Episode 2: Long-Term Disability Insurance Claims 101, Part 2: ERISA

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In a continuation of our last episode, host Evan Schwartz discusses more of the basics of filing a long-term disability insurance claims, focusing on what you need to know if your claim is governed by the Employee Retirement Income Security Act (ERISA).

Podcast Show Notes

In this episode of the Insurance Lawyer, Evan Schwartz, founding partner of Schwartz, Conroy and Hack continues the discussion in our previous episode, “Long Term Disability Claims, Part 1.” The first thing you need to identify is, if your claim was denied. If so, who was it denied by, what insurance company, and what type of coverage did you have?  If you had group insurance, it is possible that your long-term disability claim may be governed by a federal law called ERISA, the Employee Retirement Income Security Act of 1974, and it is a law that governs the handling of employee benefits claims. One question to keep in mind when filing a claim under ERISA: is there a requirement that you file an appeal before you start a lawsuit, and did the policy require that you file an appeal? If you don’t appeal a denied or terminated claim that is governed by ERISA when there is an appeal requirement contained in your policy or group plan, then you may lose your case forever.

If you are going to sue under ERISA, know that your case is going to federal court, because ERISA is a federal law. As such, make sure to select a lawyer that is comfortable litigating this case in federal court. 

You must consider doing some pre-lawsuit filing due diligence, meaning you will want to know all of the facts surrounding the case, understand what happened, why it happened, and whether or not those facts affect what you’re going to do. Afterward, you must find out if either ERISA or state law governs your case. If state law governs your case, you must file the case in a state whose law interprets your case appropriately and that would benefit the defendant best. 

Also, there is a concept called preemption and preemption is where a federal law is deemed to be so comprehensive that it supplants and replaces all the state law surrounding it. This is good for insurance companies and bad for disabled people because if ERISA governs the case, it is to preempt state law, meaning it overrules state laws. This would lead to the lawyer not being able to use certain state laws to argue the case, which could end poorly for the defendant.

Next, you must assess the merits of the case. If the individual’s case was previously denied or terminated. If the claim is governed by ERISA, you will be entitled to access the entire claim file, the medical records, the policies and the claim file from the insurance company, including the information used in the appeal. This is important because you must make sure everything in the case is consistent in order to maintain credibility.

Finally, if your claim reaches the stage of litigation, it is important to know that most litigation in one of three ways. First, the case settles. This is when each side decides to take a certain dollar amount and pay a certain dollar amount. Second is the most likely outcome, there will be a summary judgment motion that will decide the case. The third outcome is that it goes to trial and a verdict is decided. In all of these scenarios, the client needs a full understanding of the likelihood of the outcome. 

Takeaway

When suing an insurance company for not paying your long-term disability claim it is important to know whether or not ERISA governs your claim and if you are going to federal court or state court. But it is most important that your lawyer has a sufficient level of understanding and expertise in this area to give you advice and the appropriate risk assessment. 

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