The answer to this question depends on the type of disability insurance contract you have.
Most employees have disability insurance coverage through a group plan with a private-sector employer. If your employer is large enough, or if you obtained your policy through an employee organization or union, then ERISA rules and regulations come into play. According to ERISA, you must “exhaust” your administrative remedies before you can file a lawsuit. This means you must follow the terms of the insurance policy and go through each step of the appeals process directly with the insurance company. If the insurance policy states that you must file one appeal, then you may only need to file one mandatory appeal. If the insurance policy requires you to file two appeals, then you must go through two appeals before filing a lawsuit. Other insurance policies have one mandatory appeal and one “optional” appeal.
When You May Not Have to File an Appeal
There may be other situations where you do not have to file an appeal at all before filing a lawsuit. Generally, you do not need to appeal if you have an individual policy purchased directly from an insurance agent or broker, or if your policy is sponsored by a government or church employer directly (in other words, if the policy is not through a union or employee organization). In such situations, you may be entitled to file a lawsuit after your first denial.
How Long Do I Have to File A Long Term Disability Lawsuit?
If there is no mention of a specific time limit to file a legal action (lawsuit) in your LTD policy, then the time limit is the same as that for a breach of contract claim in your state. However, most LTD policies have a specific deadline to file a legal action. This specific language is usually towards the back of an LTD policy. Typical policy deadlines range from 1 to 3 years, but United Parcel Service’s LTD policy deadline is 6 months.
Can an Insured Sue for Future Policy Benefits and Attorney Fees?
An insurance company cannot be mandated to pay all future benefits. Now, as for attorney’s fees, it really depends on the type of claim.
What Is the Arbitrary and Capricious Standard of Review?
The “arbitrary and capricious” standard is a standard of review that applies to most ERISA long term disability claims. The court will review the disability plan or policy to determine whether the plan administrator has been given discretionary authority to administer the plan and make disability determinations under the plan. In other words, a plan is not required to use certain magic words to create discretionary authority for a plan administrator in administering the plan. What is required is a clear grant of discretion to the administrator. Where, for example, the insurance plan provides an insurance company with “full discretion to determine eligibility for benefits and to construe and interpret all terms and provisions of the Policy,” the arbitrary and capricious standard applies. This standard does not require the Court to merely rubber-stamp the administrator’s decision. Instead, according to the arbitrary and capricious standard, a plan administrator’s decision will not be deemed arbitrary and capricious so long as it is possible to offer a reasoned explanation, based on the evidence, for a particular outcome. It is worth noting that the arbitrary and capricious standard is the least demanding form of judicial review. A court must, therefore, review the quantity and quality of the medical evidence and the opinions on both sides of the issues. Make no mistake. This does not bode well for the claimant. It is much more in favor of the plan administrator or insurance company. The Court will uphold a benefit denial determination the decision is rational in light of the plan’s provision.
You may have questions as to whether you are required to file an appeal, or whether you should participate in the “optional” appeal process. If you have such questions, you should immediately seek legal advice from an attorney familiar with ERISA disability cases. Please call at (866) 853-7210.