Disability Benefit Claims
1. Non-ERISA disability cases are governed
by state law
Holders of individual disability policies have
significant advantages over those whose benefits are
provided through an employee benefit plan. When you
purchase a disability insurance policy from an insurance
broker, you are entering into a contract with an insurance
company. If the insurance company later denies your
claim for benefits, your claim is governed by state
law. You have the right to file a lawsuit in state or
federal court, and the dispute will be resolved by a
jury of your peers. You have the right to bring witnesses
to the court to support your claim. In addition to the
claim for breach of contract, you might be able to raise
additional claims if the insurer's refusal to pay constitutes
bad faith. Many states, including North Carolina, have
state consumer protection statutes that allow recovery
of treble damages and attorney's fees. Punitive damages
may be available if the insurance company's conduct
is bad enough.
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2. Employee benefits
are controlled by ERISA
A different law applies when disability benefits
are provided by an employer. Disputes are governed by
a federal law, called ERISA, which stands for the Employee
Retirement Income Security Act of 1974. A law that deals
with "employee retirement security" sounds
friendly, but in reality ERISA provides significant
advantages for the employer or insurance company. The
claimant is not entitled to a jury trial. Usually, there
is no trial at all.
In an ERISA case, the court typically does not decide
whether the claimant is disabled. Rather, the court's
role is limited to reviewing the plan document and the
claim file to determine whether the claims administrator
abused its discretion. Under this limited standard of
review, the claims administrator's decision will be
upheld if it is reasonable. The claims administrator
does not have to give greater weight to the claimant's
treating physician, and may decide to accept the evaluation
of one of its own staff physicians, even if that doctor
never examined the claimant.
ERISA restricts the court's review to documents that
were available to the claims administrator at the time
it issued its final decision. Evidence obtained after
the claimant has exhausted his or her administrative
appeal cannot be considered by the court. Therefore,
it is of paramount importance that the claimant fully
develop the evidence in support of his claim, and submit
such evidence to the claims administrator during the
claim process.
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3. There are time
limits for acting
Private disability insurance is governed by the
wording of the policy. As long as the insured pays the
premiums, the policy remains in force and the insured
may submit a new claim for benefits at any time.
But when claim involves an employee benefit plan,
the plan documents and ERISA provide important time
limits. The claimant may lose eligibility if he does
not claim disability before the termination of employment.
If the claimant does not appeal within 180 days, the
claimant loses his right to claim benefits.
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4. The claimant
must exhaust administrative remedies
In an ERISA case, the claimant must proceed through
the claim submission and appeal process before he is
allowed to file suit. The failure to exhaust administrative
remedies before filing suit usually results in dismissal.
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5. Claimants have
important rights
Claims administrators are required to provide
a detailed explanation of why the claim was denied and
to advise claimants of their right to appeal. Claimants
have the right to request that the claims administrator
produce plan documents and the claim file. It is imperative
that the claimant or his attorney obtain the claim file
in order to evaluate the claim's administrator's evidence
to determine what holes need to be plugged.
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6. Support from
health care providers is essential
A successful claim requires strong documentary
support from health care providers. It is usually necessary
for the claimant's doctors to work with the claimant
or his attorney to carefully rebut the claims administrator's
arguments. The claimant's medical records must support
a finding of disability.
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7. Understand the
definitions
Most policies provide for two or three definitions
of disability. These are known as "own occupation,"
"any occupation" and "residual disability."
In addition, many employer- sponsored plans provide
limited benefits for disabilities caused by mental illness
or self-reported symptoms.
Generally, disability coverage offered by an employer
will provide that a claimant will be considered disabled
if he is unable to perform "the material and substantial
duties of his occupation," or sometimes "each
and every material duty of his occupation." The
meaning of those phrases is sometimes not readily apparent.
The term "occupation" is broader than "job."
Job duties that are not generally required to perform
the occupation will be disregarded in assessing disability.
Typically, the definitions of total disability are sometimes
construed so that the claimant will not be considered
disabled if he is able to perform some, but not all
of his job duties. Therefore, when the appeal involves
the "own occupation" definition, the starting
point should be a detailed job description and an assessment
of whether the claimant is unable to perform each of
the duties on a full time basis.
Employee benefit plans usually provide that after two
years the claimant will be considered disabled only
if he is unable to perform "any occupation for
which he is reasonably suited by reason of age, education
or experience." This is a harder definition to
meet, as it requires proof that there is no job that
the claimant can do.
Some disability policies provide that a claimant who
can perform some but not all of his job duties and is
working may be entitled to a partial disability benefit.
Insurance policies frequently limit benefits for mental
illnesses to two years. It is important to distinguish
between true mental illnesses and cognitive problems
caused by physical conditions such as traumatic brain
injury, hypoxia or stroke syndrome. The terms of the
coverage will differ depending on the policy language.
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8. The five most common
myths about disability claims:
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Myth #1: If you and your
doctor fill out the insurance company's forms,
you will receive benefits.
Not true. Claim forms are required, but
rarely are claims approved on the basis of forms
alone.
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Myth #2: To appeal all
you need to do is write a letter to the insurance
company.
No. The same goes for a letter from your
doctor that says, "the claimant is disabled."
Usually without solid evidence of disability your
appeal will be summarily rejected.
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Myth #3: If you have been
approved for Social Security Disability benefits,
the insurance company will have to approve the
claim.
False. The United States Supreme Court
has held that in ERISA cases the claims administrator
does not have to accord special weight to approval
of Social Security benefits.
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Myth #4: If you have your
attorney write a threatening letter, the insurance
company will cave in.
Wrong. Insurance companies have hordes
of lawyers defending scores of lawsuits. An attorney
can assist you in presenting a solid claim, but
bluster and threats are of little value.
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Myth #5: An independent
medical examination ("IME") is fair
and unbiased.
Typically not. Doctors are paid a lot of
money to perform IMEs. The doctors who sign up
to do them need the money. Knowing who is paying
the bill, IME doctors often find the claimant
not disabled after a cursory examination. A claimants
should approach IMEs with caution and may want
to request permission to bring a witness and tape
recorder to record the examination.
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9. Insurance companies
will not fairly review your claim
Insurance companies are notorious for selectively
abstracting portions of medical records that support
non-disability. An entry such as "patient feels
better today" may mean that the claimant was on
death's door last time, but the insurance company will
cite it as evidence of a full recovery. Another favorite
technique is to refer to negative test results as indicating
that there is nothing wrong with the patient, when oftentimes
the doctor ordered the test to rule out an illness other
than the one he thought you had.
The insurance companies' favorite technique is to insist
on "objective proof" of disability. Everyone
knows that medical science has not developed tests to
measure pain and fatigue, and the courts have consistently
rejected the requirement of "objective proof"
as imposing an impossible burden of proof. Yet insurance
companies insist on denying valid claims involving chronic
fatigue syndrome, fibromyalgia, multiple sclerosis,
mental illness and back conditions.
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10. Talk to an
experienced attorney
Disability law is highly specialized. It requires
an understanding of ERISA law and a mastery of medical
terms. You should ask your attorney how many disability
cases he or she has handled. It generally does not cost
any more to hire a specialist. The only way to win these
cases is to develop a thorough understanding of the
claim history by obtaining the claim file, reviewing
all of the claimant's medical history, and using the
appeal process to develop a solid record that will convince
the claims administrator, or failing that a court, that
the claim should be allowed.
The claimant should consult an attorney before the
appeal period expires. Lawyers who handle disability
claims are experienced in developing evidence that win
claims. Many meritorious cases become hopeless if the
lawyer is contacted too late.
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We can review the facts of your case on
a confidential, no-cost basis, and advise you on your
options for recovering disability benefits. Please Contact Disability Benefit Attorneys.
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