Long Term Disability Overview – LTD

Long Term Disability Under ERISA

A Federal law known as ERISA (Employee Retirement Income Security Act) is a comprehensive and complicated law that was originally enacted to protect employees’ rights to their benefits. Ironically, it is now widely accepted that ERISA protects insurers, not claimants as intended. Here are some reasons why:

ERISA disability disputes can be very drawn out. Before any federal lawsuit, a denied claimant must “exhaust administrative remedies” by appealing in writing to the denying insurance carrier.

Time to appeal is limited. Denied claimants have 180 days to appeal and insurers have up to 90 days to consider the appeal.

By the time the internal appeal has concluded, 270 days have elapsed. During that time, the disabled person is without income from his or her job. Should the disabled person seek social security, the long term disability insurer usually is able to deduct SSD (Social Security Disability) from the amount it owes the claimant. Should the disabled person not seek SSD, the long term disability carrier may argue that the disabled person breached an LTD (Long Term Disability) policy requirement that Social Security be applied for. Since appeals will be based on medical evidence in the claim file, it is crucial that the claim file be stacked with evidence supporting the claim early on. As bizarre as it sounds, ERISA allows insurers discretion to administer their own policies. If such discretion is given under the plan, then a denial can be overturned by a showing that the insurer abused that discretion—a very tough standard.

Should the denial be affirmed after the internal appeal, then a suit in US District Court is the final option. But suit under ERISA does not amount to “one’s day in court” because testimony is usually not allowed and cases are decided by judges, not a jury or one’s peers. Instead, cases are decided based on briefings of attorneys who argue based on the evidence in the claim file. That is why properly setting up the claim file in the first place is so crucial.

In reality, few disabled persons have the stamina or resources to put up a fight against calculating and powerful disability insurance companies. Insurers know this. Richard Rizk takes viable long term disability cases on a contingency basis. If you have been denied LTD benefits, complete our online evaluation form today to see if you qualify.

US Supreme Court Justice Ruth Bader Ginsburg in 2009 and many respective commentators have expressed that ERISA is unfair and needs revamping. Richard Rizk’s primary goal is to win or settle your disability appeal in the shortest amount of time. His secondary goal is to repeal or amend ERISA so that disabled claimants do not twist in the wind while insurers delay. He will aggressively fight for you.

Does ERISA Apply to Your LTD Claim?

Many factors affect the course of your Long-Term Disability claim. Where your LTD policy came from is a key factor. Why does that matter?

Whether you received your policy from your employer OR purchased it directly from a private insurer will determine whether federal or state law applies. Almost always, state law provides LTD claimants more protection. If your employer provided you with a Long-Term Disability Plan as an employee benefit, a federal law known as ERISA (Employee Retirement Income Security Act) applies. On the other hand, if you purchased Long-Term Disability insurance directly from an insurer or insurance agent, the laws of your state of residence probably apply instead of ERISA.

In most cases, appealing a claim denial where ERISA applies is much more challenging than when state law applies. Because, under ERISA:

• A judge in federal court is more likely to find against a disabled person as a matter of law by way of summary judgment;
• Damages to punish for “bad faith” (punitive damages) are generally not available under ERISA;
• Attorneys’ fees are not usually awarded under ERISA;
• ERISA allows disability plan administrators “discretion” in that administration; and 
• Disputes are heard by a judge, not a jury.

By contrast, you will probably have more options available to you if you purchased your Long-Term Disability policy directly from an insurer or agent. As we stated before, state law probably applies in these cases rather than ERISA. Because of that, and depending on the law of the state where the policy was issued:

• Punitive damage claims may be available;
• A jury rather than a federal judge may be assigned to decide your appeal;
• A broad range of damages may be available; and
• Evidence outside the claims file may be accepted.

Whether or not ERISA applies, identify early on:

1. The disease or injury that caused the disability;
2. How the disease or injury restricts your ability to perform your specific job duties;
3. The applicable policy; and
4. Doctors who support your claim.

More ERISA info… Frequently Asked Questions

When to File Your Long Term Disability Claim

1. Request, read and correct your medical chart notes before filing an LTD claim. A successful Long Term Disability claim requires MEDICAL EVIDENCE specifically supporting your claim. While you are busy being sick, your LTD insurer has probably been writing your doctors requesting responses to questions. Don’t be in the dark. Before you file a claim, request all medical records from treating physicians… including the doctor’s communications with your Long Term Disability insurer.

If your doctor has made small errors in your record, write him a letter requesting corrections. If your doctor clearly does not support your Long Term Disability claim, get a new doctor. While your treating doctor’s opinion does not guarantee a good result, a treating doctor who does not support your claim can easily undermine it. In short, do what you can to stack the medical evidence in your favor BEFORE filing an LTD claim.

2. File your claim while still employed to the fullest, paid the most, and workingthe hardest. Here’s a common scenario:  An employee quits her job and then files a claim. The insurer denies the claim, saying that the employee’s disability benefits were negated upon resignation.

Be certain to file your claim while you are still employed and disability benefits are intact. And beware of severance packages. Some employers offer severance packages  that have hidden clauses preventing the employee from contesting Long Term Disability denials—written in legalese that makes it difficult for the employee to understand. An employee who signs such a severance package agreement could unwittingly lose all future Long Term Disability benefits. Intel is an employer that, in at least one case, has requested and obtained a severance agreement containing such a term.

An employee may also be required to only earn a fraction of his or her pre-disability wages (often 60% or 80%) to prove his or her disability. If possible, an employee should file her claim when her wages are highest. The idea here is to establish the highest disability wage replacement rate. And, generally speaking, it is easier to prove inability to perform a higher-wage job than a lower-wage job.

Along with wages, consider the duties performed in gauging when to file a claim. In most cases, it is better to file an LTD claim when job duties are the most strenuous. That is because most LTD policies require proof of inability to perform one’s “own occupation” during the first two years of disability. In other words, transferring to a “light duty” desk job from a “heavy duty” position before filing an LTD claim may not be a good idea since it is generally easier to prove inability to perform a heavy-duty job. As a general rule, file your claim as soon as you have medical evidence supporting your claim but before you transfer to a lighter job.

News and Information… “Filing a Claim for Your Health or Disability Benefits”