It can be a shock to receive a denial letter from your short-term disability (STD) or long-term disability (LTD) insurance company. After all, isn’t your disability insurance there to provide you income protection in times of need? That’s probably how it was described by your employer and the insurance company. 

The truth is a little more complicated. Read on, but please don’t be discouraged.

STD and LTD claims aren’t what they seem.

The STD or LTD coverage that you or your employer paid for is often not what it seems. We regularly see clients that are not receiving the benefits that they expected. The benefits either never began, or they were stopped far earlier than expected. Unfortunately, this is more of the rule than the exception.

Imagine that you haven’t been able to work for weeks, have your doctor’s full support, and have returned your paperwork to the insurance company. You would probably expect your claim to be approved without a lot of fuss. Yet the insurance company denies precisely this type of claim, finding that there is not enough “objective” evidence of your impairments. Your complaints are ignored, and your phone calls to the insurance company get you nowhere. When you explain why you disagree, you’re told to submit an appeal or file a lawsuit. 

ERISA is tough.

The main reason for the insurance company’s decision is a federal benefits law known as the Employee Retirement Income Security Act (ERISA). ERISA does not help the little guy, and the insurance companies are aware of this. They know what the law allows, and they straddle that fence. 

How does ERISA help the insurance company? For starters, it takes away the right to a jury trial. A group of your peers does not get to see you and your disability. In fact, ERISA typically takes away your right to testify altogether. Instead, the case is decided on an administrative record that is assembled by the insurance company. Evidence that you don’t submit to the insurance company normally cannot later be seen by a judge (even if it would be the most recent and helpful evidence). 

Because the administrative record is so important, it is crucial to prepare an extremely thorough appeal (and to do so before the appeal deadline expires). Simply sending a letter without any new evidence will almost certainly fail. An appeal should contain some combination of additional medical records, medical opinions, a vocational evaluation, and written argument.

Another challenge in ERISA disability cases is that the judge deciding your case doesn’t get to decide whether you are disabled. As crazy as that sounds, it’s how ERISA works. Instead of allowing the judge to weigh the evidence on his or her own, the judge’s hands are tied by the letter of the law. The question for the judge is whether the insurance company’s decision was “arbitrary and capricious” or “unreasonable.” 

In other words, the judge may personally disagree with the outcome and decision, but that doesn’t mean that the judge can find you disabled. For example, the judge can agree with your doctor’s opinion but conclude that the insurance company’s reliance on its cold, distant experts was reasonable. 

Another frustrating part of ERISA is that even when the insurance company’s decision is wrong (by being “arbitrary and capricious” or “unreasonable”), the judge usually will not award benefits. Instead, a win is more likely to be what’s known as a remand. The judge will order the insurance company to go back and administer the claim properly. So if the insurance company failed to consider all of your conditions, the judge might order it to go back and do so.

What a remand often means is that the insurance company will come up with another reason to deny the claim (and cover its tracks even better this time around). We have cases where we were successful in getting a remand, only to see the claim denied again. We again appealed the decision and a brought a new lawsuit. Meanwhile, our client is left waiting, still without benefits. This is part of the reason that many LTD claims settle in litigation. 

Another challenge is that ERISA claims are federal claims. This means that your attorney and the insurance company’s attorney litigate in federal court — not state court. Federal litigation is more detailed and technical. And federal courts are often more cautious than state courts. 

There is reason for hope.

Despite these challenges, ERISA STD and LTD claims are not hopeless. But they do require carefully prepared evidence and argument. It’s important to raise issues in particular ways. In particular, you want to emphasize the insurance company’s inherent conflict of interest in administering and paying claims. The insurance company naturally wants to save money, and if you can show how that conflict of interest distorted the process, you have a better chance of success. 

The insurance company also usually has an obligation to act as what the law calls a “fiduciary.” This means it must act on behalf of the people who are submitting claims for benefits. There are technical arguments that can be raised to provide additional ammunition in litigation. 

So ERISA disability claims are different from other insurance claims. The rules aren’t what they seem. But with proper preparation and representation, the chances for a favorable result can increase substantially. 

Our office helps people with STD and LTD claims governed by ERISA, as well as those disability claims which aren’t. We are located in North Kansas City, Missouri. If you have questions or need help with a claim, please give us a call or send a text.