Disability insurance coverage is an often-overlooked benefit provided by some employers. Blue-collar professionals in physically-demanding careers and those earning competitive compensation in white-collar careers are among those who might receive disability coverage as part of a benefits package.
Employers may offer both long-term and short-term disability insurance or simply long-term disability insurance to employees. These potentially critical insurance policies are subject to federal regulations. The Employee Retirement Income Security Act of 1974 (ERISA) helps protect workers from financial devastation when their employers provide certain types of benefits.
Retirement benefits and pensions are subject to the provisions of ERISA. Long-term and short-term disability insurance policies provided by employers are also governed by ERISA. In some cases, those seeking benefits because they cannot work may face an uphill battle. When is a lawsuit potentially necessary when seeking ERISA long-term disability benefits?
After an unfair claim denial
ERISA influences the way that insurance companies handle disability claims. In many cases, insurance professionals make decisions guided by company policies and profit margins. However, disability policies governed by ERISA are subject to different standards.
Insurance professionals have a fiduciary duty to act in the best interests of policyholders, not the company. They should review claims and medical documentation in good faith. In scenarios where an initial denial of benefits seems unfair, professionals with disability insurance coverage have the right to an internal appeal managed by the insurance company.
They can submit additional documentation affirming their right to benefits due to the severity of their medical condition. If the insurance company continues to deny what is clearly a valid claim, then a lawsuit might be necessary.
A bad-faith denial that violates the company’s fiduciary duty and the rules imposed by ERISA can provide the basis for litigation. In an ERISA disability lawsuit, the policyholder denied coverage largely relies on the information already submitted to the insurance company. Therefore, those navigating internal appeals often need support to ensure that they properly substantiate the validity of their claim and have enough evidence available to prevail if they must take legal action.
Responding appropriately to an unfair denial of long-term disability benefits can help workers limit their losses. Support from a legal professional can be invaluable, as the stress of navigating a claim, appeal and lawsuit without support might impact their health and quality of life.