Understanding what ERISA disability insurance claims are, how ERISA claims are governed, and how disability insurance companies think when approving or denying claims can make a difference. Reading this article may give you the motivation to keep going if you receive a denial of your long-term disability benefits.
Disability Insurance Benefits
Long-term disability benefits are designed to provide benefits in the event one’s ability to work is interrupted. Most people have little idea whether the disability benefits are provided by their employer or an insurance company, or what it will take to collect the benefits in the event they are needed, because most people are thinking about their health insurance and vacation days when their new job provides employee benefits, with disability insurance benefits being a less common concern. Typical disability insurance benefit plans cover 50-70 percent of lost income less other sources of income, with 60 percent being most common. Most employers providing disability insurance benefits provide both short-term disability benefits and long-term disability insurance benefits. It is not unusual for short-term disability benefits to be employer-paid insurer-administered plans with long-term disability insurance benefits to insurer-administered and insured-paid, but totally employer-funded and totally insurer-funded plans exist as well.
ERISA Disability Insurance
Disability insurance benefits come in two main flavors: Those governed by the Employee Retirement Income Security Act of 1974 (“ERISA”), and those governed by state law. Under most circumstances, state law provides a more favorable forum for resolution of an employee benefit dispute, with a wider variety of available remedies. That is certainly the case in Florida, where Coffman Law is located. ERISA governs most employee benefit plans. Common exceptions are most public employers, such as cities, counties, and states, and many religious organizations and employers controlled by religious organizations. ERISA also generally does not govern individual disability policies, although there are some arcane rules which can be applied even to individual policies in some instances which can create ERISA preemption. Insurers love ERISA – it generally means no juries, usually means no live witness testimony, makes attorneys’ fee awards discretionary with the Court, and often means that the Court will only look at theinsurer’s opinion to see whether it is arbitrary and capricious – legalese for highly unreasonable. The arbitrary and capricious standard is modified where the insurer has a conflict of interest, and the conflict is a factor reviewing courts take into consideration in determining whether the ERISA administrator’s decision was unreasonable.
The final standard of review under which an ERISA case can be tried is called the de novo standard – novo is Latin for “new” – new review — and under the de novo standard, both the Plaintiff (the person seeking benefits) and the Defendant (the insurance company or ERISA administrator) have the same standing before the Court. The insurance company’s opinion about the merits of its case is worth exactly the same as any other Defendant’s opinion about the merits of its case, which is to say, they’re entitled to their opinion, but the Court will decide the case based on all the evidence. A de novo case may allow evidence beyond the administrative record, depending on the circumstances, but you still don’t get a jury. Attorneys’ fees are still discretionary with the Court. Very few attorneys have much experience litigating cases under ERISA. Before signing with an attorney, ask whether the attorney has that experience. Our firm does. Coffman Law has considerable experience resolving denials of disability insurance benefit claims.
Some Reasons Long-Term Disability Claims Get Denied
Most obvious disabilities get paid: if the claimant is in a coma, there’s a good chance that the insurance company is going to pay the claim without much investigation of the medical, although legal defenses to the claim may be investigated. Most mild headaches don’t cause people to file disability claims. Somewhere between these two extremes, disability insurance claims which are denied can be successfully contested. Many more cases can be successfully contested than actually are – something insurance companies factor into the cost of disability insurance. We grow up taught to respect authority, and many people believe that insurance companies are authoritative and should be listened to when they tell a disability claimant that the claimant has no right to benefits. Unfortunately, this is sort of like listening to the person on the opposite side of a game of checkers as to whether you should jump his King when you get the chance. Disability insurance companies do pay claims, but have a vested interest in being extremely careful about paying claims where liability isn’t extremely obvious. Some insurers have computerized word-processing programs with lists of reasons for denying disability insurance claims which are evaluated before the medical evidence for your claim is even gathered or considered. There are lists of defenses to insurance claims which are reviewed in many instances before thought is given to approving the claim. Put yourself in the position of the insurance company, using an extended metaphor below.
Understanding a Disability Insurance Company’s Motive for Denying Claims
Imagine you have a pool of money. People show up with cups to dip into the pool. If you make the process too inviting, many, many, many, times as many people will show up with cups to dip in the pool, and before very long, your pool will be dry. You must have some screening process to separate out the people who are supposed to be allowed to dip their cups in the pool from the people who should not be allowed to dip their cups in the pool. New wrinkle: The people with the cups do not actually know whether they should be allowed to dip their cups in the pool. There is a probability ranging from somewhere between 0.000001 to 99.999999 that the person with the cup is entitled to dip. The person may believe he or she is entitled, and the person may be right. But neither the person nor the insurance company knows for certain. (Remember, if you’re in a coma, you’re already getting paid, and if you have a mild headache for one day, you didn’t file a claim). The insurance company, therefore, sets up various obstacles between the people with cups and the pool of money, some of which look like imposing forms to fill out, some of which look like automatic denial letters, some of which look like in-house medical staff paid to review claims. The insurance company knows that, given all the reasons people stop seeking benefits (They pay for extremely sophisticated analysis in this regard, and have been in business for decades) that a certain number of people will stop seeking benefits at each obstacle. Say, for example, that 100 people apply and are denied on their first letter. Consider that your first obstacle. A certain percentage are going to stop seeking benefits at this point. Some, ratifying the insurance company’s expectations, go back to work. Others will not. They become depressed, addicted, homeless, and generally downtrodden. Or worse. Or they are fortunate enough to have a working spouse, or a spouse who can work, and begin taking over household chores. Others write back and fight back. Some get approved on the basis of the letter they write back. Some ask their doctors for help. Some get the help and get approved. Some get no help. Some get help and get denied again. At this point, there is further attrition: that is, more people give up. The insurance company’s screening process is working remarkably well. The pool of money faces fewer cups, and the insurance company can survive, or even turn a good profit. Some screening mechanisms work exceedingly well, and insurance companies are able to make extremely impressive profits. Sadly, a great many people with cups are turned away. The likelihood that people who ought to have been paid their benefits were included in the group that were not paid begins to rise. And so there are disability insurance lawyers.
What to do if You are Denied Long-Term Disability Benefits
If you have received a denial letter from a disability insurance administrator or disability insurance company, you might want to consider calling an ERISA attorney to see whether you can contest the denial. At worst, you will have wasted a few minutes or hours of time. At best, you may find that you have the opportunity to challenge the denial of benefits. If you do not have a denial letter, call the insurance company and ask them to forward the denial letter to you (preferably via email). An attorney can be a valuable ally in this process. Coffman Law has considerable experience resolving denials of disability insurance benefit claims. Contact us. We may be able to help you, even if the insurance company has said they will not pay. Call us at 888-583-7243 (888-LTD-PAID) to see if we can help you get your cup filled!