Chicago ERISA Benefits Lawyer

Private disability insurance policies vary significantly from policy to policy, as do the coverage exclusions that apply to insureds. Whether certain coverage exclusions apply to your policy — and the limitations imposed by those exclusions — is often heavily dependent on how “premium” the disability insurance policy is. More expensive policies tend to feature fewer limitations and more generous benefits. Despite these variations, there are certain exclusions more commonly encountered than others in long-term disability insurance. These include, but are not necessarily limited to, exclusions that disqualify coverage to those who have been:

• Disabled through intentional or self-inflicted injuries
• Disabled pursuant to military service
• Disabled in an “extreme” and “risky” scenario, as defined by the insurance policy (e.g., skydiving, bungee jumping)
• Disabled during the commission of a criminal offense
• Disabled due to some specific condition (the insurance policy may define a range of conditions that will not qualify)
• Disabled due to a mental health condition (though most disability insurance policies simply limit the time period of eligibility for such conditions)

Yes, absolutely. Not only is it likely that you will receive regular requests for updated information relating to your disabling condition (and its progression) from your insurer, but insurers will expect you to keep them apprised of any material changes to your medical condition(s). You must provide updated information as you bear the burden of the proof of loss as the insured under most disability insurance policies. It’s critical that you do not forgo such notification, or you could not only lose your benefits, but you could also be held liable for damages.

Insurers must provide some justification for denying your long-term disability benefits claim. If their justification has no reasonable basis, then you should appeal the denial or pursue a lawsuit to recover your benefits. Common justifications for a claim denial include:

• Lapse of coverage
• Material misrepresentations in the original insurance application
• Insufficient evidence of disability
• Application of a coverage exclusion
• Disability tied to a pre-existing condition
• Failure to seek ongoing medical treatment

Most employer-sponsored disability plans — except for those sponsored by public employers and religious organizations — come under the Employee Retirement Income Security Act (ERISA), which creates an exclusive federal regulatory scheme for benefits claims and subsequent challenges.

ERISA was created with the intention of protecting plan participants from the abuses of plan administrators, but over time, ERISA has actually developed into something of a headache for the plan participants it was originally meant to protect. If your plan is ERISA-governed, for example, then you must fully exhaust your administrative remedies before pursuing civil action against the plan administrator or insurer — this can extend the timeline of the dispute and keep you in a vulnerable position for longer.

Additionally, ERISA preempts bad faith actions against insurers, thus eliminating a significant recovery option for insured plan participants whose insurers have mishandled their disability claims.

Yes, absolutely — in fact, concern over plan mismanagement by fiduciaries is what led to the enactment of ERISA in the first place. ERISA fiduciaries have strict duties to act in the best interest of plan participants. Failure to do so could expose them to substantial civil liability under ERISA.

• When such a situation occurs, the plan participants have a right to sue and recover damages for their losses.
• Typically, this is accomplished through a class action, as there are many others in the “class” of plaintiffs who are similarly affected by the fiduciary violation.
• For example, suppose that the administrator of your ERISA-covered retirement fund mismanages the funds through extremely risky investments. The losses are so substantial that the plan can no longer pay out the benefits to which you’re entitled. You would almost certainly have a claim against the fiduciary.

Unfortunately, bad faith claims are not actionable under ERISA.

ERISA is a federal law that pre-empts state bad faith laws, including those of Illinois. If your disability benefits claim has been mishandled by the insurer, and ERISA applies, then you will not be entitled to bring a claim for bad faith. This can undercut your ability to obtain maximum damages in extreme cases, as bad faith claims often lead to significant damages (and sometimes, courts award punitive damages, which can further multiply the amount received).

In some limited cases, however, you may be able to bring a separate fraud claim against certain defendants. You’ll want to consult a qualified ERISA disability attorney in Chicago for an evaluation of your bad faith claims and how you might be able to strategize around the pre-emption issue.

Many common law fraud claims are pre-empted by ERISA as well — such a claim might only avoid pre-emption if you can show that the defendant owed you (and violated) a duty independent of the ERISA-covered plan.

The administrative appeal process is a pre-litigation, internal (directly with the insurance company) review procedure that is imposed on benefits claimants under ERISA.

• It is not necessarily a simple, efficient, or quick process — in fact, in some cases the administrative appeal can take from six months to a year to complete.
• You have just 180 days to submit a request for review pursuant to the administrative appeal process.
• If you are dealing with a denied ERISA disability claim, contact a qualified Chicago attorney for help with the administrative appeal process. Attorney guidance is critical, even at this stage, as a favorable resolution to the dispute may be possible.

Every plan is different and may impose different procedures. For example, some plans may extend or contract the typical deadlines. Others may have different factors for determining the person who will be reviewing the claim denial.

During the administrative appeal process, you will send comments and evidence that supports your argument that the claim should have been accepted and benefits awarded. In doing so, you will have to evaluate the plan documents, as well as other relevant documentation — such as medical records, file physician review reports, and vocational opinions. Once a decision has been made (regarding your appeal), you will receive a written decision that describes the specific reasoning on which the denial (or acceptance) is based.

At this point, if the administrative appeal process has led to a denial (in whole or in part), you will have exhausted all available remedies and will be entitled to bring a civil action against the defendants.

Generally speaking, no.

Although ERISA benefits claims can be brought in many courts against both the insurer and the plan administrator (your employer):

• By pursuing an ERISA benefits claim, you are not jeopardizing your employment.
• In fact, ERISA regulations prohibit employers from retaliating against their employees for attempting to pursue a claim under ERISA, or for otherwise exercising their ERISA-based rights.
• For example, if you appeal the denial of your disability benefits and then later bring an action against the insurer for damages, your employer cannot take an adverse employment action against you (i.e., termination, refusing to give a promotion or a raise, etc.) on that basis.

ERISA does not contain a specific time limit for the filing of a claim under your ERISA-based benefits plan. However, the plan itself will include a specific time limit to notify the insurer or claims administrator of your intention to file a claim.

• For short-term disability benefits, we have seen periods as short as 7 days from the start of disability and, for long-term disability benefits, we frequently see time limits of 30 days.
• After your claim has been denied, ERISA regulation gives you 180 days to file an appeal. If the appeal is denied in whole or in part, you have a right to bring an action against the insurer and pursue the claim in a court of law. There are deadlines for this, too, however.
• ERISA statute of limitations rules are somewhat complicated. As a general rule, most ERISA-covered plans simply use the applicable state jurisdiction’s statute of limitations for written contracts — for example, in Illinois, most ERISA-covered plans will give you a 10-year deadline that runs from the date of formal denial (of benefits).
• Importantly, however, alternative deadlines may be set by each plan, and as such, the deadlines can vary substantially. ERISA only requires that the deadline be reasonable, given the circumstances.

For example, a 90-day deadline for bringing an action against the insurer would likely be considered unreasonable, whereas a two-year deadline would likely be considered reasonable.

Given the variable nature of such deadlines under ERISA and the fact that your claim may be abandoned if you do not bring an action in a timely manner, it’s critical that you consult with an attorney at an experienced Chicago ERISA law firm for guidance — your attorney will ensure that your claims are brought in a timely manner.