If you have income replacement protection if you become disabled due to a sickness or injury or illness, such coverage is most likely available to you through a group disability policy purchased by your employer. For the most part, these policies and claims thereunder are governed by the federal statute known as the Employees Retirement Income Security Act (“ERISA”). Most state and federal employees as well as employees of church groups are not covered by the federal ERISA laws.
If you have purchased a policy directly from an insurance company or insurance agent, then you have an individual as opposed to a group policy. Your individual policy will not be governed by ERISA, and instead be guided by the statutes and case law of your particular state. The state laws can differ. In Colorado, for example, a “bad faith” denial of your claim can lead to the recovery of extra-contractual damages. Some states do not have these bad faith laws. Colorado also has a powerful statute which provides for a recovery of double the contract benefits and attorneys’ fees if the claim is “unreasonably delayed or denied.”
What to do if your claim is denied?
The answer to this question depends greatly on whether you have an individual or group policy. If an individual policy, you may or may not have to pursue an internal appeal of the denial with the insurance company, although we may recommend that you do so for a variety of reasons. However, for a claim arising under a group (ERISA) policy, there are certain statutory and regulatory obligations which cannot be overlooked. You are required to file an internal appeal with the entity which denied your claim. You must be provided at least 180 days within which to submit the appeal. The appeal is a prerequisite for the subsequent filing of a lawsuit, if that becomes necessary. We always tell our clients that this internal appeal stage in an ERISA-governed claim is the most important stage of your claim. Your appeal should include all documentary evidence supporting your claim. In representing our clients, we employ different approaches and tactics to ensure a well prepared appeal for each case. A well documented appeal has a greater chance of success and, if litigation becomes necessary, is crucial to the potential success of a lawsuit.
The Litigation Process
If a lawsuit becomes necessary, litigation of a claim denial under an individual disability policy looks very different than that of a group policy. Under an individual disability policy, you will likely be entitled to a jury trial. The types of damages you can claim greatly exceed those which are recoverable under a group (ERISA) disability policy.
ERISA long-term disability litigation is often resolved by the decision of the trial court judge. These cases end up in federal as opposed to state court most often. The decision of the trial court judge is usually rendered after the parties have filed motions for summary judgment. These motions and accompanying briefs can be quite extensive. We submit extensive briefs arguing the facts, the law, and all other relevant factors of the claim in this written document. Importantly, the judge’s review of the evidence relevant to the claim is limited to the “administrative record” (better known as the insurance company’s claim file which was prepared prior to the filing of suit). Generally speaking, in an ERISA disability case, no evidence concerning the claimant’s disability can be added to this claim file following the underlying appeal decision by the insurance company. In other words, all evidence in support of your disability claim must be submitted long before the lawsuit is initiated. This is not true with respect to individual disability policy claims and denials.
Chances of Success
In our experience, you have a much greater chance of success in your disability claim under an individual policy versus a group policy governed by ERISA. Because of a lack of damages that can be awarded in your favor and against a group disability insurance company, the insurer knows that its only true exposure is the payment of the past-due disability benefits, interest and possibly an award of attorneys’ fees. Knowing that its exposure is limited, the insurance company is less concerned about its conduct in processing a claim under an ERISA long-term disability policy. The ERISA laws were passed in 1974 to supposedly protect the plan participant (employee) but it is generally accepted that the opposite is true. The employer who provides the disability benefit and more typically the insurance company that insures that group disability benefit, faces little exposure as a check on its conduct and decision making authority. An insurer of an individual long-term disability policy faces much greater scrutiny, will have the decisions analyzed and decided by a group of your peers through a jury trial most likely and can face significantly higher exposure for reaching a wrong or unreasonable decision.
Need Help with a Claim or Denial?
If you have a disability policy and are thinking of filing a claim, and would like to have your situation reviewed in advance by experienced disability insurance lawyers, feel free to contact us. Such reviews can typically be accomplished in a one to two hour consultation for which a reasonable fee will be required. If you have already filed a disability claim, and it has been denied, you should not hesitate in having your situation reviewed by an experienced attorney at McDermott Law. We have the experience it takes to understand your claim and guide you through the internal appeal process and to pursue your lawsuit against your insurance company (or third party claim administrator) if necessary. Click here to contact us by email or call (303) 964-1800.