Basics of Long Term Disability to Guide Your Client
By Mary LeMieux-Fillery
Concerning pitfalls with clients filing their own appeals, Hall said that with very few exceptions, no new evidence may be submitted after an insurer renders a final decision. Also, it is key to advise clients not to file their own appeal. Appeals need to include not only a recitation of the facts with supporting legal argument, but they should include any additional evidentiary development you wish the insurer to consider such as functional capacity evaluations, vocational reviews and neuropsychiatric evaluations. Hall said that the potentially higher claim value justifies greater investment in record development.
Hall discussed the pitfalls of the Employee Retirement Income Security Act of 1974, or ERISA, and said that a key question for practitioners to ask when reviewing a claim is whether ERISA applies, as it drastically limits claims. ERISA significantly limits recoverable damages and it provides an “insurer-friendly” discretionary judicial standard of review. He said that ERISA governs the vast majority of group LTD policies with the exception of policies provided through a government or church employer, or individually purchased policies.
Per ERISA, judicial review is limited to not whether the claimant should have qualified under the policy, but whether the LTD plan administrator’s decision was sufficiently supported by the record. Hall said that ERISA does not permit jury trials, or compensatory or punitive damages, and relief is generally limited to the amount of benefits in question. These implications often mean that insurers defending claims in federal court are overwhelming successful.
Due to the nature of ERISA, Hall encouraged attendees to inform clients at the outset about the limitations presented by ERISA, especially in terms of recoverable damages. LTD policies call for an offset of Social Security Disability benefits and workers’ compensation benefits. Calculations for future benefits also include a discount for “present-day” value. Most LTD claims are resolved via a one-time lump sum settlement and all others are decided on motions for summary judgment.
“Basics of Long Term Disability to Guide Your Client” by Mary LeMieux-Fillery was originally published in the April 2018 issue of Philadelphia Bar Reporter (Vol. 47, No. 4). Reprinted with permission.