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    Litigation and Long-Term Disability

    Litigation and Long-Term Disability

    In our 25 years as an experienced long-term disability law firm, we have clearly seen that insurance companies do not want to approve long-term disability claims. Fortunately, all claimants have the right to file an administrative appeal if their insurer denies their initial claim. But what happens if the insurance company denies the appeal? Long-term disability litigation may be necessary.

    Filing a lawsuit for long-term disability benefits can be a challenging and time-consuming process.

    In this article, Chisholm Chisholm & Kilpatrick (CCK Law) will explain:

    • What long-term disability litigation is
    • How ERISA can affect a lawsuit
    • What costs are associated with an LTD lawsuit
    • And more
    Who Are We: Chisholm Chisholm & Kilpatrick is a leading public interest law firm based in Providence, Rhode Island. Since 1999, we’ve helped hundreds of long-term disability claimants get the benefits they needed.

    Understanding the Litigation Stage of the LTD Claim Process

    There are three potential stages in the LTD claim process: the initial claim, the administrative appeal, and litigation. However, when a claimant proceeds to the litigation stage will depend on what laws govern their claim.

    For example, if a person has an individual LTD policy, and state law governs their claim, then they may be able to bypass the appeal stage and directly file a lawsuit after their LTD claim is denied.

    However, if a person has a group policy governed by the federal law ERISA, then this is not an option. Instead, they must exhaust all required administrative appeals before litigating.

    In short, litigation is when a claimant files a lawsuit against their insurer to obtain their disability benefits. Note that many lawsuits do not make it to judgment. Insurance companies often settle by offering claimants a lump-sum settlement—though claimants do not have to accept a settlement. Regardless, the litigation stage of the LTD claim process can be arduous.

    Why Would an LTD Claim Head to Litigation?

    Typically, when an insurance company denies a long-term disability claim, the claimant files an appeal. However, an insurance company may also deny the appeal. In these situations, the claimant can decide to file a lawsuit.

    Some common reasons that an insurance company might deny a long-term disability appeal include:

    This list is not exhaustive. Read our article on why insurance companies deny LTD claims for more information on how these companies can use these reasons against your claim.

    Nonetheless, if an insurance company denies an appeal, the claimant has the right to file a lawsuit to try and obtain their benefits.

    Litigation: What Happens When Filing a Long-Term Disability Claim in Court

    Does ERISA Affect a Long-Term Disability Lawsuit?

    ERISA, or “The Employee Retirement Income Security Act of 1974,” is a federal law that governs most employee benefits plans, including employer-provided long-term disability insurance.

    When people think of litigation, they often think of a judge and a jury. However, when a claim under an ERISA-governed policy goes to court, it typically does not look like what most people expect.

    Some of the ways ERISA litigation looks different include:

    • The case is filed in federal court: Because ERISA is a federal law, related litigation must be held in the federal district court that has jurisdiction.
    • There is no jury: A judge alone will hear your case and make a final decision regarding your benefits.
    • The judge may give deference to the insurance company: Many ERISA-governed claims adhere to this standard of review in court, though not all. Under this standard (i.e., the “arbitrary and capricious” standard), the judge does not have to decide whether the insurer was right or wrong in its decision to deny benefits. Instead, the judge must determine whether the insurance company had a reasonable basis for issuing the denial—which can be a much more difficult standard to overcome.
    • You may not submit evidence during litigation: Usually, under ERISA, you may not submit any new or updated evidence during litigation. It is important to submit as much relevant and supporting evidence as possible during your administrative appeal as this is the evidence the court will review.
    • You may only fight for your benefits: Typically, if you are successful in litigation, your recovery is limited to the LTD benefits owed to you and, potentially, interest and attorneys’ fees.

    If the judge rules against you, then you will not receive benefits. Of course, some claimants may decide to appeal the district court level ruling to the court of appeals.

    How to Avoid a Long-Term Disability Lawsuit

    Possible LTD Litigation Outcomes

    As mentioned earlier, insurance companies often offer settlements to claimants who file lawsuits against them. At any point during the litigation process, the insurance company may offer a lump-sum settlement to avoid further litigation.

    Insurance companies, when faced with litigation, often conduct a cost/benefit analysis of the situation to determine the best course of action. Additionally, litigation can be costly and lengthy, so it is sometimes in the claimant’s best interest to settle.

    However, many cases also do not settle. In these cases, the claimant must go through the complete litigation process.

    As a result, there are a few possible outcomes of an LTD lawsuit. First, the claimant and the insurance company can reach a settlement that avoids further litigation. Alternatively, the case can go to judgement, and the judge will render a decision.

    There are several different ways a judge may rule on a long-term disability case:

    1. They may grant all benefits and damages (if available) sought by the claimant
    2. They may grant some benefits and damages (if available) sought by the claimant
    3. They may remand (i.e., send the claim back) to the claim administrator, who must then conduct more reviews of the claim and make another decision
    4. They may deny the claim entirely.

    How Much Does It Cost to Litigate an LTD Claim?

    As with all litigation, there will be costs. One of the primary litigation costs for LTD claims is attorney fees. The long-term disability insurance attorneys at CCK Law want to alleviate the stress that comes with the long-term disability process so that claimants can focus on their health.

    Often, CCK Law utilizes a “contingency fee” payment structure. This means our attorneys receive a predetermined percentage of the benefits awarded should we win the case. Contingency fee plans do not require the claimant to pay money upfront. The client will only owe money if we recover money for them.

    However, payment structure can vary from case to case. Regardless, in every case, there is an agreement the client will sign that clearly outlines fees and other terms of representation.

    Examples of other litigation expenses include:

    • Court filing fees
    • Process server fees
    • Postage
    • Other litigation fees

    We often advance these case expenses when working on a contingency fee basis. This ensures that claimants don’t have to pay out of pocket. The client simply reimburses CCK Law out of their share of the money recovered.

    Other Considerations for LTD Claimants Facing Litigation

    State-Governed Claims Are Handled Differently

    State law typically governs individual policies that claimants bought directly from an insurance company. Some group policies may also be governed by state law. Examples include government and church plans.

    If you have a state-governed claim, then litigation will look different. For example, under state law, you are entitled to have a jury hear your case. Likewise, you may also submit new evidence during litigation, whereas under ERISA, you may not. As mentioned earlier, under state law, you may be able to file a lawsuit after an initial claim denial, though it may be advantageous to file an appeal anyway.

    Deadlines for Filing a Long-Term Disability Lawsuit

    All claimants should thoroughly read their policies. Insurance policies will outline all deadlines for the entire long-term disability claim process, often including litigation. Thus, the deadline to file a lawsuit will vary based on a person’s specific insurance policy and by state law.

    If a claimant wishes to file a lawsuit against their insurer but does not adhere to the filing deadline within their policy, then the lawsuit may be rejected by the court as “untimely.”

    Under ERISA, the appeal denial must give a deadline for filing a lawsuit. Moreover, it is important to obtain a complete copy of the insurance policy and discuss it with an LTD attorney who can best advise them on the steps to take.

    Claimant Deadlines for Long-Term Disability Claims and Appeals

    Long-Term Disability Litigation Length

    There is no deadline by which a long-term disability lawsuit must be resolved. The length of a lawsuit depends on several factors. These factors can include:

    • What insurance company is being sued
    • The scheduling order issued
    • Discovery disputes
    • Mediator availability
    • Whether a settlement is reached
    • The court’s caseload

    As such, an LTD case can resolve in a few months or potentially drag out for years. This is part of the reason that many insurers try and settle early in the process.

    Call CCK Law Today

    CCK Law understands how frustrating the long-term disability claim and appeal process is. We have years of litigation experience and can use it to fight for your benefits.

    However, the administrative appeal stage is often the best time to contact an LTD lawyer. Under ERISA, new evidence may not be submitted during litigation. Thus, a lawyer can help get the best and strongest evidence on file during the appeal stage, thereby strengthening your case should it ever make it to court.

    This is not something you must handle on your own. CCK Law may be able to help. Call us today at (800) 544-9144 for a free case evaluation with a member of our team. We will analyze your case and determine if we can assist.