This article discusses what are long term disability benefits and how to navigate a claim.
There are two types of long-term disability insurance. A majority of the cases are derived from employer sponsored welfare benefit plans (LTD benefits), and a small number are individual insurance policies not obtained through employment. Many insurance carriers have stopped writing individual policies. Individual policies are covered by state insurance law practices and employer sponsored plans are governed by the Employee Retirement Income Security Act (ERISA). If the policy is an individual policy, the legal argument use is a breach of contract, which can result in compensatory and punitive damages.
Every person (hereinafter the “claimant” or “beneficiary”) with a physical and mental disability must understand what the LTD policy states, i.e. read the contract and plan documents. Total disability is defined in the plan and the beneficiary must meet this exact standard in order to obtain benefits. The plan document will also indicate the amount of month benefit, such 60% or 66% of pre-disability income.
In order to successfully obtain LTD benefits under an ERISA LTD plan, the following issues must be developed.
First, obtain a copy of the LTD Plan and insurance contract between the employer and the insurance company. Determine the standard of review, either the arbitrary and capricious review standard (plan reserves discretion to interpret and administer benefits, courts will give deference to any decision made) or de novo review standard (this is the default standard under ERISA-court will review the entire case a new). This is critical to understanding how to prepare the application and any subsequent appeals.
Second, obtain a diagnosis from two or more specialists familiar with the particular disability in question. Each doctors should not make statements in the medical file that the patient is “feeling good” or “condition has not worsened and the patient is coping well”. Doing so prevents the insurance claims examiner from denying the benefits because of these positive statements. Cases are routinely lost due to these kinds of statements in the treating physicians medical files. The treating physician/specialist must also state what the specific limitations are; state the diagnosis using medically accepted criteria; state whether or not the beneficiary is totally disabled. Also, the treating physician/specialist must provide other relevant testing and make a definitive diagnosis. Remember, the beneficiary must establish that at the time when the application was filed, he or she was totally disabled.
Third, obtain written letters from other treating physicians that concur with the diagnosis. Each of the physicians selected should see the patient at least on quarterly basis or more, in order to demonstrate active patient status.
Fourth, obtain a psychiatric diagnostic review from a forensic psychiatrist. This involves somewhat expensive testing and review, but is worth the investment to rule out any somatoform disorders controlling the physical symptomology. Many insurance cariers deny claims because they believe the medical condition at issue is caused by some form of mental illness, i.e. major depression.
Fifth, obtain a treadmill or bike cardiopulmonary review. This testing will objectively support the medical diagnosis. Then have the testing results reviewed by the treating physician/specialist. It is also recommended that a labor economist be hired to provide a written report on the beneficiary’s capacity to earn a livelihood. Many LTD plans define total disability in terms of “inability to earn 80% of pre-disability income.” A labor economist will use population and disability statistics to support the beneficiary’s incapacity.
Sixth, collect all the medical files from treating physicians and other experts, and compile the administrative record for submission to the insurance carrier at the application stage and at all appeal stages of the claim. If the case is one where the application has been filed, then make a written request to the insurance company for all documents reviewed (30 day response time for the insurer), including claims examiner communications with internal counsel, which are not privileged communications. The attorney-client privilege actually belongs to the beneficiary/applicant. The beneficiary must make a written waiver of such privilege in order to obtain the protected communications.
Seventh, submit a written legal argument to the insurance carrier, at the application stage and later. This will send a strong message to the insurance company that the beneficiary is very serious about the claim. A copy of a template argument is contained under this section of the database. Attach to the legal argument as exhibits (either application stage or on appeal), the administrative record containing medical files, expert reports, medical literature, Diagnosis Standards, sworn beneficiary affidavit in support of total disability. Number each page on the bottom to keep track of the documents submitted by the beneficiary (“[Beneficiary’s Name] Pages 1-1000”). Continually add documents to the administrative record as they are generated, including letters to the insurance company. There have been cases where the insurance carrier illegally does not disclose internal company documents and even letters from treating physicians. Also beware that the insurance company will hire a private investigator to case the beneficiary to determine daily activities, i.e. do not lift rocks in your backyard and watch what you say on the cordless telephone.
Eighth, comply with all deadlines, such as 180 days to file an appeal of denial of benefits, 45 days for the insurance carrier to provide a written response-with an option for an addition 45 days if requested in writing to the beneficiary. The beneficiary can also make written requests for extensions of time from the insurance carrier to submit an appeal or other supporting documentation. Always obtain the consent of the insurer before proceeding to take the extension. Beware of the statute of limitations imposed by the insurance company, usually three years from the date of the application, to file a legal suit protesting the denial of benefits. Insurance companies have a fiduciary duty to continually review all claims, even closed claims.
Ninth, the beneficiary must use an ERISA attorney to navigate through this entire process. A skilled attorney should be familiar with the particular medical condition and the entire process previously described herein. Besides the treating physician/specialist, the ERISA attorney’s function is a critical part of this entire process. Insurance companies always deny claims of un-represented beneficiaries, but the carrier will think twice when an attorney is working on the case. However, the use of the attorney does not guarantee positive results. This is a very complicated area of law. Although often expensive, the attorney will be familiar with the insurance company practices and may have handled prior cases against the same insurer. Not all disability cases are alike factually. Remember, fees for all experts and attorneys are an investment in obtaining the financial return of continued income replacement until the age of sixty-five. Medical and attorneys’ fees generated during the administrative phase of the case are not recoverable, once the case is filed in federal court and the beneficiary is successful, the court has discretion to award attorneys’ fees and costs.
Tenth, the administrative review of the application and all subsequent appeals is the “litigation” of the case. Although no lawsuit has been filed, the administrative stage is where a future court will review for ERISA violations and wrongful denials if they occurred. Once the administrative process is concluded, the administrative record will be closed. The beneficiary cannot add any further documentation to the claim file, unless he or she can demonstrate good cause to the court to expand the administrative record, such as the existence of a conflict of interest by the insurance carrier, i.e. financial incentive to deny claims. If the claim is prepared properly, the beneficiary can avoid litigation by getting the claim approved using the aforementioned process. If the claim is denied, the beneficiary must file a lawsuit in federal court to protest the decision, i.e. appeal. Once the complaint is filed, the beneficiary’s attorney must immediately serve the complaint on the Plan Administrator and all fiduciaries. Immediately thereafter, the beneficiary must file a motion for judgment on the administrative record, i.e. a bench trial on the written legal briefs and exhibits. A court will then make the final determination. If the claim is denied at this stage, the beneficiary can appeal to the circuit court of appeals in the particular jurisdiction for review.
For more information please contact Mark Carey at (203) 255-4150 or email to firstname.lastname@example.org.