair your claim.

Disability Insurance: Does Loss of License Disable Your Disability Claim? was published in Physicians News Digest in November 2008. Mark F. Seltzer, Esquire is the founder of the Law Firm of Mark F. Seltzer & Associates, P.C., representing Physicians, Healthcare Practitioners and Professionals in disability insurance claims and cases. The firm is located at 1515 Market Street, Suite 1100, Philadelphia, PA 19102, and can be contacted at (888) 699-4222 or at www.seltzerlegal.com.