Many insurance companies have become masters at denying legitimate claims for disability benefits. These powerful corporations are supposed to deal honestly and fairly with their policyholders and it is our job as disability insurance lawyers to ensure that they do.
How can insurance companies get away with unfair denial of benefits? Part of the answer is due to regulations that are in place regarding employee benefits.
Was Your Employer-Sponsored (Group) Disability Claim Denied?
If so, there will be several issues working against you. Most disability insurance plans are provided through the workplace. These group disability plans are regulated by federal legislation known as the Employee Retirement Income Security Act (ERISA). This is important, especially when the insurance company denies a claim for disability benefits. A brief history will explain why.
The original purpose of ERISA was to protect employee pension plans. Over the years, the law was expanded to govern employee-sponsored short and long-term disability insurance plans. This means that a claimant whose disability claim is denied cannot file a lawsuit in state court under state insurance laws. Instead, employer-sponsored disability claim disputes have become federal cases ruled by ERISA.
What is the difference? Under state insurance law, a claimant is entitled to a trial by jury. No matter what reason the insurance company gave for denying a claim, a state court reviews the case “de novo” – which means “anew” – and forms its own decision whether or not the claimant is disabled under the policy.
State insurance laws apply fair and just remedies to protect claimants such as breach of contract and bad faith, and puts insurance companies that engage in abusive claims handling under the threat of severe financial punishment. If you are self-insured – meaning you purchased a private disability insurance plan directly from an insurance agent – state insurance laws would apply.
Federal ERISA regulations, however, limit due process and lean heavily in favor of the insurance company. Suffice it to say that ERISA has become a major obstruction to fair treatment of disabled claimants who rely on group disability insurance to compensate their loss of income. So much so that disability insurance attorneys are working together with lawmakers to reform deceptive practices allowed under ERISA.
How Is ERISA Unfair to Claimants?
ERISA law was never meant to apply to insurance, and the broadening of the law has been ill-suited for fair proceedings on behalf of denied claimants ever since. Under ERISA law, The insurance company plan administrator decides if you are disabled.
- If denied, you have very strict deadlines to apply to appeal the denial.
- You cannot submit new evidence after the administrative appeal. Cases are won and lost depending on the quality of the administrative appeal.
- You must exhaust the 180-day appeals process before you can file a lawsuit to obtain benefits.
- Many insurance companies will deny the appeal, because they will not face punitive actions if the claimant files a lawsuit. They have nothing to lose.
- In a lawsuit, rarely is “de novo” review applied by the court. The court will generally presume the insurance company’s decision is reasonable unless, as demonstrated to the court by the claimant, the court finds that the insurer has acted in an “arbitrary or capricious” manner.
- Cases are tried in federal court. Disputes are heard by a judge, not a jury.
- The insurance company is basically immune from liability for a wrongful denial of disability benefits. They never face having to pay “punitive damage” awards, so there is really no deterrent for an insurance company to deny a claim. If a judge determines in favor of the claimant, the insurance company will merely pay what they should have in the first place without monetary punishment.
Banking on the protections provided by ERISA, insurance companies have standardized their claims handling practice in a way that is meant to deny claims.
Disability Insurance Lawyers Are Essential to Your Appeal
Once you receive a denial letter, it is essential that you retain an experienced ERISA claim attorney as soon as possible! Claimants who are represented by a skilled attorney have a far better chance of winning their benefits.
The ERISA lawyers at Marc Whitehead & Associates have prevailed against the nation’s most powerful insurance companies in settlements and lawsuits on behalf of our clients. If you were denied disability benefits, contact us. We are intimately familiar with traps presented by ERISA and the legal processes involved in proving your case and winning your claim.