James:

Welcome to the Broker Advisor podcast. Today we have Randy Tate, who’s the Director of Underwriting at MGIS. Randy, it’s no secret that you are the most attractive MGIS employee, so we are glad we could nab you today. How are you?

Randy:

I Am doing great today. Thank you, James. And you’re taking great liberties there with that statement.

James:

My goal is to always make my guests feel a little bit uncomfortable right at the beginning.

Randy:

You succeeded. Well done.

James:

So, you are currently the director of underwriting at MGIS, but you used to be one of our regional vice presidents of sales. And you tell a story from time to time that I think just does a great job of illustrating the need for disability insurance for healthcare professionals who have high incomes. This orthopedic surgeon group. Why don’t you just launch into it and tell us about that experience?

Randy:

Sure, I’d love to. So a few years ago I was working with an orthopedic surgery group, walking through our contract and just helping them understand how it worked and walking through the needs that they had to kind of figure out what they wanted to put in place. And one of the surgeons spoke up and just said, let me tell you a little story so that you can understand what we really need and what we’re trying to avoid. And I said, absolutely, I love hearing stories. And so he went on to tell me about his partner who was still in the firm, no longer practicing, but still owned part of the practice, the orthopedic surgery group. Apparently he was diagnosed with diabetic neuropathy, so he got the shakes. He wasn’t able to hold his hand still, and it progressively got worse to where he couldn’t perform surgery at all.

He was an orthopedic knee surgeon. He exclusively did knee surgeries. In fact, he was performing ligament repair that he had patented, a procedure that he had patented. And so he was doing a lot of surgeries, making a lot of money, and he no longer could because of his diagnosis and because of the hand tremors he developed. And so what happened was he filed a claim with his carrier. His IDI carrier approved the claim quickly. He had a great IDI policy with rich definitions protecting his ability to do what he did. But then when he filed the claim with his group disability carrier, they denied the claim. He pushed back on it, they reinforced their decision. He actually got an attorney involved, and the courts sided with the group insurance carrier because based upon the contract language, the claim denial was appropriate.

And so they upheld that denial and wouldn’t pay him a claim. So naturally, the next question should be that you have, what was the definition of disability in his policy? Physicians know that they should buy disability that is really rich. They all buy individual disability policies as they finish med school. And then they go on to buy group disability policies. And most physicians understand that you need to buy a policy that has specialty and subspecialty language in the definition of disability. And this doctor had done that. Their clinic purchased, they did their research and they purchased a policy that included specialty subspecialty language. So he should have been protected, but he wasn’t. The group carrier with that language still denied his claim. So what happened was this, the American Board of Medical Specialties, the governing board in the United States, they recognize orthopedic surgery as a specialty.

And then there are two subspecialties that roll up underneath orthopedic surgery. One is surgery of the hand and the other one is orthopedic sports medicine surgery. And so basically what they came back with in the denial letter that I read, they just simply noted that you are still able to do procedures within your subspecialty of orthopedic sports medicine and so we do not consider you to be disabled. You’re still able to do something within your subspecialty. And one of the things that he was told by the carrier was that, we get you do knee surgery, you can no longer repair ligaments and do those things that require fine-tuned motor skills in your fingers, but you can still work with hips and some of the back surgeries that are needed that don’t require the dexterity in the fingers, but require a good strong back and good strong arms. And so they denied his claim. Again, the lawsuit, the court sided with the carrier saying that they’re in their right to deny the claim based on their specialty and subspecialty definition of disability. And so he never got a dime from his group disability carrier.

James:

Well, so…

Randy:

Pretty disappointing.

James:

And so just thinking about the logic of that. So if he could have done those other surgeries, why didn’t he?

Randy:

Good question. So I asked him that as well, and what he told me was that he was an orthopedic knee surgeon. Again, he had developed a couple of procedures that he was the first to develop in the United States, and so he was making a lot of money and without question, talking to him, there was some pride there. He was an orthopedic knee surgeon. He didn’t want to do other stuff. And so that was part of it. I think the other part of it was he just didn’t feel great, and it still required a decent amount of energy to work with backs and with hips, but I think a lot of it was pride. He worked hard to get where he was at and he was a knee surgeon. He didn’t want to be told he was something else.

James:

Yeah, yeah. No, I asked that question, that’s an interesting thing for an insurance advisor to keep in mind is that even though maybe he technically could have done those other things, he had spent so much time and energy and effort developing these special procedures that he couldn’t perform. And so for the group carrier to deny that probably would’ve felt pretty insulting and frustrating.

Randy:

And that’s exactly how he felt, you’re right. Talking to him, he was clearly bitter. He was upset. He couldn’t understand why he spent all that money for a policy that supposedly protected his ability to be a knee surgeon, but it didn’t. So the cool part of the story though is their practice bought our policy and they’ve been with MGIS ever since. And basically as I told them, here’s what we would’ve done in that same situation. And I told the doctor this and they bought our policy. They’ve had it again, like I said, ever since. But had they been insured with us, our definition of disability includes actual procedure’s language. Meaning we look at the actual procedures that a physician performs in their practice. And we typically will look back 12 months at those procedures, CPT codes, CPT procedure codes, which physicians in their offices are familiar with, basically the codes that are used to bill for all of the procedures the physician does.

Had they been insured by us when this happened, we would’ve captured the fact that he was performing knee surgery. And if he could no longer perform knee surgery, but he was physically capable of still doing hips and backs, we still would’ve considered him disabled because he couldn’t do the procedures he was doing, knee surgeries, before the disability started. And so we would have, assuming he had an income loss, which he did, he would’ve been considered disabled and we would’ve paid him a disability benefit.

Again, the key to the policy, and it would’ve benefited them and definitely benefits other orthopedic surgery groups out there, is that we’re looking at the actual procedures that a physician performs based on their CPT codes in the practice over the last 24 months. For an orthopedic group, obviously orthopedic surgery is the specialty, but only has hand surgery and then a very broad orthopedic sports medicine as the subspecialty, you’re going to get a lot of them that potentially could be considered not disabled if something happens, depending on the contract language they have. Our contract, including that CPT code, actual procedure’s language, ensures that if they can’t do what they were doing prior to disability, like this knee surgeon, they’ll be considered disabled and they’ll receive a benefit from us.

James:

Well, thank you, Randy. That’s an awesome story.

Randy:

Yeah, it was a great story. Talking with these guys, it really was a great story because on one side you have a physician that didn’t get what they expected and what they had paid for, but on the other side, he was there and he was making sure that his peers that he had worked with for years and knew you for years, his friends didn’t make the same mistake he did. So he had interest in their benefit, and we were able to talk, make sure that we got to a point where they all understood how the contract worked and put the new policy in place for him. So it turned out to be a really good story, but certainly for him, he went through some tough times as he lost a lot of money that potentially he would’ve received because of disability.

James:

Yeah, absolutely. Well, thanks for coming on the show today, Randy, and telling your story.

Randy:

Absolutely. Thanks for having me on, James.

James:

All right, have a good one.

Randy:

You too.