By John W. De Haan, DeHaan Busse LLP
If you have a long-term disability plan (LTD) provided by your private employer, it is most likely governed by a federal statute known as the Employee Retirement Income Security Act of 1974 (ERISA). ERISA sets certain requirements that employer-provided benefit plans must follow. On such LTD disability claims, it requires the insurance carrier to provide you notice of why your claim was denied, and also allows you to appeal that denial to the carrier/LTD plan. If you do not appeal the denial to the carrier/LTD plan, then you will not be allowed to file a lawsuit to recover benefits.
If you appeal the denial and the carrier upholds its decision to stop benefits, only then can you file a lawsuit to recover benefits. Under ERISA, the courts have held that your are NOT entitled to a jury trial. Rather, your case would be reviewed by a federal judge. Depending on the language of the LTD Plan, the judges review will either be de novo (i.e., the judge will review all of the evidence and decide if you are entitled to benefits), or deferential to the carrier (i.e., the judge will only overturn the carrier’s decision if he/she finds the carrier abused its discretion, or its decision lacked a reasonable basis).
Unfortunately, most LTD Plans contain language that give them a deferential review by the courts. As a result, carriers often deny claims – even years after the disability started – in reliance upon a deferential review by the courts. That is, because they know there is a very low threshold for them to win in court, they rely upon that procedural advantage to get away with an otherwise wrongful, unsupported denial. The most important thing to understand is that the appeal under ERISA is extremely important. Even if you cannot get the carrier to change its decision on your claim, it is during the appeal that you can put documentation into the claim file to show the court how unreasonable the carrier’s decision was. If you do not do a good job on the appeal, then you may not have much chance of success if you have to sue.
Under these circumstances, therefore, it is prudent to consult with a disability attorney as soon as possible about your claim. You will need to provide the attorney with copies of the denial letter, your LTD Plan’s Summary Plan Description (SPD), and some medical documentation of your disability. These documents will allow the attorney to assess the relative merits of your case, and determine if he/she can help you. You can obtain a copy of the SPD by requesting it from your employer. You should request it via certified mail, so you can show the date your employer received your request. The employer has 30 days to respond and can face penalties it it does not respond in a timely manner.