You had disability insurance through work for a simple reason: if you got too sick to work, you would still have income. Maybe you paid premiums for years. Then you filed a claim and the insurance company said no.
What most people do not realize is that a federal law called ERISA, the Employee Retirement Income Security Act of 1974, controls most employer-provided disability plans. Congress passed ERISA to protect employee benefits. But the way courts apply it to disability claims can give insurance companies real advantages.
Here are five of them, and what you can do about each.
1. The judge may have to give the insurer the benefit of the doubt
In most lawsuits, the judge or jury decides who is right. ERISA cases can work differently. If your plan validly gives the insurer discretionary authority to decide claims, the court may apply a deferential standard, called arbitrary-and-capricious or abuse-of-discretion review. The judge then asks whether the insurer’s decision was reasonable, not whether it was correct.
Example: your treating orthopedic surgeon has seen you for five years and says you cannot sustain full-time work. The insurer hires a doctor who reads your records, never examines you, and says you can do sedentary work. Under deferential review, the court may uphold the denial even though the evidence could support a finding that you are disabled.
Not every case gets deference. Without a valid grant of discretion, the court decides the question fresh, which is called de novo review. Some states restrict discretionary clauses in insurance policies.
How to fight back: get your complete policy and plan documents and have them reviewed for discretionary language. Then build an appeal that makes the insurer’s position unreasonable, not just debatable: answer each reason for denial with specific medical evidence.
2. You may not be allowed to add new evidence in court
This is the most dangerous trap. In many ERISA cases, the judge reviews only the administrative record, the file built during the insurer’s claim and appeal process. Discovery is often limited, and you cannot assume you will be allowed to add new medical opinions after the appeal is denied.
Example: a woman with severe fibromyalgia and chronic fatigue is denied because the insurer says she can do sedentary work. She appeals on her own with a short letter and a few treatment records. After the appeal is denied, she hires a lawyer who gets a detailed opinion documenting that she cannot maintain regular attendance or concentration. The court may refuse to consider it.
How to fight back: treat the appeal as the trial. Before you file it, make sure the record includes:
- detailed opinions from your treating physicians,
- evidence on sitting, standing, walking, and lifting, with numbers,
- documentation of pain, fatigue, and medication side effects,
- evidence on concentration, attendance, and unscheduled breaks,
- point-by-point responses to the insurer’s medical reviews, and
- vocational evidence answering the jobs the insurer named.
3. You generally cannot recover punitive or emotional distress damages
Suppose the insurer wrongly cuts off $60,000 in benefits. You fall behind on your mortgage, run up debt, and live under serious stress. You win in court. You can recover the benefits owed under the plan, and the court may award interest, attorney’s fees, or other limited relief. But ERISA generally does not allow punitive damages or damages for emotional distress or the financial hardship the denial caused.
How to fight back: first, find out whether ERISA applies at all. A policy you bought on your own is generally not governed by ERISA, and neither are certain government and church plans. State law may allow broader remedies for those policies. More: ERISA plan or private policy?
4. The company deciding your claim may be the company paying it
If your claim is approved, the insurer may owe you thousands of dollars a month for years. If it is denied, the insurer keeps that money. Often the same company makes the decision and pays the bill. In Metropolitan Life Insurance Co. v. Glenn (2008), the Supreme Court held that this conflict of interest is a factor courts should weigh. A conflict alone does not mean you win, and your ability to investigate the insurer’s reviewing doctors in court may be limited.
How to fight back: request your complete claim file. You are entitled to it free of charge, including the medical reviews and vocational reports. Then look hard at the reasoning. Did the reviewer overlook evidence? Ignore your doctor’s explanation? Name jobs without considering your restrictions? Quote only the helpful parts of your records? Your appeal should point out each one.
5. Strict deadlines, and you usually must appeal before suing
ERISA rules give you at least 180 days to appeal a disability denial. In most cases you must finish the plan’s appeal process before you can sue. Many plans also set their own deadline for filing suit, which can start running before your appeal is even decided.
And even a win in court may not end the fight. If the judge finds the insurer’s review was flawed, the judge may send the claim back to the insurer to decide again instead of ordering payment.
How to fight back: as soon as you get a denial letter, find your appeal deadline, request your claim file and plan documents, identify every reason for the denial, gather evidence answering each one, and file a detailed appeal before the deadline. Requesting the claim file does not extend the deadline. More: Can I sue in federal court?
ERISA also gives you rights. Use them.
ERISA is not all bad news. You are entitled to a full and fair review of a denial. Federal rules give you:
- the right to your claim file free of charge,
- the right to submit new evidence on appeal,
- an appeal decided by someone other than the person who denied you, without deference to the first decision,
- review of medical questions by a qualified health care professional who was not involved in the first decision, and
- the right to see and respond to any new evidence or reasoning the insurer plans to rely on before it decides your appeal.
The key is using these protections before it is too late. Your administrative appeal may be your best opportunity to win your LTD case.
Denied or cut off under an employer plan? Talk to us before you file your appeal. Call 770-351-0801 or request a free case evaluation.
Related: Should I appeal myself or hire a lawyer? · Top 5 reasons LTD claims are denied