A disability insurance policy is a contract between the insurance company and the policyholder. The policyholder makes monthly payments to the insurance company; in exchange, the insurance company agrees to provide them with a source of income should they become too disabled to work.
In the U.S., when two parties enter into a contract like a disability insurance policy, they are required by law to act in good faith and deal with each other fairly. An insurance company acts in bad faith when it reneges on its contractual obligations and unfairly denies, delays or terminates a policyholder’s disability claim.
Examples of Insurance Company Bad Faith
The disability benefits insurance attorneys at Marc Whitehead & Associates have represented many individuals who have had their benefits denied, delayed or terminated due to the bad faith actions of an insurance company.
Examples of bad faith on the part of an insurance company can include:
- Denial of insurance benefits due as outlined in the policy
- Making misrepresentations about benefits and features of a disability insurance policy
- Failure to acknowledge receipt of a claim
- Denial of a claim without explanation
- Delay or failure to approve a claim
- Failure to promptly or properly investigate a claim
- Delay or failure to pay benefits after approving a claim
- Offering a policyholder less money than their claim is worth
- Non-disclosure of policy benefits
- Unreasonable conditions (such as requiring multiple forms from healthcare providers, repeated exams, requiring policyholders to seek Social Security Disability benefits, etc.) to obtain benefits
If you believe your insurance was acting in bad faith when it denied your claim for disability benefits, you should first consult with an experienced disability insurance lawyer. An attorney will be able to examine your policy to determine if there’s been a violation in the terms of your policy, if the insurance company fully investigated your claim, or misrepresented the benefits described in your policy.
You Legal Options For Wrongfully Denied Disability Claims
The legal options available to policyholders depends on what type of insurance policy they have.
There are two types of disability insurance: employee group disability plans and individual plans. Each has its own advantages and disadvantages. Group disability plans are less expensive than individual disability insurance plans, but generally don’t offer the same level of benefits. Individual plans cost more than group disability policies but can be tailored to fit the policyholder’s personal needs.
Employer group disability plans are regulated by ERISA. Enacted by Congress in 1974, ERISA is a federal law designed to protect individuals who participate in private industry pension and health plans from fraud and other unethical actions.
Among other things, ERISA provides policyholders with the right to appeal a denial of benefits. It allows policyholders to sue an insurance company for bad faith, but only after the appeals process has been exhausted. In an ERISA bad faith insurance lawsuit, the damages a policyholder can recover are limited to the amount of the benefits owed and legal fees.
While individual disability policies don’t fall under the protection of ERISA, state and federal laws give the holders of individual plans more options when it comes to seeking legal remedies after an insurance company acts in bad faith. Lawsuits can be filed in state and federal courts; the trial can be decided by a judge or jury.
In addition to fraud, the holder of an individual disability insurance policy can also sue for breach of contract. Damages are not limited to the amount of the disability benefits the plaintiff is owed; they can also include damages for mental anguish, legal fees and even punitive damages.
In some states, such as Texas, the defendant can ask for up to three times the amount the insurance company would have paid if their claim had been properly processed.
Have You Been the Victim of Insurance Company Bad Faith?
If you believe you have been the victim of bad faith on the part of an insurance company, it’s urgent that you take immediate action to protect your rights and your benefits. The disability insurance attorneys at Marc Whitehead & Associates are here to do both.
In a lot of situations, it’s possible to get your disability benefits approved or reinstated without having to go to court. And if a lawsuit is your only recourse left, you’re in good hands. We have prevailed against insurance giants like Cigna, the Hartford, Liberty Mutual and MetLife in federal court to get our clients the disability benefits they deserve. Call the law offices of Marc Whitehead & Associates to find out how we can help you get all the disability benefits you are entitled to.