Although long term disability insurance purchased from a private insurance company or provided by an employer as a benefit of employment can offer vital financial security, beneficiaries often face a difficult road when filing a claim for benefits.  The economic model for maximizing insurance industry profits does not revolve around insurers paying the maximum number of claims or the full measure of benefits owed.  Insurance companies deny or underpay a significant number of claims because this strategy generates enormous profits for the insurance industry.  The ability of insurance companies to allow collected premium dollars to remain invested also provides a financial incentive to drag out the claims process.  Below we provide answers to some long term insurance claims-related questions.

Can a long term disability insurance carrier deny your claim even if your physician has not authorized you to return to work?

Many people who are still physically unable to return to work are informed by their disability insurance carrier that their claim is being denied.  This is understandably a confusing and frustrating situation because individuals unable to work are told that the financial security they counted on appears out of reach.  Even if the claimant’s physician has not signed off on a return to work, insurers routinely conduct their own medical review.  The insurance carrier might send the medical records to its in house doctors or to an "independent" doctor for a peer review.  Because these physicians have a financial interest in receiving future business from the insurance company, they tend to be overly optimistic about an employee’s ability to return to work without limitations or restrictions.  The insurance carrier subsequently relies on these favorable reports while disregarding the treating physician’s recommendations.

Can you file a lawsuit rather than an administrative appeal?

The answer to this question depends on the source of your disability insurance policy.  If the policy is provided by your employer as part of your employee benefits package, the claim will probably fall under the auspices of ERISA.  This federal law requires that claimants exhaust administrative remedies before filing a lawsuit.  When a claimant files a lawsuit for disability insurance benefits without an appeal under a policy governed by ERISA, the insured faces a risk that the lawsuit will be dismissed.  However, an individual that purchases a private disability insurance policy can usually file a lawsuit without an administrative appeal.

How should you interpret your insurance carrier’s actions if your insurer pays short term disability insurance benefits under a “reservation of rights”?

If an insurer has not made a final determination regarding the issue of coverage, the insurer might commence temporary disability insurance benefits under a “reservation of rights.”  This legal phrase is intended to avoid having an initial grant of benefits constitute a “waiver” of the carrier’s rights to dispute coverage at a later point in time.  After payment under a reservation of rights, the insurer might terminate benefits or continue normal payment of your claim under the policy.

How does receipt of worker’s compensation benefits impact your long term disability insurance claim?

Worker’s compensation benefits generally will be considered an offset against disability insurance benefits if the policy is a group plan provided by your employer.  ERISA law applies to such policies, and your disability insurance benefits might be reduced in proportion to your worker’s compensation payments.  The question is less clear if you have a privately purchased individual disability insurance plan.  This issue typically will be governed by the language of subject insurance policy.

Are you permitted to earn any income while receiving disability insurance benefits?

A policyholder’s right to earn income depends largely on the type of disability insurance policy.  If your policy uses an occupational definition of disability, you might be able to earn income pursuing a job outside your prior career.  If your policy includes a broader definition of disability, then earnings you receive from work in any job might be offset against your disability payments.  An insured receiving $4,000 a month in disability payments who accepts a job making $2,000 per month in a different occupation could see his or her disability payments reduced to $2,000 per month. 

What if a long term disability insurance carrier is stonewalling a claim?

Disability carriers frequently engage in a strategy of delaying payment as long as possible.  The insurance company profits from this delay because the money that would be paid out on a claim can continue to earn a return on investment.  If the insurer is stonewalling your claim, you should consult with an experienced long term disability insurance claims lawyer.

How should an insured proceed when an insurance carrier ignores the policyholder’s ERISA appeal?

If you do not hear back from the insurer on your appeal within 45 days, you should consult with an experienced long term disability insurance claims lawyer as you will likely need to file a lawsuit.

Can your disability carrier deny your claim if you decline to undergo a surgical procedure recommended by your treating physician or the insurer’s medical expert?

Generally, an insurance company does not have the right to compel a claimant to submit to an operation or undergo surgery.  If your orthopedic surgeon or neurosurgeon recommends an operation on your back, for example, disability insurance benefits cannot be conditioned on the decision to undergo the invasive surgery. 

You can reach Miami Insurance Claims Lawyer J.P. Gonzalez-Sirgo by dialing his direct number at (786) 272-5841, calling the main office at (305) 461-1095, or Toll Free at 1 (866) 71-CLAIM or email Attorney Gonzalez-Sirgo directly at [email protected].

J.P. Gonzalez-Sirgo
J.P. Gonzalez-Sirgo, P.A.
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