Personal Injury and Long-Term Disability
It’s no secret that employees are working longer and people are living longer than ever before. The economic conditions have caused many employees to push back their retirement date. One consequence of these facts is that there has been a marked increase in long-term disability claims by disabled employees. Many employers provide long-term disability benefits as part of their employment package. I recently assisted two clients in obtaining “LTD” benefits. These turned out to be quite involved and time intensive. One required an internal appeal in which we were successful.
In order to be entitled to long term disability benefits, a person has to be “disabled” continuously for the initial “elimination” or waiting period and beyond. This disability need not be, and in fact is often not, due to a work-related injury. Disability can be established by a combination of unrelated injuries, conditions or illnesses that combine to prevent a person from working for the required period of time.
Different policies can define “disability” differently. Many policies adopt the definition of disability found in the Social Security Disability Act. However, the policies need not use that definition and many do not. Generally, these definitions require that the person be unable to perform the material and substantial duties of their own occupation for usually a period of two to three years. The definition often changes after that period of time and the person, in order to continue to receive benefits, must show that their injuries prevent them from performing any occupation that exists in the national economy for which they are suited by education, training or experience.
Benefits end if the employee no longer meets the definition of disability if their condition improves or they cannot meet the more restrictive definition. Also benefits can end once the contractual maximum is reached.
These policies typically pay out 50-65% of the person’s salary and these benefits are often taxable. The employee must comply with the insurance company’s requests for information and provide supporting doctor opinions within the requested time frame. These requests can be extensive and ongoing. The employee must also obtain recommended or accepted medical care in order to receive benefits. The employee also must undergo examinations by the insurance company’s hired doctor.
Most policies provide that the amount paid is further reduced by Social Security disability or retirement benefits, retirement benefits from other plans or organizations (but not for cost-of-living increases), unemployment benefits and sometimes personal injury settlements. The employee is required to apply for these benefits and an insurer can estimate the likely Social Security disability or retirement benefit and reduce the long-term disability benefits even if the insured does not apply or is denied.
Many policies often contain an exclusion for pre-existing conditions. However, after the policy has been in place for one or two years, the insurer generally is prohibited from relying on a pre-existing condition. They are often restrictions or exclusions for disabilities due to mental illness or chemical dependency.
Appealing an Adverse Decision
Generally, there are two types of appeals. Much depends on whether the plan is governed exclusively by federal ERISA (Employee’s Retirement and Income Security Act) or governed by state law. ERISA laws would exclusively apply to plans that are considered self-funded. The employee must first exhaust any internal appeal. That is typically handled by another insurance entity and may consist of submitting written argument and supporting documentation. This should include a well-supported and comprehensive report from the treating physician(s) with well-founded opinions supporting the employee’s disability.
If federal ERISA law applies, it’s important to make as complete and exhaustive of a record as possible since any judicial review will be limited to the evidence that was presented during the internal appeal. For the client I represented, we also had a vocational analysis that we had used in his personal injury claim, which also supported his claim for ongoing disability benefits. Thus, with the reports from his treating surgeon, the vocational report we were able to successfully obtain his long-overdue disability benefits.
These plans often have a very short time period within which the employee must provide notice of a claim and provide proof of loss. The plans can specify a statute of limitations. If Minnesota law applies, there is a three-year statute of limitations which can be shorter if ERISA law governs. There are significant differences between plans covered by ERISA as opposed to those covered by state law in terms of the standard of review and the amount of evidence that may be considered by the reviewing court. ERISA plans are generally more difficult to successfully pursue given this restrictive standard of review and scope of the record.
I am expanding my practice to further assist clients in this area of law. If you or a friend/family member have any questions about long-term disability plans, I’d be happy to answer them. We provide a free initial consultation.