If you’re denied long term disability insurance benefits by the insurance company, you may be eligible to file a lawsuit in federal court. Litigation is the process of taking legal action or filing a lawsuit to protect your legal rights.
What To Do After a Final LTD Denial
When Can You Sue?
When a group long-term disability (LTD) insurance policy is governed by ERISA law, one of the questions we are asked most is “When can I sue for a denied claim?” In an ERISA disability claim, a lawsuit cannot be filed until all of the claimant’s administrative remedies have been exhausted. Most LTD policies governed by ERISA require at least one appeal directly with the insurance company or plan administrator before a lawsuit can be filed.
Is an ERISA Claim in Federal Court or State Court?
Unlike an individual disability policy that is governed by state law, federal courts have jurisdiction over all ERISA long term disability cases. Policyholders whose benefits have been denied or terminated do not have the right to a jury trial in ERISA cases. The federal judge alone will make the decision in an ERISA long term disability lawsuit.
Note: A lawsuit can be extremely time-consuming. That is why it is critical that the disability attorney you choose to represent you does everything possible to resolve your case during the internal administrative appeal process without having to depend on a federal court for a fast resolution of your claim.
Most civil cases are started by one party (the party suing, called the “plaintiff”) filing a “complaint” with the court. A “complaint” is a document that describes what the plaintiff wants (money or some other type of relief) and why they believe they are entitled to that relief. It also identifies the “defendant” (the party being sued). The court will also issue a “summons”, which notifies the defendant that they are being sued. The complaint and summons must both be “served”, or personally delivered by a process server, to the defendant
Once the Complaint is processed by the Clerk of the Court and a summons is issued, we will have a process server deliver it to the defendant. The defendant has 20 days from the date that they are served in which to file a response to the Complaint, which will usually be an Answer to the Complaint or a Motion to Dismiss. Assuming the defendant chooses to Answer the Complaint (in which they will most likely deny everything that we allege in the Complaint), the next step is to hold a Parties Planning Meeting.
At the Parties Planning Meeting, the attorneys for all the parties will get together to discuss how much time will be needed to perform discovery in the case and various other procedural deadlines. Based on the discussion at the Parties Planning Meeting, we will submit a report to the court, who will then issue a “Scheduling Order” which sets forth important procedural dates, such as when witnesses need to be disclosed, when discovery ends, and when the case should be ready for trial. In federal court, the short deadlines that the court imposes in which to finish discovery force everything to move along rather quickly. It does take several months, however.
How Does the Judge Make a Decision?
How will the federal judge make a decision about the ERISA lawsuit? There are two standards of review in ERISA cases: (a) the de-novo review standard and (2) the arbitrary and capricious standard (also called the “abuse of discretion” standard). The judge will determine which standard applies to your disability based on the language in the policy itself. Specifically, the parties and the judge will review the LTD policy to determine whether it includes a discretionary clause that allows the insurance company to interpret the policy.
A de-novo review is a more favorable standard of review to the policyholder. With a de-novo review, the judge will independently review the entire administrative record (your entire claim file) and determine whether you are disabled and entitled to benefits under your group disability insurance policy. The abuse of discretion standard, on the other hand, applies where a plan grants the fiduciary discretionary authority to determine eligibility for benefits. The abuse of discretion standard, in essence, requires that the judge determine that the insurance company’s denial of benefits was wrong and that the insurance company’s decision was “arbitrary and capricious”. Essentially, in order to reverse a disability denial, the Judge must find that the insurance company acted unreasonably and that there was no rational basis for the insurance company’s decision.
Note: Multiple states have sought to ban the use of discretionary clauses in disability policies. Unfortunately, most long term disability ERISA policies provided by employers contain discretionary clauses. That means that the abuse of discretion standard is commonly applied by federal courts throughout Florida and the rest of the country.
What Are My Chances of Winning a Lawsuit in an LTD Claim?
Group ERISA Lawsuits vs. Individual State Law Lawsuits
There are numerous differences between a lawsuit filed in connection with an ERISA LTD plan versus an individual disability income policy. With an individual policy, the claimant is entitled to a jury trial in state court. However, an ERISA claimant is not entitled to a jury trial. An ERISA disability lawsuit will be decided by a federal judge. In most cases, the decision is made after the parties have filed written briefs in support of cross-motions for summary judgment.
Another disadvantage to ERISA lawsuits is that it is difficult to receive an award of attorney fees for the winning party in an ERISA disability case in most federal circuits.
Moreover, in a lawsuit in state court for the wrongful denial of benefits under an individual disability policy, the claimant may be able to seek extra-contractual damages for the insurance company’s bad faith. Unfortunately, ERISA regulations do not allow any claims for bad faith or punitive damages for an insurance company’s wrongful denial of long-term disability benefits in a group plan ERISA claim. If the federal court rules in favor of the claimant in a federal ERISA lawsuit, the disability insurance company’s only potential damages are the payment of the claimant’s past-due benefits and possibly interest and attorney fees.
Legal Representation in Long Term Disability Insurance Claims
Although based in Florida, the Ortiz Law Firm represents claimants across the United States. If your LTD claim has been wrongfully denied, delayed or terminated and you’d like to speak to an experienced Long Term Disability Insurance Attorney contact us at (866) 853-4512 to schedule a consultation. We can help you evaluate your claim to determine if you will be able to access Long Term Disability Benefits and how to move forward with the process.