This section is for you if you are fighting to recover group disability benefits under an employee sponsored plan.  Group disability plans are governed by federal law called ERISA.

ERISA has good points and bad points.  The downside to ERISA is that you do not have the right to sue the disability insurance company for bad faith damages.  Thus, if the insurance company denies your claim wrongfully, forces you to submit to numerous “independent” medical exams, buries you in wasteful paperwork, the most you can recover in Court is a Judgment ordering them to do what they should have done in the first place.  Sometimes, Courts will also award attorney’s fees.

As bad as this sounds, ERISA is not always bad news.  ERISA claims usually involve less money than private purchase non-ERISA disability policies.  Thus, your case may involve $15,000, $20,000 or even $30,000.  By contrast, non-ERISA disability policies purchased by doctors or executives may involve a pay out of several million dollars.
 

My Off-The-Record Conversation With a Claims Supervisor

Recently, I had the opportunity to interview a claims adjustor for a large disability insurance company.  This claims adjustor told me that his company might deny a “borderline” claim, with the hope that the claimant would just give up and go away.  However, his company would quickly back down and pay the claim if the claimant hired a lawyer and presented additional evidence supporting the disability claim.

The claims adjustor stated that, at least for his company, the bad publicity and cost of litigating a “small” claim of $20,000 was not worth the trouble for the insurance company.

The bottom line, therefore, is that ERISA claims have some disadvantages, but if we are diligent in clearly setting out our argument and presenting specific evidence of disability, there is a good chance that the claims adjustor will back down.

Another benefit I bring to my clients is what I would call “professional detachment.”  If you are negotiating with a claims adjustor about your own benefits, it is natural that you will become emotionally involved and that you will be personally offended by any adverse action.  Your communications with the claims adjustor may become heated and personal in nature.  In a worst case, your claims adjustor will dig into his position and not back down because a particular claim has grown personal.

As your lawyer, I approach my negotiations with the claims adjustor as one professional trying to help another professional get the documentation he needs to fairly resolve the claim.  This is not to say that some claims adjustors are not foolish people.  Some are.  But, my overall experience has been that at the claims adjudication stage, I can do more good for you by firmly and professionally serving as your advocate, and taking the personal feelings out of the process.
 

How Do You File an ERISA Claim for Employer Sponsored Disability Benefits?

The simple answer to this question is as follows: contact your company’s personnel office and ask for a “claim form.”  Answer the questions on the claim form and mail it (preferably by certified mail, return receipt requested) to the insurance company claim office.
 

Keep a Detailed File and Log

The world of insurance claims is unlike anything you have ever experienced.  The insurance adjustor may misplace or lose documents.  Adjustors are routinely hired, fired, reassigned, on vacation, sick, in training or unavailable.

Therefore, Ginsberg’s Rule One: Keep every scrap of paper you receive from the insurance company, and copy every scrap of paper you send in to them.

Ginsberg’s Rule Two: All correspondence with your disability insurance company should be by certified mail, return receipt requested.  Keep a running log of every phone communication, and make notes as to what was discussed.

Even if you hire an attorney to assist you, I recommend that you keep your own file.  My suggestion is to go to an office supply store and buy an expandable monthly organizer bucket file.
 

Gather As Much Information About Your Plan as Possible as Soon as You Can

Surprisingly, many of my private disability clients do not really know what type of coverage they have.  If you have an ERISA employer sponsored plan, it is a good bet that you pay your insurance premiums by payroll deduction.  You will notice one or more cryptic abbreviations on your pay stub

Your first job is to find out exactly what type of coverage you have.  Where do you find this information?

Your employee handbook is a good place to start; however, it has been my experience that employee handbooks are often not updated.  For example, it is not uncommon for an employer to change insurance companies, or for the disability insurance company to change names, or for the paycheck abbreviations to change.

Your personnel director should also be able to help you.  One of the first things I ask new clients to provide me is a copy of a recent pay stub along with an explanation of each and every deduction.

Just because you have been paying the premium, don’t assume that your employer or the insurance company intends to help you file a claim!
 

What Types of Coverage are You Likely to See?

The three types of insurance I am concerned about are “short term disability,” “long term disability,” and “health insurance.”  Let’s discuss each of these in more detail:

Short Term Disability (STD) - if you have STD, you may receive income benefits due to a temporary inability to work.  STD policy provisions vary widely - here are some examples of the types of coverage and limitations you may see:

  - coverage may only be available if you work more than 20 hours per week:

 - you must be out of work for 2 consecutive weeks

 - you do not get paid for the 2 week waiting period (you are expected to use sick or vacation time)

 - your rate of pay may be based on your years of employment - for example, if you have worked 5 years or less, your STD payment is 70% of base pay, but if you have worked more than 5 years, you get 100% of base pay.

 - the STD policy may limit you to 24 total weeks on STD in any 12 month period

Long Term Disability (LTD) - your LTD policy will spell out what you can expect to receive.  Common policy provisions include:

 - LTD often will not pay for the first 6 months of disability (use STD or accrued vacation for the 1st 6 months)

 - if you are approved for LTD, you must apply for Social Security Disability (the reason for this common provision - if you are approved for Social Security, the LTD benefit is reduced by whatever you receive from Social Security.  I can assist you with your Social Security claim - click here to learn more about Social Security or contact me directly).

 - if approved for LTD, you can receive 60% of your base pay

 - for the first two years of LTD, you are considered “disabled” if you cannot perform the duties of your own occupation.  After two years, you must be disabled from any occupation

Health Insurance - for many claimants, health insurance is extremely important.  In some cases, you continue to pay for health insurance at “employee” rates, and remain on the books as an employee.  In other cases, after a certain time on LTD, you may be terminated from employment and be forced to pay COBRA rates to keep your health insurance.  Job termination, by the way, does not terminate your LTD coverage.
 

How Does Workers’ Compensation Impact on STD, LTD or Health Insurance?

Your case can get very complicated if there is an allegation of an on-the-job injury.  Workers’ compensation is considered “primary” insurance and is the first coverage that is paid.  Complications arise when an employer (improperly) directs an employee who is hurt on the job to file for benefits under LTD rather than workers’ compensation.  Other issues arise when a claim is initially denied by worker’s compensation, accepted by LTD, then later picked up by the workers’ compensation carrier.

In cases involving both disability insurance and workers’ compensation, you want to avoid getting caught between two insurance companies, each of whom is pointing the finger at the other.  This is where experienced legal counsel can be most beneficial to you.
 

How Long After You File a Claim Must You Wait?

By law, the LTD carrier must advise you of its decision within 90 days.  The law also permits the LTD carrier to take an additional 90 days (for a total of 180 days - 6 months) if further investigation is needed.  Thus, you may be asked to wait 6 months with no source of income while the insurance company makes its decision.  And, of course, there is no guarantee you will win.

What Happens if the LTD Carrier Denies My Claim?

If the insurance company denies your claim, your next step is to file suit in Federal Court.  As a general rule, you must “exhaust” your administrative remedies with the insurance company before you can sue in Federal Court.  It will most definitely be to your benefit to have a lawyer assist you when it comes time to file a lawsuit in Federal Court.  Here are some important points to keep in mind:

1. No Fee Unless You Win.  Most lawyers (including Ginsberg Law Offices, P.C.) handle LTD lawsuits on a contingency basis - a contingency means that there is no fee unless you win.  note, however, that you may be asked to pay certain costs associated with your lawsuit - including such things as court filing fees, deposition costs and expert witness fees.  Your lawyer may or may not front these fees, but the rules that govern lawyer conduct in most States require that case costs be paid by the client.

2. The Earlier the Better.  The earlier you can involve me in your case, the better.  In some situations, a Federal Court may only consider the “administrative record” - the medical and vocational evidence in the insurance company’s file.  If you were to  hire me after the record has closed, I might not be able to present functional capacity evaluations or doctor’s statements.  Good cases can be made better and weak cases can be made stronger.

3. Standard of Review.  A major issue in many ERISA LTD cases is the “standard of review” that applies.  In every ERISA case, the Federal Court has to decide what to review.  It can choose either a “de novo” review or an “arbitrary and capricious” standard of review.

A de novo review is almost always preferable for a claimant.  In a de novo review case, the Judge will take a fresh look at the claim denial.  In other words - did the insurance company make the right decision?

By contrast an “arbitrary and capricious” review is much more limited.  The issue here is whether the insurance company’s decision was “arbitrary, capricious or an abuse of discretion.”  In other words, did the insurance company give good reasons for its decision?   Thus, in a “arbitrary and capricious” case, the issue is not whether or not the insurance company decision was right or wrong - instead the question is whether their claims process was fair and fairly applied.  As you might imagine, it is much harder for a claimant to win when the insurance company only has to prove that its decision was made with some justification.

Some Courts have created yet a third standard - a “heightened arbitrary and capricious” standard.  This is the law in the 11th Circuit (Georgia, Florida, Alabama).  The 11th Circuit recognizes the inherent unfairness of permitting an insurance company to decide a claim, then avoid Court challenge by covering its tracks with a paper trail and sham medical exams.  Thus, in the 11th Circuit, in cases where the insurance company both administers and pays the claims, the “heightened arbitrary and capricious” standard applies.

In case you were wondering, the regular “arbitrary and capricious” standard applies in the 11th Circuit when the insurance company uses an “independent” third party claims processor, or “servicing agent” to review its claims.  Thus, if the claims adjustor in your case works for a company that is different from the insurance company, it is likely that a servicing agent is being used.

What Standard of Review Applies in Your Case?

How does your Judge know which standard to apply?  The United States Supreme Court has decided that if your insurance company reveals to you that it has sole authority to interpret the insurance plan and to grant or deny claims, you will be stuck with the insurance company’s decision unless it is arbitrary and capricious.

On the other hand, if your LTD insurance policy does not warn you with specific disclosure langauge that the insurance company has the power to interpret the plan, and grant or deny claims, then you get the chance to challenge the correctness of the claim denial as well as other relevant evidence before a Judge in a “de novo” review.

Why is the Supreme Court so concerned about disclosures and language in the plan?  My sense is that the Supreme Court felt that if you purchased an insurance policy that says “you pay us premiums, but if you have a claim, we get to decide what the policy means and whether or not we want to pay you” you have made a voluntary and informed decision to trust the goodwill and reasonableness of an insurance company.

On the other hand, if your plan documents does not reveal all these rights reserved by the insurance company, you have not made an informed decision in buying your coverage, because you did not know the rules. In this circumstance, you get a de novo review.

The Supreme Court case that made this finding is called Firestone Tire & Rubber v. Bruch, and it was decided in 1989.  Since that time, insurance companies have been changing their group insurance policy language to include the disclosure language that reveals their expansive discretion.  The problem is that if insurance companies come right out and say “we’ll only pay you if we want to,” no one would buy their insurance products.  Thus, over the past fourteen years, the insurance companies have been trying to come up with language that includes the disclosure language, but not in an obvious way that will scare off customers.  As you might imagine, there have been many hearings in LTD denial lawsuits arising from the question of whether the Firestone disclosure language is present in a clear and obvious fashion.

As your lawyer, I want a “de novo” review.  In a “de novo” review, I can bring in medical evidence that may not be in your claims file, and new evidence that arose after your claims file was closed.  The issue in a “de novo” review is whether or not you are entitled to benefits, not whether an insurance company covered its tracks.

Therefore, when I meet with a new client, one of the first things I will want to see is a copy of the insurance policy as well as the “summary plan description.”  I will be looking for specific language relating to powers retained by the insurance company.

What Other Problems Might I Face in my ERISA Claim?

1.  Independent Medical Exam - it is very likely that your ERISA LTD policy has a provision that requires you to appear at the office of a doctor chosen by the insurance company for an “Independent Medical Exam” (also known as an IME).  In many cases, the sole purpose of the IME visit is to give the insurance company a reason to deny your claim or terminate benefits.  IME doctors frequently work at “evaluation clinics” and are used by insurance companies in worker’s compensation cases as well as private disability cases.  Sometimes, private doctors serve as IME physicians to supplement their income.  I generally advise my clients that the IME doctor is not there to help, and to be very careful.  If you have favorable MRI reports, it may make sense to take them, but usually the best defense to an IME is to secure favorable medical evidence at the same time from a long term treating physician.

Standard of review issues:

Arbitrary/capricious -  in a claim decided under an “arbitrary & capricious” review, the findings of the IME probably cannot be challanged.  Instead, the insurance company can rely on its act of scheduling an IME as proof that its decision was not arbitrary and capricious.

De Novo - By contrast, in a de novo consideration, the merits of the IME can be challenged.  The objectivity of the doctor may be raised, the nature of tests performed and the weight that the IME is afforded can be at issue.

2.  Functional Capacity Evaluations - your claims adjustor may ask you to attend a functional capacity evaluation (FCE) to assess your physical capacity for performing various types of work.  An FCE may consist of tests in which you lift weights, bend, stoop, crawl, stand, sit, etc. While you might think that an FCE is “objective,” your results will frequently turn on the technician’s evaluation of your effort and performance.  I have personally seen several cases where an FCE technician pushed my client to lift or stretch and reported that my client had a 20 lb lifting capacity and standing capacity of 7 hours.  What did not go into the report, however, was the level of pain sustained by my client the day of the test and the week afterwards.

Standard of review issues:

Arbitrary/capricious - the existence of the FCE is evidence that the insurance company did not act arbitrarily. The actual findings of the FCE are not at issue.

De Novo - the FCE report may be challenged as being biased, as not replicating a work like setting, or as being unreliable in the face of other evidence.

3.  Transferrable Skills Analysis - your claims adjustor may direct that you undergo a “transferrable skills” evaluation.  The purpose of this evaluation is to determine whether you have skills or experience that could permit you to perform work within the limitations caused by your illness or injury.

For example, I once had a client who was the team manager of a group of paralegals and secretaries at a large law firm.  Her job was to hire, fire and train permanent and temporary secretaries, paralegals and clerk/typists. In addition, she would frequently fill in and do the various jobs herself when needed.  Over time, this client developed carpal tunnel syndrome, which is a painful swelling in the wrists and forearms that prevented her from typing and lifting.

This client had a number of transferrable skills that would permit her to work, even if she was not able to perform every part of her regular job.  In this case, my client had transferrable skills that included the ability to supervise employees, formulate work schedules, interview prospective hires, evaluate employee performance, etc.

In this case, my client was “disabled” from her regular occupation, but was not disabled from “any occupation.”

A transferrable skills analysis is similar to and may be associated with a functional capacity evaluation.  It may be performed by a psychologist, a rehabilitation supplier or employment counselor.  It usually takes the form of a detailed interview in which your responses to questions are “scored” by a computer and a detailed printout summarizing your capacity for various types of work is produced.

Recognize that a Transferrable Skills Analysis is a tool used by insurance companies to cut off your benefits.

4.  “Own Occupation” vs. “Any Occupation” - as discussed above, you must identify a number of important terms in your LTD or STD policy.  How your policy defines these terms is crucial.  One common area of dispute over definitions arises frequently in the definition of “own occupation” and “any occupation.”

Own Occupation Issues

Many policies provide for disability benefits for a set period (frequently two years) if you are unable to perform the duties of your “own occupation.”  After two years, you must prove disability from “any occupation” to continue to receive benefits.  (Your particular policy may be different - this is only an example.)

One question that may arise has to do with defining your “own occupation.”  Vocational experts often use a publication called the “Directory of Occupational Titles” (D.O.T.), which is produced by the U.S. Department of Labor.  The D.O.T. describes “every” job that exists in the national economy and identifies its exertional level (how much lifting, standing, etc.) and its skill level (unskilled, semi-skilled or skilled).

The problem, obviously, is that many people perform jobs that are a combination of D.O.T. categories.  In addition, the D.O.T. definition may not be accurate for your particular job.  For example, the D.O.T. may identify your job as light (lifting 10 lbs. frequently and 15 lbs. occasionally), but in reality, you may lift 50 lbs. occasionally.

An issue I sometimes must address in an “own occupation” claim, therefore, is whether my client is disabled from his specific job when the actual job is different from what the D.O.T. computer program shows.

Any Occupation Issues

A similar issue arises when I argue for disability based on an “any occupation” definition.  For example, your policy may provide for LTD benefits for two years if you are disabled from your own occupation, but after two years, you must be disabled from “any occupation.”

Under the D.O.T., the “easiest” jobs that exist in the national economy include such things as surveillance system monitor, hand packer, foil wrapper, and garment inspector.  By definition, these jobs are sedentary (sit down), low stress, non-production oriented, and require little in terms of training or physical exertion.

In theory, therefore, if the “transferrable skills analysis” (done by computer) shows that you have the capacity for one of these low stress, easy jobs,  you are not disabled.  You can see how a broad view of “any occupation” gives the insurance company free rein to cancel benefits once you fall into the “any occupation” definition category.

Fortunately, the Courts have ruled that insurance companies must take into account the circumstances of your life, your age, educational background and even the number of these easy jobs near where you live.  Still, you can see how the paper trail of “independent medical exams” and “transferrable skills analysis” can be used against you.

Standard of Review Issues

Arbitrary/capricious: because the insurance company has disclosed to you that it has the power to interpret your policy and decide claims, its findings regarding what constitutes your “own occupation” will not be disturbed unless “arbitrary and capricious” - and as noted above, it is very difficult to prove abuse of discretion if the insurance company covers its tracks with transferrable skills analyses.

De Novo - in a de novo review, there are many ways to challenge the correctness of the insurance company’s decisions about “own occupation” and “any occupation.”  For example, many insurance companies rely on computer generated vocational evaluations.  These computerized evaluations can be challenged as the data base used may not be accurate. The D.O.T. has not been comprehensively updated since 1977.  A computer generated job description and computer generated transferrable skills analysis using 1977 era data may be completely inaccurate. In such cases a personalized job analysis by a vocational expert consultant who considers both the D.O.T. and updated statistical and personally observed job data may generate superior evidence that can win a case.

Again, however, this more accurate evidence would only be available in a de novo review.  Since the D.O.T. is still the officially recognized printed authority for the Department of Labor and the Social Security Administration, your insurance company’s use of the D.O.T., even if the results are outdated and incorrect, does not demonstrate “arbitrary and capricious” behavior.

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