For
most of us, our marketable skills, education and training are our
most valuable asset. Studies show that over the course of our productive
earning years we run a more significant risk of experiencing an
extended period of disability due to injury or illness than of death
itself. Life insurance protects our loved ones against the economic
consequences of death, whereas disability insuance is intended as
a financial safety net in the event one becomes unable to perform
customary job duties. In some cases self-employed individuals purchase
private policies; in many cases, disability insurance is offered
as an employment benefit along with life insurance and retirement
plans.
The
definition of disability varies from policy to policy, but in general,
STD and LTD disability insurance pays when you become unable to
perform the material and substantial duties of your job at the time
of onset of disability. In some cases, the definition of disability
does not change; in many cases, however, after an initial period
(often 24 months) the definition of disability broadens to require
an inability to perform any substantial gainful activity. There
are also limitations for disbility caused by or contributed to by
mental disorders, limitations on conditions such as fibromyalgia,
chronic fatigue syndrome, and other chronic illnesses. These requirements
and limitations vary according to the wording of your individual
policy.
The
disability insurance field experienced great growth during the 1980's
and into the 1990's as insurance companies sought to fill this need.
Unfortuantely, the disability insurance companies underpriced their
products and failed to anticipate the volume of claims that would
be filed as aging baby boomers began to experience the effects of
age, chronic illness, injury and disability. As a result, many disability
insurance companies (most notably but certainly not limited to UNUM
Provident which has been the subject of numerous class actions)
have taken an increasingly hostile and adverserial stance towards
its insureds, denying claims which appear clear on their face.
Most
disbility insurance policies are governed by a federal law called
ERISA (governmental employees, including school teachers employed
by public school distrcits, are exempt from the reqirements of ERISA).
Under ERISA, there are several levels of internal claims review.
Once a claim is finally denied by the disability insurer, the next
step is to file suit in US Federal District Court. Unfortunately,
the scope of review in court is extremely limited. In most cases,
the judge is limited to reviewing the claims file and deciding whether
the claims manager's decision is "arbitrary and capricious."
This means that, even if the judge may disagree with the decision
the claims manager reached, he is often powerless to reverse that
decision. The scope of the court's review depends on a number of
factors, including (1) the language of the policy itself regarding
how much discretion is given to the claims manager; (2) whether
the insurance company is engaged in a conflict of interest; (3)
whether all applicable time limits have been met; and many other
factors. While there is limited discovery on appeal (including the
right to send out written questions and requests for documents,
the right to take sworn tetsimony of key witnesses, etc.) there
is no right to a trial. The federal district court judge in effect
sits as an appeals judge reviewing the record and weighing the arguments
of the attorneys.
If
your claims file doesn't include all of the relevant evidence necessary
to prove your disabilty, your case may effectively have been lost
by the time you get to federal district court, regardless of how
real your disablity and how deserving your claim. It is essential
that you consult with a disability attorney as early in the claims
process as possible so that your attorney can help you develop the
right medical, vocational and factual evidence to support your claim.
Joe
Koplin specializes in ERISA LTD claims and appeals, represents claimants
throughout Washington, and welcomes your questions. You can reach
Joe Koplin at joekoplin@mandk.net
or directly at (425) 641-6000.
