If you have long term disability (LTD) insurance and the insurance company denies your claim for benefits, you might be asking, "Can I sue?"
Generally, yes you can sue the insurance company. How and when you can sue will depend on whether your plan is a group plan covered by ERISA or an individual plan covered by State Law.
If your plan is provided to you by an employer, it is most likely covered by a federal law called Employee Retirement Income Security Act (ERISA). ERISA lays out certain procedures that must be followed in all LTD claims, appeals and lawsuits.
In order to start the ERISA LTD claims process, an application for benefits must be made. If your claim is granted, you're done. The insurance company will send you essential funds to replace lost income.
But you're not here reading this article because your application was granted. Your claim has been denied or terminated.
If your claim was denied or terminated, then an appeal must be made. This is called an administrative appeal. You usually only have 180 days to file an appeal after the denial/termination. That seems like a long time, but it's not.
If you received a denial letter, contact the Disability Legal Center right away. You must begin the appeals process right away. Call us at (888) 320-2058 for your Free Denial Letter Review.
ERISA requires you to exhaust all administrative appeals before filing a lawsuit. Most policies only allow or require one appeal. Some may allow two, but that is less common.
Your appeal is filed with either the insurance company itself, or a plan administrator. These requirements are all contained within the policy itself, and is available upon request from your insurance company or administrator.
Unlike individual long term disability policies which are governed by your state's laws, ERISA disability cases are governed by ERISA, and the federal courts.
So, once your claim is denied or terminated, and your appeal has also been denied, you may file a lawsuit in federal court.
If your policy was an individual policy, you can sue in federal court and have a right to a trial by jury. But in ERISA cases, you do not have a right to a jury trial. Instead, the judge will decide your case.
A lawsuit is extremely time consuming and can take several months or longer. That's why it's critical to choose a disability attorney that will do everything possible to resolve your case during the above mentioned administrative appeal process. This way you do not have to wait and depend on a federal court for resolution of your claim.
There are two standards of review for ERISA LTD cases. "De novo" review and the "abuse of discretion" standard.
Abuse of discretion is the tougher standard. You see, ERISA is designed to "protect" the employee and their benefits. However, sophisticated insurance companies found a loophole in the law and gave themselves an unfair advantage.
If the insurance company wrote in their policy a discretionary clause, they reserved for themselves the right to interpret the policy and your claim. Yes, they sold your company a policy that let them decide whether your claim is worthy of payment.
Only an outright abuse of that discretion could be overturned by a federal court. The decision to deny or terminate your benefits must be "arbitrary and capricious." The federal judge will give deference to the insurance company's decision. This standard of review is highly unfair and amounts to "highway robbery."
De novo means "from the new." In this case, if a judge reviews your case under the de novo standard, the judge will independently review your entire administrative file and determine if you are disabled and entitled to benefits.
The federal judge will not give any deference to the insurance company's decision, and will make their own decision based on the evidence. This is the best standard for you.
Some states have passed laws forbidding LTD insurance carriers from selling policies containing discretionary clauses. California is one such state. That means, for all intents and purposes, discretionary clauses are illegal in California and almost all (if not all) cases will be decided under the de novo standard. This is great news for LTD claimants in California.
California disability attorney Joseph Dang is available for free consultations to discuss your options if your LTD claim has been wrongfully denied or terminated. Call us today at (858) 999-2870, or Toll-Free at (888) 320-2058. Or just fill out our contact form on this page and we will respond promptly.
Mr. Dang may give you guidance as to whether an ERISA long-term disability lawsuit is appropriate in your case.