 What happens now that my claim has been denied? Several issues arise following the denial of benefits. Understanding your rights under the law and your disability income policy will protect your ability to recover benefits or file a lawsuit if necessary. Below are some questions you may have if your claim for disability benefits has been denied. The questions below may not answer many questions or concerns unique to you. Call our offices to get the answers you need.
Frequently Asked Questions
- What is ERISA?
- What is bad faith?
- What is an elimination period?
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- Must I appeal a denial of benefits?
- Am I entitled to a copy of the insurance company’s file on my claim?
- Will the insurance company put me under surveillance?
1. What is ERISA?
ERISA stands for Employee Retirement Income Security Act of 1974. ERISA is a federal law that covers pension, health and disability insurance plans and governs your rights to certain benefits. ERISA establishes minimum standards for such plans, including standards of conduct for plan fiduciaries and for the disclosure of financial and other plan information. Our Firm handles disability benefit claims, including short and long term disability claims at the administrative and litigation levels.
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2. What is bad faith?
Bad faith is a term used for a state law claim against an insurance company based on the company’s conduct in handling a claim for benefits. Bad faith laws apply if ERISA does not, as ERISA supersedes any and all State laws that relate to employee benefit plans, which includes most bad faith laws.
Florida’s bad faith law is codified in Section 624.155, Florida Statutes. Florida’s bad faith law allows for the recovery of punitive damages in certain circumstances, and attorney’s fees and court costs. Bad faith insurance claim practices include, but are not limited to:
- failing to attempt in good faith to settle a case within the policy limits when liability is reasonably clear;
- making claims payments to insureds or beneficiaries not accompanied by a statement setting forth the coverage under which payments are being made; and
- failing to promptly settle claims, when such obligation is reasonably clear in order to influence settlements under other portions of the insurance policy coverage (except as to liability).
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3. What is an elimination period?
An elimination period is a waiting period which must be satisfied prior to being eligible to receive disability benefits. In many cases, an elimination period requires that you are continuously disabled for the specified amount of consecutive days, typically 30 to 90 days, and in some cases 180 days, before disability benefits are due.
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4. What information must the carrier provide me at the time it initially denies my claim?
If the carrier denies your claim for benefits, the reviewer must provide the following information in its initial denial letter:
- the specific reasons for the denial;
- reference the specific policy provisions it relied upon to deny your claim;
- a description of the specific information or documentation that is needed to perfect your claim (i.e. make it valid);
- a specific explanation of what steps need to be taken to have your claim reviewed;
- a recitation of your right to obtain internal guidelines, rules or criteria utilized in the carrier’s review and denial of your claim; and
- inform you of your right to bring a lawsuit under ERISA after exhausting your administrative remedies with the carrier.
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5. May the insurance company offset my monthly benefits?
Yes, the insurance company may offset your monthly benefits if there is a provision in the policy providing the insurance carrier with such a right. Most group polices contain a list of the types of “other benefits” it may offset from the base monthly benefit. Common offsets include, but are not limited to, workers’ compensation benefits and social security disability benefits.
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6. Am I required to apply for Social Security Disability Benefits?
If your disability insurance policy contains a provision requiring you to apply for social security disability benefits, which most group policies do, then you must comply with the requirement or risk being held in breach of the policy. Most policies reduce their benefit payments by offsetting “other income” you receive as noted above. If the policy does offset your benefit, it will provide you with a definition of what “other income benefits” it may offset.
Most policies, especially the newer policies, allow the insurance company to estimate the amount of social security disability benefits that you may be eligible for and offset your monthly disability benefit by the estimated amount, should you fail to apply for social security disability benefits. Also, most policies require that you exhaust all of the appeals available to you under the Social Security Act. Otherwise, the insurance carrier will estimate the amount of social security disability benefits available to you and offset your monthly benefit by such an amount.
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7. If I am awarded Social Security Disability Benefits, does that automatically make me eligible for disability benefits under my disability insurance policy?
No. Unfortunately, the courts have held that while an award of social security disability benefits is evidence that should be taken in to consideration in reviewing a claim for disability benefits, such a decision is not binding on the insurance carrier, nor does it hold any more weight than any other supporting evidence.
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8. Must I appeal a denial of benefits?
Yes, under ERISA, if a claim is denied initially, then “a full and fair review by the appropriate named fiduciary of the decision denying the claim” is required under 29 U.S.C. §1133 (2). Further, in order to be able to subsequently file a lawsuit, you are required to appeal the initial denial. Your policy will provide specific instructions on how to file the appeal, including specific deadlines, and such provisions must be followed to preserve your right to file a lawsuit.
The appeal stage is a critical stage for you to provide the carrier with all of your supporting documents because this is your last chance, barring some exceptions, for you to provide the carrier with proof of your claim. After the deadline to submit an appeal, you are barred from providing additional supporting information to the carrier. The file in the carrier’s possession, referred to as the “claim file” or “administrative record” is the only record that is provided to the court, should you file a lawsuit. Your trial consists of the judge’s review of this record and no additional information may be added to the record, barring few exceptions. Thus, the appeal is your last chance to prove your claim.
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9. Am I entitled to a copy of the insurance company’s file on my claim?
According to 29 C.F.R. § 2560.503-1 (h)(2)(iii), an administrator is required, on appeal, to provide, upon request and free of charge, “ . . . reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits. Whether a document, record, or other information is relevant to a claim for benefits shall be determined by reference to paragraph (m)(8) of this section.” “Relevance” is defined by 29 C.F.R. § 2560.503-1(m)(8) as:
(8) A document, record, or other information shall be considered “relevant” to a claimant’s claim if such document, record, or other information
(i) Was relied upon in making the benefit determination;
(ii) Was submitted, considered, or generated in the course of making the benefit determination, without regard to whether such document, record, or other information was relied upon in making the benefit determination;
(iii) Demonstrates compliance with the administrative processes and safeguards required pursuant to paragraph (b)(5) [pertaining to procedural consistency] of this section in making the benefit determination; or
(iv) In the case of a group health plan or a plan providing disability benefits, constitutes a statement of policy or guidance with respect to the plan concerning the denied treatment option or benefit for the claimant’s diagnosis, without regard to whether such advice or statement was relied upon in making the benefit determination.
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10. Will the insurance company put me under surveillance?
Many insurance companies use surveillance as a means to determine whether to deny a claim and to specifically determine what activities you are doing in order to compare such activities to your ability to work. Of course it is not always relevant to your ability to perform the duties of your own or any occupation. Most often the surveillance is misused or misinterpreted in order to deny a legitimate claim for benefits. However, such surveillance is typically admissible in court.
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