As a benefit to their employees, many employers offer long-term disability benefits through carriers like UNUM or MetLife. What you may not know is that long-term disability benefits are routinely denied to deserving individuals who have counted on and paid for long-term disability insurance.

 

Long-term disability plans from private employers are often covered by the Employee Retirement Income Security Act (ERISA) statute, which governs these payments. ERISA applies to most employee benefit plans, with a few exceptions.

 

First, you or your employer will make a claim to the carrier. Then the carrier will often initiate benefits for the short-term (about 6 months in most cases) while they determine if you are eligible for long-term disability benefits.

 

The carrier will typically perform some “independent review” of their own, whether it is having their in-house medical personnel review your file, or possibly sending you to a physician selected and paid for by the carrier.

 

The carrier may use their “independent review” to con you into thinking that they did a lot of work looking at your claim, and unfortunately, you just don’t meet the criteria. In fact, they are looking for any and all reasons to prevent making any payment to you for the long-term, which is typically until you reach retirement age.  It is obviously in their financial best interest to avoid paying you.

 

Once the carrier denies your long-term benefits, you have the right to appeal the decision. You must “exhaust administrative remedies” first; what this means is that you must appeal through the carrier’s process before you can sue federally. You may then sue the carrier in federal court under one or all of four theories: to recover benefits that are owed to you, for breach of fiduciary duty if the carrier is obligated to pay you, if your carrier or employer is refusing to pay benefits in retaliation against you, or if the carrier has specifically violated ERISA or the terms of your plan. ERISA Section 502 (a), 510; 29 USC 1132 (a), 1140.

 

There is not a standard of limitations for ERISA claims; that is, your time to bring a claim is not specifically limited. However, ERISA cases have been held to a breach of contract standard of limitation, and sometimes shorter statutes of limitation have been imposed. In any case, you should contact legal counsel as soon as you believe your benefits have wrongfully been denied.

 

The court has two standards of review for ERISA claims: De Novo, which means that the court may make an entirely new decision based on the evidence before the carrier and take new evidence; or Arbitrary and Capricious, which means that the court may not review anything but what was before the carrier, and no new evidence may be submitted or considered by the court, absent evidence of bias or improper procedure by the carrier. De Novo applies unless the carrier has the authority to determine eligibility for benefits or to make changes to the plan itself.

 

Additionally, the carrier will oftentimes “recommend” or “help” an employee apply for Social Security benefits. What the carrier doesn’t tell you is that they are looking for a way for someone else (Social Security) to pay you, so that they can have a chance to “offset” any benefits you should be paid.

 

If you get Social Security benefits, many long-term disability insurance companies will not pay you up to the amount that Social Security pays. For example, if you received $1,200.00 from Social Security per month in disability benefits, and your insurance premium paid for $2,000.00 in long-term disability, your carrier would only have to pay you $800.00 per month.

 

Furthermore, if you were paid a retroactive or “back” benefit from Social Security, meaning that you should have been receiving payments in the past,  your carrier can and will ask you to pay the money they paid you back to them. For example, if you were given a $24,000.00 back award from Social Security for 12 months that you should have been paid Social Security benefits, and your carrier paid you $1,500.00 per month for those 12 months (a total of $18,000.00), they would seek that $18,000.00 from you as “reimbursement” or “overpayment.” The carrier may be able to file a lawsuit in equity to obtain reimbursement under limited circumstances.

 

If you have been denied long-term disability benefits by  your insurance carrier, you have a right to appeal your denial, whether it is via the company’s internal process or the court system under the ERISA statute.

 

Nye & Associates can help you to obtain the benefits that you deserve. Contact us to set up an appointment today.

 

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