ERISA, the Employee Retirement Income Security Act, was enacted in 1974 with the purpose of protecting employee benefit plans, but insurance companies have become adept in using ERISA rules and regs to their advantage. Almost all Short Term Disability (STD) and Long Term Disability (LTD) plans are subject to ERISA, as are some individual plans. ERISA is complicated and has a number of requirements regarding disability claims that both the insured and the insurance company must follow.
Once a disability claim subject to ERISA is filed, evaluated, and denied by an insurance company, the insured either accepts the denial or files an internal appeal with the insurance company. Each step of this process has deadlines that must be carefully followed, or you can lose all future benefits along with your right to appeal or even litigate. It is important to keep detailed records and stay on top of your claim.
Our office recently received a referral from an insurance agent whose client’s employee had filed a disability claim under their LTD policy. She had rheumatoid arthritis and could no longer do her job. The employee’s disability claim had been denied, and they were about to appeal when the agent thought to contact our firm. I am going to lay out some of the mistakes that were made or about to be made and how we were able to fix them, hopefully helping you avoid the same pitfalls. Inadvertent mistakes can happen and can cost hundreds of thousands of dollars in past and future benefits.
Placing Too Much Faith in the Employer’s Human Resources Department
Issue: The employee had been told by her employer that she was too sick to work and, based on this guidance, she went ahead and filed a disability claim. With the help of the best intentions of the HR department, she filled out her claim forms, resigned from her job, and waited for her benefits.
Solution: While the employer may have believed that the employee was too sick to work, the insurance company ultimately makes that decision. The HR department may have been trying to be helpful, but it is important to establish a thorough medical record and diagnosis before filing your claim. Get a copy of your policy, read it, and see what constitutes a disability. You may need to talk with experts – your doctor, an attorney, or even a disability claims consultant – to help make the best decisions and the strongest claim.
Failing to Obtain and Submit The Right Evidence In Time
Issue: After her claim was denied, the employee was upset and eager to appeal, so she immediately contacted the agent to get his help. This over-eagerness was going to hurt her claim, and her appeal was almost certain to be denied! Under ERISA, any and all evidence that can be used to evaluate the claim must be submitted with the initial claim and certainly before the appeal. Even if important information that proves the claim is unearthed, it can’t be used if it’s not in the claim before the appeal – it’s even excluded from any possible litigation.
Solution: This is where the agent was wise to call us! After calling our firm, we spoke with the employee and quickly developed a plan for a successful appeal. The employee still had some time before the appeal deadline, so we were able to work with her to clarify some of the answers on the claim forms and develop information to support her claim. After reviewing the claim forms, we also discovered that the attending physician had no fully understood what needed to be on the claim forms and had filled them out incorrectly and incompletely. After videoconferencing through Skype with the employee and her doctor to go over her claim, he corrected his report to be more specific and complete of her symptoms and the specific job duties that she could not do due to her medical conditions.
Using the Insurance Company’s Lawyer to File for Social Security
Issue: After correcting the medical records and providing other documentation of her occupation, she filed her appeal and the claim was quickly approved! This, however, was not the end of the tactics used by this insurance company. Most LTD policies require that the insured file for Social Security benefits as part of the claim process. The claims examiner offered to have their attorneys help the insured file for Social Security. Be wary of this help. Some attorneys will guide the insured toward filing for condition that may get the Social Security claim approved – but will also hurt their ability to maintain their long term benefits from the insurance company.
Solution: Always use an independent advocate when filing for your Social Security benefits. There are many firms that have accredited professionals to help with your Social Security claim. An individual that is associated with the insurance company may be biased in favor of the people writing their paycheck. This is not to say that the individual is evil, but they are simply following the procedures set up by the insurance company.
We work with many clients who have to comply with ERISA and had very different experiences. Some insurance companies approve STD claims quickly while others try to use every trick in the book to delay or deny LTD benefits. If you or a client of yours is considering filing a disability claim that is subject to ERISA, please do not go it alone! Hiring an experienced claim consultant will help ensure that the benefits are paid, and paid on time. For more information on working with our firm, please visit our information for agents page, or call us toll-free at 855.828.4100. We look forward to hearing from you!