Law Office of Mike Forni - Long Term Disability Benefits

What is a Long Term Disability Benefit Plan?

A long term disability benefit plan ("LTD Plan") provides employees a percentage of
their salary (usually 50 -70%) after becoming disabled and unable to work.
Predictably, insurance companies hate to pay these benefits and will fight vigorously
to avoid paying these benefits. Insurance companies have a series of standard
(unjustifiable) reasons for denying these types of benefits. Unfortunately, this can be
a very difficult time for individuals in this situation -- they have to fight two evils -- the
insurance company and their disability.

It is strongly recommended that family members be very supportive during his time.
In addition, an attorney can play a very important role in building a case against an
insurance company. Under ERISA, you are required to exhaust your "Administrative
Remedies" before you file a lawsuit. This mandates that you file your claim with the
Claims Administrator for review. If the Claims Administrator denies your claim, then
you are entitled to appeal your denial. If the Claims Administrator denies your
appeal, then you will have the right to sue. Exhausting your administrative remedies
is a critical part of your case because you are building your "administrative record,
which is the only information (most likely) that the court will consider in reviewing your
case. Therefore, if you fail to raise certain arguments or fail to submit certain
information, you may be barred from introducing this information in court.

It is important to keep in mind that a large sum of money may be at stake. Most LTD
plans provide benefits until the employee turns either 65 or the employee is no
longer disabled and can return back to work. Therefore, if you are in you are 30 or
40, you could be entitled to benefits for 20 or 30 years.

What types of lawsuits arise in the administration of LTD Plans?

Wrongful Denial of Benefits. Employers usually sign a contract (policy) with an
insurance company to be financially responsible for the payment of benefits to
disabled employees. Sometimes these policies delegate discretion (decision making
power) to the insurance company to determine whether the employee (claimant) is
disabled and entitled to benefits. Courts have noted that insurance companies,
under this type of arrangement, may have a "conflict of interest" because they have
a pecuniary interest (and will profit more) if its denies the payment of benefits. In
several circumstances, a court has concluded that the insurance company abused
its discretion by denying the employee his or her benefits, and must approve or
reinstate the employee's long term benefits.

Benefit "Offsets". Generally, LTD Plans have an "offset" provision which requires
the Plan's benefits to be offset by amounts paid for social security, worker's
compensation income, or other sources of income. These situations can be very
complicated because it may take the Social Security Administration several years to
determine whether an individual is disabled. In these situations, the Social Security
Administration will issue an employee a check that covers several years of benefits.
Afterwards, the insurance company will take steps to recover this money, either by
lawsuit, or reducing the person's disability checks to recover the money. There are
several situations where the insurance company is not entitled to this money and it
would be worth your while to consult with an attorney before turning this money over.

Preexisting Conditions. Some LTD Plans have a "preexisting" clause which
restricts the payment of disability benefits for medical conditions that existed before
the participant started participating in the LTD Plan. The application of this type of
clause can become more complicated when the employer has switched insurance
carriers or the employee was forced to take a leave of absence and had to reapply
for his original position. Preexisting conditions are governed, in part, by the Health
Insurance Portability and Accountability Act ("HIPAA"). In several situations, a court
has determined the plan administrator (or the insurance carrier) has misapplied the
plan's preexisting condition clause.

Unrecognized Medical Conditions. There are several types of medical
conditions that are not commonly recognized by the insurance community as medical
conditions that are disabling. An example of just a few are, Fibromyalgia, Chronic
Fatigue Syndrome, and Indiometriosis (see our Related Links Page for more
information regarding these medical conditions). In these circumstances, it is
important to review each case individually and determine the degree of limitations
imposed on the individual and how these limitations prevent the individual from
performing the material duties of his or her job. We can assist you with this process.