If there’s one certainty in the field of disability insurance law, it’s that every claim is unique. And while there are a host of legal concepts that potentially come into play, the extent to which they apply to a given claim cannot be determined without a thorough individual review.
Below are some of the questions frequently asked of us by those we assist, as well as brief responses. We emphasize, however, that because no two claims are identical, the information set forth below should not be relied upon in conjunction with an evaluation of, or the formulation of a strategy for, any particular claim.
Is my disability claim controlled by ERISA or not?
I’ve received a benefit denial/termination letter. What’s the next step?
What about deadlines?
What if my policy/plan is amended after I become disabled?
When I get to court, how will the decision to deny/terminate my benefits be evaluated?
Will the judge give special consideration to the opinions of my treating physician(s)?
What about other grounds for denial, such as misrepresentation or pre-existing condition?
What happens if I win my case?
Besides benefits, what other damages can I ask a judge to award me?
My disability insurer wants me to submit to an examination by one of their doctors. Am I required to attend?
What’s the best way to go about preparing an ERISA appeal?
Isn’t my case against my disability insurer a “slam dunk” because the Social Security Administration has found that I’m disabled?
What’s an offset?
The rules under which an ERISA claim must be played out are markedly different than those applicable to an ordinary “breach of contract” claim, and thus it is critically important to know at the earliest possible moment whether or not ERISA controls. This may seem like a simple question, but in some instances it is not.
Generally speaking, if your disability coverage was made available to you as a benefit of your (or someone else’s) employment or union membership, then ERISA applies; otherwise it does not. There are several exceptions to this general rule. For example, if the employer in question is a governmental entity or an agency or instrumentality of a governmental entity, then ERISA does not apply.
Additionally, there exists a so-called “safe-harbor” exemption, according to which ERISA does not apply where: (i) the employer or union makes no contribution toward the premium for the coverage; (ii) participation in the coverage is completely voluntary; (iii) the employer or union has not endorsed the coverage and has had no involvement aside from permitting the insurance company to publicize the program, collecting premiums through payroll deductions or dues checkoffs and remitting them to the insurance company; and (iv) the employer or union receives no consideration in connection with the coverage, other than reasonable compensation for administrative services actually rendered in connection with payroll deductions or dues checkoffs. Note that all four (4) factors must be present in order for the “safe harbor” provision to come into play. If one or more factors is absent, the provision does not apply (which means that ERISA controls).
Except in rare circumstances, in order to preserve your right to someday challenge in court an ERISA-controlled benefit determination, you must first pursue an ERISA appeal. Some plans require two appeals, and in that instance both must be pursued before a lawsuit may be brought (it is permissible for an insurance company to offer more than two appeals, but under current rules, you cannot be compelled to file more than two).
Apart from being mandatory (in most cases), an ERISA appeal can fulfill an extremely important role in the process. By the time a case gets to court, the judge may consider the administrative record complete, such that no additional materials will be accepted for consideration. Thus, your ERISA appeal may wind up being your final opportunity to come forward with evidence supportive of your claim.
From a claimant’s perspective, there are deadlines for: (i) filing a claim; (ii) filing an appeal challenging a benefit denial or termination; and (iii) commencing a lawsuit in the wake of an unsuccessful appeal. The deadlines for filing a claim and for commencing suit typically flow from the language of the subject policy or plan (though it’s not unusual for that language to be expressed in terms that are far from clear). Moreover, as to the latter, the limitations period is frequently divorced from the adverse determination, which, strangely, means that a claimant’s time to sue may begin to run down even before his or her benefit is denied or terminated. Anyone interested in exactly how this works should take a look at the Supreme Court’s decision in Heimeshoff v. Hartford Life & Accident Ins. Co., 134 S. Ct. 604 (2013), which is discussed in our blogpost of December 19, 2013.
As for appeals, per the terms of the pertinent regulations, disability claimants have 180 days (or roughly six months) to file.
Insurance companies face deadlines for rendering initial claim determinations and for resolving ERISA appeals from denied/terminated claims. The deadlines are described in the regulations, and they contain generous “extension” provisions that permit insurance companies to obtain more time by simply providing timely notice of their intention to do so. They also permit insurers to suspend (or “toll”) the period when they conclude that additional information is needed.
In general, an amendment will have no effect on a claimant who became disabled prior to the amendment’s effective date. Stated differently, a disability claimant’s rights are generally said to “vest” on the date of his or her disability, such that subsequent amendments are without force or effect.
Depending on whether certain language is (or is not) present in your plan or policy, the judge will review the determination either anew (de novo review) or with a degree of deference (“arbitrary and capricious” review). It is, of course, more difficult for a claimant to prevail in the face of “arbitrary and capricious” review, which explains why the standard of review is often hotly contested.
There are some ways of avoiding “arbitrary and capricious” review despite the presence of discretionary plan language, and some courts have held that a watered-down version applies under certain circumstances (e.g., where the entity that determines benefit eligibility also funds the payment of claims deemed payable).
Developed in the context of Social Security disability law, the so-called “treating physician rule,” according to which the opinions of a claimant’s treating physician are entitled to more weight than those of the non-treating physicians hired to evaluate a claim, has been held by the United States Supreme Court not to apply to ERISA-controlled disability claims. That said, the opinions of a treating physician cannot be ignored, which means that where a denial or termination is issued despite a treating physician’s finding of disability, the insurance company had better have reliable evidence to support its contrary determination.
Somewhat infrequently, a decision to deny benefits will be grounded on a basis other than that the claimant is not disabled. In that regard, insurance companies sometimes take the position that certain information furnished in the policy application was false or that the claimant’s disabling condition is “pre-existing” (that is, a condition from which the claimant suffered before his or her disability coverage first became effective).
Both of these defenses are tightly controlled by statute. Thus, when they are alleged, it is particularly important to have your claim evaluated, instead of simply accepting what the insurance company has to say.
Dumb question, right? Wrong. Many ERISA claimants will be surprised to learn that not all court victories immediately result in an award of benefits. Rather, in some cases, a “win” leads to a “remand” — a technical term that simply means the claim is being returned to the claim administrator with instructions to reevaluate things after correcting the mistakes upon which the decision to remand was based. On remand, the original determination will either be overturned, in which case benefits will be paid, or upheld, in which case the claimant’s only recourse is to again ask the court to intervene.
While it may seem logical that a claimant whose claim was wrongfully denied or terminated should stand to recover (or at least partially recover) not only the benefits of which he or she was deprived, but also additional damages associated with the inconvenience brought about by the insurance company’s decision, such extra-contractual damages are generally not recoverable under ERISA.
What is potentially recoverable, depending on a series of factors, are interest and attorney’s fees and costs.
In general, reasonable examination requests must be honored, which is to say that if you refuse a reasonable request, your disability insurer may be justified in terminating your claim for failure to cooperate.
While what needs to occur in order to put forth the best possible ERISA appeal varies from case to case, virtually all appeals begin (or at least should begin) with the same first step: securing a copy of the insurance company’s file. Only after obtaining access to the insurance company’s file can one truly be prepared to draft an appeal, and in recognition of that, the regulations provide that on request, disability insurance companies must supply a copy of the claim file free of charge. If you find yourself short on time (see “what about deadlines?” above), you should attempt to secure an extension from the insurance company. If the insurance company refuses, you should submit a timely appeal, noting that you intend to supplement it once your file has been supplied to you.
Many disability claimants (quite understandably) believe that because they have been found disabled by the Social Security Administration, they will have an easy time proving that the insurance company’s decision is wrong. They harbor that belief, no doubt, because Social Security disability benefits are very difficult to obtain. So are they right? The short answer is “no.” Disability insurers are not bound by determinations of the Social Security Administration, and benefit denials/terminations are frequently upheld even though the claimant is receiving Social Security disability benefits. Still, the case law is clear that an insurance cannot ignore the fact that a claimant is receiving Social Security disability benefits; rather, it must consider it as one of many factors.
In the ERISA context, if you begin receiving benefits from other sources (e.g., the Social Security Administration or workers compensation), your disability insurer is frequently permitted to deduct (or offset) those benefits from your monthly long-term disability benefit. That’s the bad news. The good news is that as those collateral benefits increase through cost-of-living adjustments, the offset usually remains at the “original” amount (in contrast, insurers usually are permitted to take advantage of increases attributable to reasons other than cost-of-living adjustments). Also, many plans feature a “minimum” benefit — that is, an amount that will be paid each month even if offset considerations dictate a lesser amount. Naturally, in order to determine what does/does not qualify as an offset, you need to review your particular plan or policy.