erisa law mobile alabama

How To Deal With Your ERISA Disability Claim

ERISA covers disability insurance claims as well as health insurance claims. Short term and/or long term disability insurance is often provided as a benefit of employment. Usually, ERISA will be the law that governs. If you have suffered a non-work related injury that prevents you from working either at your specific job or at any job, depending on the type of coverage and the policy language, you should file a claim for benefits.

In the mid 1980s, every insurance company that wrote disability coverage was trying to out do the others by writing very liberal definitions that favored the insured consumer. They were going after the growing market for professional disability coverage because of the big premiums. They ended up paying out more in claims because the policy language was so liberal and many companies went out of business. As the number of companies in the market decreased, so did the competition. As the competition decreased, the claims denials increased.

Things have not changed. Expect to have your claim denied. Insurance carriers know that most people will go away, even when they are truly unable to work. Do not play their game. Stay at them. Talk to your doctors and ask them to write letters explaining why you can’t work. Get them to send the insurance company all of your medical records. The more information that you can find, the better. As we have previously discussed, ERISA gives insurance companies lots of room to deny. Read the letters you get back from them carefully. Calendar the deadlines – you have to jump through all of the hoops. Ask around – find a lawyer or law firm that handles ERISA claims and make an appointment.

In order to win an ERISA case, you have to show that the fiduciary’s denial was “arbitrary and capricious.” That is a very tough standard – it means the consumer loses most of the time. On health care claims, the fiduciary function is often handled by the insurance company that provides the coverage. In such a situation, there is a real incentive for the insurance carrier to deny the claim – it leaves the money in the company’s pocket. The fox is guarding the henhouse. Fortunately, recent Supreme Court rulings have made it harder for companies to wrongfully deny claims in such situations.

Even if you win, ERISA reins in the damages you are entitled to. Traditionally, insurance companies have been discouraged from cheating their insureds by the threat of punitive damages rendered in a jury trial. There is no such hammer under ERISA – the Act abolished the right to a jury trial and punitive damages as a remedy. Most states allow an insured to recover those damages against the insurance company that would put the insured back in the position they were in prior to the company’s wrongful conduct. If your health care insurance provider wrongfully refuses to pay a $100,000 hospital bill and you lose your house and car as a result, those damages could be substantial. The judgment might even include an award for the emotional turmoil you went through losing your house and car. Not so under ERISA – the only damages you can be awarded is the amount of the medical/hospital bill not paid and an award for attorney’s fees, but only if the judge says you get them.

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