Disability Insurance Questions and Answers

What are Long Term Disability Benefits?

Long Term Disability Benefits are wage replacement benefits, that is, they are paid to an individual in the event of a sickness or injury resulting in an inability to work. Typically these benefits are calculated based on a percentage of your gross income.

Does it matter if my Long Term Disability (LTD) policy was purchased by me or my employer?

If the LTD policy is purchased by the employer as an employee benefit, then more than likely, the claim will be governed by ERISA. ERISA is an acronym for Employee Income Retirement Security Act of 1974 which was enacted to regulate and protect employee rights. If an LTD policy is governed by ERISA then State law remedies which normally apply to an improper denial of insurance benefits do not apply.

Are all policies provided by an employer subject to ERISA?

No. When ERISA was enacted it explicitly exempted benefit plans provided by governmental agencies and religious organizations.

Are there special rules if I work for the City, County or State – CalSTRS – SDCERS – SDCERA?

Yes, if you work for a governmental entity, they will have their own disability retirement plan and their own rules and procedures for filing for disability benefits.  As opposed to an administrative appeal under ERISA, most governmental plans provide that if the application for benefits is initially denied, the employee is entitled to a judicial hearing or de novo hearing at which the employee can present evidence of their disability.  If you are required to go through an evidentiary hearing, you should seek legal counsel for help.  To view a claim against the County of San Diego handled by Stennett & Casino click here.

Do I need to file an appeal in an ERISA governed policy if I receive a denial of my claim?

In order to protect your right to file suit you must file a timely appeal of your claim for a denial of benefits.

How do I file an appeal?

Under ERISA regulations the denial letter you receive will include the specific reason for the denial, it will reference the specific provisions in the policy on which the adverse determination was made and it should describe what additional material is necessary to perfect the claim. It will also delineate the time period in which an appeal must be filed, where to file it and will offer to provide you with a complete copy of the claims record at no cost to you.  This is usually the time to make first contact with an experienced ERISA attorney to help in planning the appeal.

Do I need to Appeal the denial of benefits if the plan is not governed by ERISA?

No. In a non-ERISA plan, you do not need to file an Appeal and can file a traditional “bad faith” suit in State Court.

What do I do if the Appeal is finally denied?

Typically the next step is to file an action for wrongful denial of benefits in Federal Court since they have jurisdiction to hear these matters.   You need to consult with an experienced ERISA attorney.

What are some of the terms with which I should be familiar when presenting an ERISA LTD claim?

  • Administrative Record is basically the claims file consisting of all the papers and evidence relied upon to either approve or deny the claim.
  • De Novo Standard of Review means that once suit is filed the judge determines if you are entitled to benefits without giving any deference to the decision of the insurance company.
  • Arbitrary and Capricious Standard of Review means the judge will give deference to the decision of the insurance company and will only overturn their decision if he determines that the insurance company abused its discretion.
  • Own Occupation  is important since most LTD policies initially determine disability based upon the physical requirements of your own occupation. It is important that your employer submit to the insurance company an accurate description of your job and not a generalized “watered down” description of what you do.
  • Any Occupation  most LTD policies after a specified period of time will determine disability based on your ability to perform the physical requirements of “any occupation”. However, the occupation must be one in which you could reasonably engage based upon your education, training and experience

It looks like my disability insurance claim is going to be denied.  What type of attorney do I need?

If you have a group policy it is most likely covered by the federal law known as ERISA (Employee Retirement Income Security Act) and you need an attorney specializing in ERISA claims.  If it is an individual policy that you purchased then it most likely is covered by California State insurance law.  In that case you need an attorney experienced in civil litigation and insurance disability claims (as opposed to social security disability and workers’ comp claims).  There are several attorneys locally that deal with insurance disability claims, but very few that deal with ERISA claims.  Our firm handles both.

I am disabled.  Hartford LTD wants me to sign an agreement to reimburse them any retroactive monies I receive from Social Security Disability in order for me to get paid my LTD disability.  What should I do?

LTD policies often have provisions allowing the insurer to offset “other benefits” such as Social Security Disability.  If you are not receiving Social Security benefits the insurer often requires you to (1) apply for Social Security benefits through the appeals process and (2) agree to reimburse the insurer any retroactive benefits you receive from Social Security.  If you do not sign such an agreement they will often deduct an estimated amount you will receive from Social Security from your LTD benefits.

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