Winchester, Va. — Until a few years ago, Debra Potter made sure that her family could cruise the Caribbean, watch the NFL on big-screen TV and keep her elderly mother and in-laws at home in comfort.
She did so by earning $250,000 a year selling more insurance than almost anybody else in the state of Virginia, virtually all of it disability and health policies that she thought put a safety net under middle-class and affluent families such as her own.
Potter so believed in the protection she was providing that she made sure she was covered under a policy her employer, Southeastern financial services giant BB&T, had with UnumProvident Corp., the nation's largest disability insurer.
But when Potter began falling down in 2002 and was subsequently diagnosed with multiple sclerosis, she discovered that the protection didn't work anything like she'd expected.
UnumProvident, whose policies the 50-year-old insurance agent had been selling, questioned whether Potter really was disabled and refused to pay her. Although the firm, based in Chattanooga, Tenn., relented a few weeks ago, the reversal took three years and did not come before the Potters had run through most of their savings, yanked one of their five children from college for lack of tuition and hired a lawyer.
The $10.5-billion-a-year insurer denies mishandling Potter's case, saying only that "new information" caused it to change its position and start paying.
"People need safety nets, and that's what I thought I was selling them," Potter said. "But here I am with all my knowledge of insurance and I couldn't make it work for me."
When middle-class Americans talk about safety nets, they usually mean such things as food stamps or housing subsidies -- public assistance on which generally only the poor depend. In fact, working people up and down the income spectrum lean heavily on a long list of protections such as healthcare coverage, unemployment compensation and pensions or 401(k)s.
But an examination of Potter's experience, UnumProvident's legal and regulatory record and the practices of several other insurers suggests that a key component of working Americans' protective shield fails with unnerving regularity.
Disability insurance -- now carried by more than 50 million Americans -- generally promises to replace at least half of a person's wages in case of illness or injury. However, in a substantial number of cases, especially those involving workers with long-term or permanent disabilities, it doesn't deliver.
The chief reason -- and one that affects not only disability but the whole universe of employer-provided benefits -- is a series of court decisions dealing with the federal benefits law known as ERISA. The decisions have prevented states from extending almost any form of consumer protection to these benefits, and have severely limited individuals' ability to successfully sue their insurers.
"People who file disability claims today are worse off than they were two or three decades ago," said Judge William M. Acker Jr., who was appointed to the U.S. District Court in Alabama by President Reagan. "The law that was supposed to protect them has been turned on its head; the chief beneficiaries are now the insurance companies," said Acker, who has presided over a variety of disability insurance cases and has written extensively on the subject.
That such a sweeping change could occur and that it could upend someone as well-heeled as Debra Potter illustrates how close most Americans are to the economic edge, where a few setbacks at work or in health can send a person tumbling.
"The safety nets designed to protect people from being run over by economic forces beyond their control have been shredded," said California Insurance Commissioner John Garamendi, a Democrat whose department is investigating UnumProvident.
For years, disability was a sideline, often thrown in by insurance agents as an incentive to buy life insurance. But starting in the 1960s, the scope and importance of the disability safety net increased dramatically.
Types of policies expanded to include both individual and employer-provided coverage. Benefit-payment periods were extended to last to age 65 or later. Eligibility rules were loosened to include not only people who could do no work at all but those unable to do just their "own occupation." An example of the difference: An airline pilot whose eyesight had deteriorated so much that he couldn't fly but could still do a desk job would not have been covered under the old system, but would be covered under the new one.
Washington weighed in by extending Social Security to cover the most disabled, elderly or not, and by boosting benefits several times.