If you are a private disability insurance insured — whether your benefits are short-term, long-term, or are provided through an employer — then you may find that you encounter difficulties with regard to securing benefits in the wake of an injury, illness, or other condition that has impacted your ability to work. Despite the fact that the severity of your condition and its disabling effects may seem obvious to you, the insurer require you to jump through various hoops in order to obtain the benefits owed under the policy.
If you have had a private disability benefits claim denied, then it’s important that you get in touch with a skilled team of Chicago private disability insurance attorneys for assistance with the next steps of the process — evidence gathering, internal appeals, negotiations, and civil litigation.
At Bryant Legal Group, P.C., our attorneys have decades of experience helping insureds through every stage of the dispute process. We understand the unique difficulties associated with private disability claim denials, and how to overcome the tactics often employed by insurers to discourage further engagement. Contact our firm today to learn more about your claims and the various options that are available to you.
Common Justifications for a Claim Denial
Private disability insurance coverage can differ significantly from policy-to-policy, depending on a number of factors, from the insurance carrier (and their policies) to the premium nature of the coverage and provisions included in the policy. Regardless of the type of coverage you purchased, however, insurers are incentivized to deny claims and come up with various justifications for their disability benefits denial in order to maximize their profits. These justifications commonly include the following:
- Coverage exclusion applies (i.e., intentional self-harm, disability caused by voluntary engagement in dangerous activity, disability related to military service, etc.);
- Insufficient documentary evidence in support of the disabling condition at-issue;
- Claimant made a material misrepresentation in the original insurance application;
- Claimant is exaggerating the extent of the injury (inconsistency revealed by insurer investigation or surveillance of the claimant);
- Disability is caused by a pre-existing condition that was known at the time of the insurance application;
- Claimant failed to adequately mitigate their losses;
- Claimant did not obtain adequate medical treatment on a consistent basis, leading to serious coverage gaps;
- Coverage lapsed; and
Just because an insurer has denied your disability benefits claim does not necessarily mean that you have no options. In fact, it is quite common for insurance companies to deny disability claims for “paper thin” reasons, in the hopes that the claimant will simply resign themselves to the adverse decision of the insurer. With the assistance of qualified Chicago private disability insurance attorneys, however, you can request a reconsideration of the insurer’s decision to deny your disability benefits claim and secure the benefits to which you are entitled.
If your claim has been denied, the next steps will depend a great deal on whether your private insurance benefits are ERISA-governed.
The Employee Retirement Income Security Act (ERISA) is a federal regulatory scheme that applies to certain qualified employer-sponsored benefits plans — excepting coverage sponsored by a public employer or a religious organization — and applies exclusive of state law. Even if you are an Illinois resident and you work for an Illinois employer, for example, it’s quite likely that your employer-sponsored benefits plan is ERISA-governed.
ERISA sets out appeal exhaustion requirements for insureds who are attempting to challenge a denied disability claim and imposes a number of unique limitations on the way insureds can litigate their claims in federal court, and these unique limitations apply to the appeals process as well.
Let’s take a look.
ERISA Basics and the Administrative Exhaustion Principle
ERISA was passed into law in 1974 with the intention of protecting plan participant-insureds and their heirs from the abuses and adverse, unjustified decision-making of plan administrators. ERISA protections have been expanded over time, but in fact, the reality is rather sobering. What began as a regulatory scheme intended to protect plan participants has developed into a limiting burden for those whose claims have been mishandled by an insurer.
There are a number of limitations imposed on claimants who are attempting to secure benefits under an ERISA-governed plan — but for now, we’ll examine the “administrative exhaustion principle,” which prohibits any civil action against the insurer until and unless the insured has exhausted all their administrative remedies.
Administrative exhaustion in the ERISA benefits context is achieved by going through the internal review process implemented by the disability policy at-issue directly with the insurance company or third-party plan administrator that made the adverse benefit determination. Some ERISA-governed plans require up to two rounds of internal review before the administrative exhaustion principle is satisfied.
There are some variations on a plan-by-plan level, but the procedures and deadlines are uniformly dictated by ERISA. Once you have had your benefits claim denied, the insurer must send you a letter of denial explaining the basis for its decision, which then also explains that you can request reconsideration of your benefits claim pursuant to the internal review process (by filing an administrative appeal). You must file the administrative appeal within 180 days (six months) of receiving the letter of denial. Failure to do so could preclude you from challenging the decision of the insurer and obtaining your rightful benefits.
Once you file an appeal, the ERISA disability insurers have just 45 days to review their earlier decision to deny your claim for benefits. Not all claims take just 45 days to review, however. In some cases, if the insurer requires additional time due to the complexity of the case (or for some other reason), they can request up to two extensions.
If the insurer affirms their earlier denial decision, or overturns the denial but undervalues or adversely defines your disability claim (i.e., argues that your condition qualifies only as a partial disability, or as an exclusively mental health condition), then you may bring a lawsuit against the insurance company and litigate the conflict in a court of law.
Illinois Bans Discretionary Clauses and Prescribes the De Novo Review Standard
Illinois has banned discretionary clauses, and the Seventh Circuit Court of Appeals has upheld the application of that prohibition on ERISA-governed disability plans. What exactly does this mean for the disability claimant in Illinois?
In the past, many insurance plans included language that required that courts evaluate the denial of benefits under a deferential standard. Essentially, the court could not find that denial was wrongful unless there was proof of both an erroneous decision, and arbitrary and capricious behavior. In other words, if your insurance policy included a discretionary clause, then the court could find that the insurer made a mistake in denying your benefits but could not actually reverse that decision unless you were able to show that the insurer’s denial was arbitrary and capricious in nature.
If your ERISA policy was issued or offered in the state of Illinois, the Illinois ban on discretionary clauses should apply to your claim. This means that a reviewing court must apply the de novo standard of review, which requires them to look at the evidence as though it were a “blank slate” and the court reviews the evidence, weighs in, and determines whether or not you have shown by a preponderance of evidence that you are entitled to benefits under your ERISA disability plan. The decision and thought process of the insurance company are irrelevant to the court.
Retaliation Is Prohibited
It is not at all uncommon for claimants (whose coverage is ERISA-governed) to worry that by pursuing a disability benefits claim and “causing a fuss” — in other words, by challenging the adverse decision of the insurance company — they may be subjected to retaliatory action by their employer.
Fortunately, the law protects those who have exercised their ERISA-related rights from retaliation. If your employer retaliates against you (i.e., terminates your employment, refuses to give you a raise, transfers you to a difficult new post) for exercising your ERISA-related rights, then you may bring a separate action against your employer for damages.
Non-ERISA Challenges Can Transition to Litigation Immediately
Challenging a non-ERISA private disability benefits denial is substantially less complicated. If you have had your non-ERISA benefits denied, then you may simply move forward and file a lawsuit against the insurance company for wrongful denial — you need not go through a required internal review process. This can be a substantial boon for those insureds who are in a difficult, vulnerable financial situation and who don’t have the time or interest for a long and drawn out reconsideration process. By moving on to civil litigation, your attorney may be able to apply more pressure on the insurance company to negotiate a satisfactory settlement.
Granted, the internal review process can vary quite a bit from plan to plan, and it is not always a waste of time. The internal review process may be recommended by experienced counsel if after consultation we determine that specific evidence is missing and if that insurer has the ability to review that evidence the claim may be awarded. Additionally, giving the insurer an opportunity to review additional evidence supporting a claim may be advantageous in litigation even if the insurer still initially upholds its denial of benefits.
Developing a Sufficient and Comprehensive Disability Record
Bryant Legal Group’s Chicago private disability insurance attorneys generally encourage individuals to seek guidance from us long before they receive a letter of denial, and in fact, before they submit an application for disability benefits in the first place. The earlier you consult an attorney, the better off you’ll be with regard to your benefits claim. With the aid of a qualified attorney, you can put together a comprehensive set of evidence to support your disability claim — and avoid the procedural pitfalls that some claimants encounter.
Comprehensive disability records typically include:
- Statements by treating physicians
- Medical records
- Statements by vocational experts
- Statements by employer
- Video footage of disability
- Pay-stub evidence
- Third-party sword witness statements
- And more
If you can submit an unassailable claim for benefits, you may be able to avoid the hassle, expense, and emotional frustration associated with having to challenge a wrongful denial of benefits. You can at least give yourself the chance for early success on your claim.
Connect to Our Team of Chicago Private Disability Insurance Lawyers for Assistance
Bryant Legal Group, P.C. is a Chicago-based boutique insurance litigation firm with significant experience advocating on behalf of disabled insureds in disputes against their insurance carriers. Our attorneys are committed to the comprehensive, aggressive representation of client interests over the course of litigation — whether in an administrative appeal or in the trial context. This approach to disability insurance litigation has brought us significant success in negotiating pre-litigation compromises, as it is well-understood that we are willing and able to pursue a case all the way through to trial (if necessary).
Unlike many of our competitors, we offer truly individualized legal representation. It is our deeply-held belief that effective advocacy in the insurance dispute context requires a close and collaborative relationship with the insured. We strive to put together a comprehensive record of the disability at-issue and work with medical experts and others as necessary to develop a thorough understanding of the medical condition(s) and vocational issues. By engaging in such significant efforts early on in the client engagement process, we are able to detail a stronger argument for benefits.
If you’d like more information about our services, or would like to speak further about your case with a qualified professional, we encourage you to call (312) 561-3010 or submit an online form to connect to one of our experienced Chicago private disability insurance attorneys.