Appealing Disability Insurance Claims
UPDATED: December 17, 2019
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Navigating the appeal process when your long term disability insurance claim is denied depends on whether or not your disability insurance policy is governed by a federal law known as ERISA, the Employee Retirement Income Security Act of 1976.
Most individual long term disability income policies are not governed by ERISA If your disability insurance policy is not governed by ERISA, you ordinarily can bring a civil lawsuit after the denial of benefits and are not obligated to complete an appeal process. Read your policy's procedures on internal appeals and complete all steps that you have contractually agreed. Some policies do include arbitration or further review steps prior to the commencement of a civil action.
If your disability insurance policy is ERISA-governed, certain specific steps must be followed, and because of the nature of those rules, it is often very wise from the very beginning of the appeal process, to hire an attorney who is experienced in disability insurance and ERISA to guide you in order to protect your rights. Most group disability income polices are governed by ERISA.
Individual long term disability plans
As stated earlier, most individual disability insurance polices are not subject to ERISA, but are governed by the statutory and common law of the state in which the policy is issued. When you have a problem with a denied claim, check your policy to see your appeals process (most likely a customer service number will be listed). Remember, the policy is a contract and you agreed to its terms, including the appeals process. (If you do not have your policy, call the insurance company; they are required to provide a copy.) .
If there is an appeal or arbitration process stated in the policy, you should follow it. Legally the insurance company must provide you an understandable reason on claim denials, in writing. But in any event a good next step is to contact the claims manager/supervisor in writing to ask for the precise reasons for denial, in writing. If you are still having trouble, read the policy for further internal review steps. Put simply, you should exhaust any stated internal avenues for appeal under the terms of the disability insurance plan.
If the insurance company is still giving you a hard time, it may be time to contact the consumer complaint division of your state insurance department. Sometimes filing a complaint with the insurance department may bring some results (i.e., bring pressure on the insurance company to reconsider your claim). On some occasions, the department investigator will speak to the insurance company, get their side of the story, and pass their response on to you. It depends on the insurance department as to how helpful they will be. Some are more consumer-oriented than others.
If your efforts with your disability insurance provider are still unsuccessful, another way to fight is to submit your complaint to mediation or arbitration (if this was not contractually required and has not yet been tried). In mediation, there is a neutral third person, a mediator, who facilitates the resolution process (and may even suggest a resolution), but does not impose a resolution on the parties. In arbitration, there is a third person who, as a private judge, imposes a resolution. Mediation and arbitration can reduce the expenses for both parties of actual formal litigation, but both parties must agree to participate. In most cases, unless there is already a provision in the policy, the insurer will probably not agree to participate.
If all of these steps have failed, your final step is filing a lawsuit. If you do not have an attorney, you may want to seriously consider contacting an attorney who deals with long term insurance disability claims. Keep in mind that the insurance company attorneys have detailed knowledge of insurance benefit claims and know far better than you how the court process and procedures work in their favor.