Group Plan versus Individual Disability Insurance Policy | Long Term Disability Attorney

Hi, I’m Nick Ortiz. I'm a board certified disability insurance attorney. Today I'm here to talk to you about the difference between group and individual long-term disability claim. So, I'll be referring to group kind of with this hand and individual with this hand, and I'm going to do a cross-comparison between the two, because they are very different in the way that they're handled by our legal system. When I'm referring to group, what I mean is a policy that's obtained from an employer as part of a group employee plan. Oftentimes, if you work for larger companies like AT&T or Verizon or some of these bigger companies, as part of their employee benefit package, you might have life, health, but also disability insurance, and so that's part of a group plan. That's what we're referring to. An individual plan, by its very definition, is not a plan that you got through your employer, but it's a plan that you obtained individually, on your own. It's an individual, referred to as an ID for Individual with Disability plan.

The first key difference is the type of law that applies to each type of plan. Under a group plan, because it's through an employer, it's subject to a federal regulation called the Employee Retirement Income and Securities Act of 1974, oftentimes referred to as ERISA for short. ERISA was originally enacted in order to make it more affordable for employers to offer benefits to employees such as life, disability, and health insurance, but there were some trade-offs to make it more affordable, and those trade-offs are that they take away certain rights that you have when you go through the decision making process in that type of claim. For example, one of the key things that is taken away from you is your right to a jury trial, because jury trials are pretty expensive, and so they said, "look, no longer will we allow a jury to decide the outcome of a case if there's a dispute in the contract case. We want a federal judge to make the decision." So, you no longer have the right to a jury trial if an ERISA group plan case goes to trial. Second, you are not allowed to introduce any new evidence. So part of this cost-saving measure is so there's not this long discovery exchange of information where there's depositions and testimony that goes on during court. What happens is the evidence is limited to whatever was in your claim file during the administrative review process and that's the only thing that the judge can consider in a bench decision.

So, you can see that you don't have the right to a jury trial, you cannot introduce any new evidence, you won't be allowed to testify, nor your friends testify or your doctors. If there's a new diagnosis you can't introduce any new medical records. All those things are taken away from you in an ERISA plan. The other major thing is when you have a group plan, you must go through the appeal process directly with the insurance company before you can file a lawsuit. What that means is typically when you're denied, you have either 90 or 180 days, depending on your plan, but typically 180 days to file an appeal, and you must file an appeal directly with the insurance company and go through each required appeal that the insurance company puts on you before you go to court. If you do not go through the appeal process and you try to file a lawsuit, then your case will be dismissed by the court for your failure to exhaust your administrative remedies. So it is very critical that you go through that appeal process before filing suit.

Finally, the main difference between a group and an individual is in a group plan, the standard of review that a court applies. The standard of review, which is how they look at the case, is what's called the "arbitrary and capricious" standard of review in most cases, if they're given discretion under the plan in most jurisdictions. What that means is when the court is looking at the case, they have to determine that not only was the decision wrong, which is relatively easy to establish in many cases, but was the decision by the insurance company without any reasonable basis? And, that's a very tough burden for a claimant to overcome, because although you can show that the disability exists and one should be entitled to benefits, it's oftentimes more difficult to show that the insurance had no reasonable basis for the decision. They can oftentimes point to a medical review or report by one of their doctors that says that you're not significantly impaired, and if they have that type of report, then the court may allow the decision to stand.

So, now I want to do a cross-comparison with individual disability plans. Let's start with that standard of review we were just talking about. In an individual policy, the standard of review is preponderance of the evidence. It's the civil standard under state court, not federal court. All you have to prove is that by preponderance of the evidence that you should be entitled to benefits. That's a much easier burden to satisfy than the arbitrary and capricious standard that we were talking about. The preponderance of the evidence standard is more along the lines of what you think of in any typical case, and that is when you think of the classic scales of justice. So, when you present your case, the jury just has to decide that they believe your case a little bit more than the other side. Let's say they believe you 51%, and they believe the insurance company 49%. Whichever side that they believe just a little bit more by preponderance of the evidence, then that's the side that they must rule in favor of. So, that's a lot easier to establish than showing that there is no reasonable basis for the insurance company's decision. If you're using the scales of justice under that, it's more like you have to prove your case almost beyond a reasonable doubt. So, it's a much different standard of review.

The next major difference is we were talking about how you don't have the right to a jury trial in a group plan, but in an individual you do. You have the right to a jury. You have the right to testify. You have the right to have your doctors and your friends and family and people get up to testify about the changes and impact that your disability has had on your life. That is another major difference is having the ability to testify and introduce even new evidence that's been developing over the recent months in that type of case. Another big difference is going through the appeal process. You don't necessarily have to have gone through the appeal process, although you should really look at what your insurance policy requires, and if there is some required appeals in the policy itself. While you're not subject to the same stringent requirements under ERISA, you are still subject to whatever the requirements are under your policy. So, those are some of the major differences between the two types of claims, and therefore, it's oftentimes good to have an experienced attorney who knows the differences between the two and can help you evaluate what your rights and responsibilities are under the different types of policies, to help you look at the file, look at the policy, and help explain to you what it is that you need to do to get your benefits either instated or reinstated.

The Ortiz Law Firm handles cases around the country in long-term disability claims, and so, if you'd like to talk to an experienced attorney with our firm, then I encourage you to give us a call at 850-308-7833. If you'd like additional written materials, there is a book that I wrote called The Top 10 Mistakes That Will Destroy Your Long-Term Disability Claim. I encourage you to download a free copy of the book I'm making available at www.FreeLTDBook.com. Thank for listening. We look forward to hearing from you.