Frequently Asked Questions
All insurance claimants — disability claimants included — have a duty to mitigate their various losses. The duty to mitigate generally entails the exertion of “reasonable effort” towards the minimization of your losses.
In laymen’s terms, this means attending your rehabilitation sessions, following through with treatment (by attending appointments), being consistent about taking your medication, and more. The insurer is not required to pay full benefits a disability that was exacerbated by the claimant’s own failure to act reasonably. If you fail to mitigate, then the insurer may have a reasonable basis to either deny your claim or undercut your benefits significantly.
Additionally, most disability insurance policies specifically require that you receive appropriate ongoing medical care; failing to do so, may be a separate reason for an insurer to deny your claim.
The consequences of lying — or otherwise misrepresenting the details reported in your original application for disability insurance coverage — vary depending on the nature of the misrepresentation.
In Illinois, you may still be entitled to receive disability benefits, even if you misrepresented certain facts on your original application, so long as those facts were not: 1) intended to deceive the insurer, and 2) material to the disability coverage.
For example, if you simply forgot to write about some minor health condition, the insurer cannot use that as justification for a denial (or rescinded coverage). Further, if the health condition is unrelated to the disability coverage — in other words, if they would have still extended coverage to you had you no misrepresented the facts — then the insurer is required to pay out benefits for a legitimate disability claim.
It’s worth noting, however, that the insurer may be entitled to payments to cover any difference that there would have been to the insurance premium.
Generally speaking, you are entitled to receive disability benefits, even if your disability is caused primarily by a mental health condition (such as depression, anxiety, panic disorder, PTSD, etc.), though there may be associated limitations.
It’s worth noting that some plans are extremely strict and actually exclude all mental health conditions from qualification for benefits altogether, but this is quite uncommon — most plans have a basic provision known as the “mental or nervous condition” limitation. This limitation entitles you to disability benefits for a 24-month period, after which you will no longer be entitled to receive further benefits.
Every insurance policy is different, so there is no universal answer in this regard — whether you are entitled to disability benefits for a “partial” or “residual” disability depends on the specific terms and conditions of your plan.
Disability insurance plans that include partial or residual disability benefit coverage allow for the receipt of a reduced amount of benefits when the policyholder has not necessarily been rendered totally disabled but still has a loss of earnings. The conditions for partial disability qualification may be quite specific.
For example, if you can only work part-time, the insurer may require that you show that (due to your disability) your performance has been reduced by a particular percentage, or that your scheduled hours have been reduced. If you meet the requirements (i.e., 25 percent fewer hours worked per week) then you will qualify for a partial disability benefit.
Insurers owe their policyholders a number of duties. Among these is the general duty of good faith. Insurers must act in good faith towards their policyholders when handling their insurance claims — this duty is imposed on insurers because they have specialized knowledge that gives them an unfair advantage in the claim evaluation and payout context. Bad faith, however, does not exist and apply to insureds in every state. Some states have either common law or statutory bad faith law, which gives insureds the right to file a lawsuit against an insurer based on that legal theory.
If an insurer violates their duty of good faith, you are encouraged to seek legal help from one of our Chicago disability claim attorneys. If you purchased your policy in a state where there is bad faith law, the insurer may be liable for significant compensatory damages. In particularly egregious cases, you may be able to bring a separate fraud claim and the court may award punitive damages.
Bad faith conduct includes, but is not necessarily limited to:
- Fraud and other knowing misrepresentations
- Unreasonable delays in claim processing
- Intentional interference with claim processing
- Wrongfully denying a legitimate claim in order to force the policyholder to expend additional effort through litigation
- Refusing or failing to payout benefits (for an accepted claim)
- Failing to adequately investigate the submitted claim
- Failing to maintain consistent communication with the policyholder
- And more
Generally speaking, the court will find bad faith if the insurer has conducted themselves in a vexatious, unreasonable, or outrageous manner. They will make this determination on the basis of the total circumstances — for example, if the insurer failed to payout your benefits, but an investigation reveals that they simply had the wrong address and contact information in their system, it is unlikely that the court will find the insurer liable for bad faith (though they will almost certainly order the insurer to make the necessary payments).
The Employee Retirement Income Security Act (ERISA) was established in the 1970s with the intention for providing additional protections to benefits plan participants from the misconduct of Plan Administrators, among others. In the context of today’s insurance disputes, however, ERISA coverage may ultimately give policyholders fewer protections than non-ERISA plans.
- ERISA regulation covers employer-sponsored insurance plans that are specifically related to employee benefits, such as employer-sponsored disability and health insurance coverage.
- If you have an insurance dispute that arises out of an ERISA-covered plan, your claims will be subject to federal law — not Illinois state law.
- Federal ERISA rules limit your ability to secure damages for bad faith, special damages, emotional distress, and more.
ERISA application may not always be a negative, however. ERISA plan participants in some circuit courts can have the denial of their benefits claims evaluated under the de novo standard, which means that the court will not defer to the factual determinations of the Plan Administrator. Instead, the denial of benefits will be considered with a “blank slate,” given the evidence.
Definitions of disability vary quite a bit from plan to plan. Most standard short-term disability and individually purchased disability policies require only that the claimant demonstrate that their injury/condition render them unable to perform the duties of their “own occupation.”
For example, suppose that you are a dentist and you severely injure your neck. Though you might be perfectly capable of performing a different job — assuming your disability coverage is based on an “own occupation” definition of disability — you would likely be entitled to receive disability benefits.
Most long-term disability plans provide for 24-months of benefits, after expiration of the elimination period, under an “own-occupation” definition of disability and then requires that you be disabled from “any occupation” in order to be eligible for benefits.
Some stricter plans only have an “any occupation” definition of disability. If your plan is based on an any-occupation definition of disability, you cannot secure benefits unless you demonstrate that you are unable to perform any alternative job (that you would otherwise be qualified for given your age, training, experience, etc.).
Short-term disability coverage and long-term disability coverage are related, though it’s not necessarily the case that policyholders have access to both forms of coverage.
- Short-term disability insurance coverage is a temporary wage replacement that usually lasts for 26 weeks or 180 days after the occurrence of a disability.
- Waiting periods tend to be short (in some cases, 7 days).
- By contrast, long-term disability insurance usually has a minimum period of coverage that lasts for 24 months, and in some cases, may last until full retirement age.
Short-term disability insurance and long-term disability insurance are often packaged together, in which case the short-term disability insurance coverage will transition naturally into long-term disability insurance coverage, assuming that you still qualify as disabled at the time. It’s worth noting, however, that the conditions for qualification (i.e., own occupation vs. any occupation standard) may change.
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