Litigation is sometimes an unfortunate fact of life when dealing with claims for disability insurance. Some claims don’t get paid by the carrier no matter how well they are documented. In these cases, there is no choice but to litigate.
Claims for disability income benefits arising under group insurance policies maintained by employers are subject to the requirements of ERISA and litigated solely in federal court. Normally, there is only limited judicial review. Cases are decided without trial, based on the records contained in the carrier’s claim file and detailed legal briefs submitted by the parties. To prevail, the plaintiff must usually convince a judge that the carrier’s determination was arbitrary and capricious. The prevailing party may petition the Court for an award of attorney’s fees to be paid by the opposing party.
Claims arising under policies of individual insurance can usually be litigated in either state or federal court. These are essentially breach of contract actions, and there is wider review available. The plaintiff may demand a full jury trial. To prevail, the plaintiff must convince the jury that he or she is disabled within the meaning of the policy, and that the carrier breached its contract to pay benefits. The jury makes a de novo determination based on the evidence presented at trial. There is no fee-shifting provision in these cases. Parties must pay their own legal fees.
It is important for carriers to know a lawyer is prepared to litigate in the event of a bad claim decision. Our office has never received an unfavorable decision on a disability insurance claim without commencing litigation and bringing the matter to a satisfactory conclusion in Court. We do everything we can to secure benefits without litigating. However, when we accept responsibility for handling a claim, we are generally prepared to pursue it to whatever level of adjudication is required to obtain a just result.
Before retaining a lawyer on a claim for disability insurance, you will be well advised to discuss the likelihood of litigation; ascertain the lawyer’s level of experience and success litigating claims; arrive at a reasonably good understanding of what action he or she is prepared to take in the event of an unfavorable determination; and discuss how legal fees will be paid should litigation be required.