Private Long Term Disability Insurance Plans - Governed By ERISA

Clients often have questions regarding private long term disability plans through their employers and provided by Mutual of Omaha and other companies.  There is a federal law called ERISA that helps protect employee's rights.

What is ERISA?

ERISA stands for the Employee Retirement Income Security Act, a federal law passed by Congress in 1974. ERISA § 514(a), 29 U.S.C. § 1144(a).  President Nixon signed ERISA into law after 10 years of study designed to reform the nation's pension system. Congress ultimately included employer-provided insurance benefits as part of the law. That is why most Short Term Disability, Long Term Disability, Health, and Life Insurance benefits that are offered by private employers are covered by ERISA. ERISA applies only to employee benefits provided by private employers. If you work for a government entity or a church, ERISA will not apply to your claim. However, any private employer (even a small company with only one employee other than the owner) that provides employee benefits will be subject to ERISA.



What kinds of Group Employer Benefits Are Covered By ERISA?

ERISA will apply to any employee benefits offered by a private employer if one or more employees other than the owner are in the plan. Typical employee benefits that are covered by ERISA include: * Long Term Disability Insurance * Short Term Disability Insurance * Health Insurance * Life Insurance * Accidental Death & Dismemberment Insurance * 401k Plans * Stock Options * Pension Plans ERISA is so broad that it even includes on-site benefits like day-care services offered by employers. However, ERISA applies only to employee benefits provided by private employers. If you work for a government entity or a church, ERISA will not apply to your claim. However, any private employer (even a small company with only one employee other than the owner) that provides employee benefits will be subject to ERISA.

What if I purchased long term disability insurance on my own?

If you purchased long term disability insurance directly from an insurer (rather than received long term disability insurance as an employee benefit) then ERISA probably does not apply. Instead, state law applies.

Why do I care whether State law or ERISA applies?

ERISA, while enacted to protect workers, is widely known as an extremely pro-insurance law. For example, overturning a denial governed by ERISA may require proving that the insurer “abused discretion,” a very high standard of proof. Also, while ERISA cases are heard by federal judges, appointed for life by the President. By contrast, cases litigated in state courts are often heard by jurors who may be more sympathetic to the disabled and less accommodating to insurance companies.

Angela Madathil represents persons with federal ERISA disability claims as well as those with disability disputes concerning disability policies issued in Nebraska. If you live anywhere in the United States, your employer provided you with a Long Term Disability policy and your claim is now denied, contact Angela Madathil to see how she may be able to favorably resolve your claim.

What is long term disability insurance (LTD)?

Disability insurance protects workers who become disabled for an extended period due to injury, sickness or mental illness. (See your policy for a specific definition.) Disability insurance’s aim is to help replace lost wages in that situation—but not completely. Disability insurance typically pays 60 to 80 percent of pre-disability earnings. Long term disability insurance often begins after six months of inability to work up to a certain age, usually 65. Again, policy terms differ.

What is NOT “long term disability insurance”?

Neither Social Security Disability (SSD) nor Workman’s Compensation insurance are what we refer to as long term disability insurance. While long term disability insurance is provided by private insurers such as The Standard, Hartford, Met Life or Aetna, Social Security is government funded. Many long term disability policies contain a clause allowing the long term disability carrier to reduce long term disability benefits by amounts received from social security, workman’s compensation, or no-fault auto insurance (PIP). Understanding the interplay among these benefits is crucial to resolving a long term disability claim.

What is an ERISA disability “PLAN”?

Most large to medium sized employers offer employees an ERISA disability plan. ERISA requires plan administrators to provide participants with key information regarding plan benefits, funding, fiduciary responsibilities, management, grievance and appeals. As unfair as it may seem, ERISA allows insurance companies to interpret plan terms.

When you were hired, you probably received a large packet from human resources outlining your disability plan. This plan is a different document than your policy. If you have an LTD claim or think you might have one, secure your PLAN and POLICY as soon as possible. Plans differ. For example, “disability” is defined differently from plan to plan. To complicate matters, plans often differ in how disability is defined after a certain amount of time, often two years.

I have been denied an insurance disability claim. Now what?

First, fax the claims to request a “complete copy of the claims file.” ERISA requires the insurer to provide it without cost to you. Under ERISA, you must first file one or more “administrative appeals” (see your letter of denial for deadline). This appeal is considered by a separate claim unit.

You need to stack the claims file with evidence helpful to your case. Why? Your disability appeal will be based on the evidence in the claim file. The key here is to ask the right questions. Asking the wrong questions or simply asking your doctor to support your disability may not be effective enough. Remember, your doctor probably has already answered many questions posed by your insurer to track the policy’s specific requirements. Consider opinions of other physicians and statements of the responding doctor. Remember that while denial appeals are usually required within 180 days, many physicians delay responding to requests for opinion letters. If you think you might need legal assistance, contact Madathil Law Office as soon as possible, so Disability Attorney Angela Madathil can start working up your file for suit or settlement.

What evidence can help in my long term disability appeal?

Evidence from treating physicians and medical specialists in the area of disability at issue can be helpful. Sometimes your own sworn statement or videotape specifically describing your functional limitation helps overturn a denial. Additionally, an IME (independent medical evaluation) or FCE (functionally capacity evaluation) or MRI or CT testing may help substantiate your disability and satisfy any policy requirement for “objective findings.”

Why then do I need a disability attorney?

The standard of proof to overcome an ERISA long term disability denial may be “abuse of discretion,” a very tough standard. To sustain a denial, insurers usually only need some evidence to support its position. Sometimes insurers deny for the wrong reasons or apply the wrong legal standard. Angela Madathil can help to successfully overturned denials where denial language does not track policy or plan requirements. Angela Madathil also knows what questions to ask of whom and at what time in order to maximize the chance of a settlement or win an appeal. Also, insurance companies know ERISA is a sweet deal for them and that a represented client is more likely to go the distance or present a story to the press that may result in changes to ERISA that benefit disabled persons at the expense of insurers.

 How much time do I have to initially appeal a denied claim?

There are appeal deadlines, and time is not on your side. Under ERISA you generally have between 90 and 180 days to appeal and submit evidence in support of a disability appeal. Then the insurance administrator has 45 days to respond, with a one time extension of another 45 days.

If you live in Nebraska and have filed a disability claim with your long term disability insurance provider, and that claim has been denied, contact Madathil Law Office for a free consultation to see if we can help.

Angela Y. Madathil

Madathil Law Office, LLC

Employment and Business Law

Serving clients in Omaha and Lincoln

In Omaha                                         In Lincoln

1625 Farnam Street #830                  285 South 68th Street Place, Suite 322

Omaha, NE 68102                            Lincoln, NE 68510

angela@madathil-law.com

http://www.madathil-law.com/

T: 402.577.0686

F: 402.415.0635

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Disability Benefits from Employer

Employees often purchase disability insurance plans through their employers.  These plans are governed by ERISA.  Receiving benefits for disability under a long-term disability plan can be difficult when you are suffering with a mental-health issue like severe depression or bi-polar disorder.  The Eighth Circuit recently came down with a decision which shows that you likely will not be entitled to benefits under long-term disability policies which only provide benefits if you are totally disabled if you can do any job.

In Siegel v. Connecticut General Life Ins., et al, the employee suffered from severe depression.  The Eight Circuit held that the plan administrator did not abuse its discretion in terminating plaintiff's benefits as there was substantial evidence to support the determination that he was able to work and was not totally disabled.

The long term disability plan provided that if the employee's disability was due to mental illness, he

would stop receiving benefits after the first two years unless he was "totally disabled."  The term "totally disabled" was defined as being unable to perform the essential duties of any occupation for which the employee was or could reasonably become qualified.

The plan administrator initially approved Siegel's long-term disability claim in October 1995. In November 1997 it reapproved his claim for continued benefits, concluding that he was incapable of employment in "any

occupation." Connecticut General requested and received periodic updates from Siegel's doctors regarding his condition.

Siegel sent a letter to the plan administrator asking whether he could obtain part time employment without losing his disability benefits. The plan administrator informed Siegel of the relevant provisions of

the plan which allowed totally disabled beneficiaries to pursue "rehabilitative work" for a limited time.  However, the plan administrator then opened an investigation into Siegel's continued eligibility and requested

that he complete a questionnaire about his daily activities. Siegel reported that he used a computer daily, watched television for five to six hours, did laundry, attended religious services, volunteered two days a week for one hour, and could drive a "couple hundred miles with breaks." Siegel explained that he was unable to return to work due to a "lack of concentration and inability to plan and follow through."

 Siegel's psychiatrist, indicated that he suffered from "[p]ersistent and unremitting depressed mood and pessimistic outlook," "poor ability to focus," "poor ability to maintain pace," and "poor ability to

apply self-discipline." Dr. Beeghly reported that Siegel's memory, thought process, and judgment were normal. Dr. Beeghly expressed frustration that Siegel had not been seeing a therapist as he had

recommended. 

The plan administrator informed Siegel that his benefits would be terminated, explaining that it had concluded he was no longer incapable of employment.  Siegel responded with additional documentation. A form filled out by his primary care physician indicated that Siegel was disabled, but it did not give any further information as to his medical history, diagnosis, or treatment.  A report by a neuropsychologist who had examined Siegel concluded that he likely had "relatively severe, presumably treatment-resistant depression" but that there was "no evidence for neuropsychologically based intellectual or memory impairment."

Two experts concluded that he retained several functional capabilities. These included "ability to focus and concentrate," "higher level executive functioning,"2 and social skills. A vocational rehabilitation specialist identified three entry level occupations in which Siegel could work: repair order clerk, production clerk, and mail sorter. 

Siegel filed an ERISA action in the district court seeking review of the plan administator's decision. See 29 U.S.C. § 1132(a)(1)(B). The parties then agreed to have a court trial limited to the administrative record. The district court granted LINA's motion for judgment, concluding that the plan administator had not abused its discretion because it had conducted a full and fair review and there was substantial evidence to support its decision. 

The Eight Circuit held that the district court properly did not apply de novo review.  The abuse of discretion standard was proper. 

The Eight Circuit determined that it woudl affirm the plan administrator's decision if it was reasonable and supported by substantial evidence. Clapp, 262 F.3d at 828. Substantial evidence is "more than a scintilla, but less than a preponderance." Id. (quoting Sahulka v. Lucent Techs, Inc., 206 F.3d 763, 767–68 (8th Cir. 2000)).  Because the plan administrator  is both insurer and decision maker, "we take that conflict [of interest] into account and give it some weight in the abuse-of-discretion calculation." Carrow v. Standard Ins. Co., 664 F.3d 1254, 1258–59 (8th Cir. 2012).

The Eighth Circuit agreed with the district court that the plan administator did not abuse its discretion in

terminating Siegel's benefits. To be "totally disabled" under the plan's definition, Siegel must have been unable to perform the essential duties of "any occupation for which [he is] or may reasonably become qualified." There was substantial evidence from which LINA could reasonably conclude that Siegel was able to work. Siegel expressed an interest in part time work and had asked LINA how much he could work and earn without losing his disability benefits. Although Siegel's treating physicians indicated that he suffered from depression and lack of motivation, they did not identify any specific impairments or deficiencies. Only Dr. Beeghly was willing to certify that Siegel was disabled, and even he expressed some doubt on the subject.

The experts retained by LINA all agreed that while Siegel exhibited symptoms of severe depression, he was not totally incapable of employment. We conclude that on this record, it was not an abuse of discretion to terminate Siegel's benefits.

If you are having problems receiving benefits under your employer's long-term disability plan, you may want to speak to an attorney.  If you need help with long-term disability or other employment related questions, contact Angela Madathil, and Madathil Law Office, LLC, for a free consultation.  Contact us at angela@madathil-law.com or by telephone at 402.577.0686.  For more information look at our website www.madathil-law.com.

If you live in Omaha, Lincoln, Lancaster County, Douglas County, Otoe, or Cass Counties and you need an employment lawyer, consider contacting Angela Y. Madathil and the Madathil Law Firm.   The firm serves clients in all of these areas.

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