So, you have worked for a company for twenty years. It’s a large company, and you were offered benefits when you started. You took them. Who wouldn’t? You got health, a 401k, discounts on various services, accidental death and dismemberment, life insurance, and disability. Your company even had an insurance representative sit down with you to discuss your options. He or she probably even told you that disability insurance is more important than life insurance – what if you can’t work? what will your family do for income?
You sign up. Now, you are covered, right? Hmmmmm. Maybe.
These disability policies, or any insurance or benefit you obtain through your employer, are governed by a Federal law called the Employee Retirement Income Security Act of 1974, or ERISA as it’s commonly known. This law, ERISA, provides incentives for insurance companies to deny claims even when they seem fairly straight forward.
Why? You may ask. First, ERISA cases can only be decided by judges. You cannot get a jury in an ERISA case. Second, you cannot sue for any state law claims such as breach of contract, fraud or bad faith. You can only sue for the benefits you would have received had you not been denied. So, if the long term disability carrier denies the claim, their only risk is that you sue them in Federal Court, and if they lose, they simply have to pay you what you would have been entitled to had you been approved in the first place. They have to pay an attorney, and it’s quite possible that the Court will award attorney fees to the Plaintiff, but such an award is discretionary and up to the Judge.
If an insurance company denies ten people, and nine out of the ten don’t even file suit, they win. So what if the last person files suit and wins, the insurance company saved on the other nine. For what reason would they approve a claim?
In order to defeat these denials, you have to be very careful, and we will discuss options in future blogs. In addition, there are some circumstances where you can go around ERISA, but those are very limited, and we will discuss those as well.
If you have any questions about the denial of insurance coverage or ERISA, please do not hesitate to contact us at Lewis, Feldman & Lehane, LLC. We will be glad to provide you with our knowledge and insights.