Why Was my Long-Term Disability Claim Denied?
Written by Kantor and Kantor insurance Matters on December 30, 2012
If you’ve ever had to appeal or litigate the denial of a long-term disability claim, you know how infuriating and time consuming the process can be. While your health needs and incapacity might seem very clear to you and your doctor, an insurance company might interpret things differently. What makes an insurance company deny a claim under these circumstances?
If you get your insurance coverage through your employer, as most people do, you fall under the umbrella of ERISA (Employee Retirement Income Security Act). Designed to protect individuals, ERISA was established in large part to protect employee pension benefits. The law is very complex and spills over into other employee benefits such as short term and long term disability. While the legislation can be helpful in protecting individuals against unethical employers, when it comes to disability claims, the laws of ERISA can essentially allow insurance companies to deny claims with ease.
ERISA cases are notorious for improper evaluation of claims and lack of payment. Why? Because ERISA can often times require a court of law to give deference to the insurance company’s claims decisions. Basically, this means that absent some highly outrageous conduct or unreasonable activity on the part of the company, the court cannot or will not overturn the company’s claim denial. This is true even if the court feels that the claim decision was wrong. As if that is not bad enough, ERISA law also severely limits the remedies available to someone who has had a claim wrongfully denied. Even if the court ultimately finds that the insurance company’s decision was unreasonable, and that benefits should be paid, paying such benefits is almost the full extent to the insurance company’s liability. There can be no other economic damages, no emotional distress, and no punitive damages.
The bottom line is that there is almost no risk to the insurance company in denying a claim. The worst that happens, IF the claim is appealed, and IF the insured gets a lawyer, and IF the lawyer will take the case, and IF the court rules in favor of payment, is that the claim has to be paid. That’s a lot of “ifs,” and insurance companies bank on the fact that most of those “ifs” never happen. Even if they do, it doesn’t cost the insurance company any more than it would have had they decided to pay the claim in the first place. The odds are stacked in their favor. These issues are most pronounced in the area of health, life, and disability claims, and it has become nearly impossible for individuals to have these claims fairly evaluated and properly paid. As a result, insurance companies have a very strong incentive to deny claims for benefits.
While managing your chronic illness, the very last thing you want to deal with is fighting for the health benefits to which you are entitled.
At Kantor & Kantor, we fight insurance companies every day. We take great pride in the work we do and have recovered millions of dollars of benefits that might never have been paid to our clients. We look forward to becoming involved with and helping your community. Please contact us at (800) 446-7529 or visit us on the web at www.KantorLaw.net if you are interested in receiving more information about the services we can provide to you.