A recent four-year study of employee benefit litigation found that cases involving long term disability claims have accounted for over 60% of all federal cases among five broad categories, including health care, life and accidental death, and pension cases.
Those living with chronic illness or long term disability can certainly appreciate why these numbers are so striking. Convincing insurers of chronic disease, sometimes referred to as “invisible illness,” can become a complex and time consuming endeavor. Unfortunately, obtaining the long term disability benefits to which you are entitled is not as straightforward as you might imagine. Insurers require very specific evidence and apply internal definitions of what it means to be disabled.
The odd thing about the prevalence of long term disability litigation is that fewer private employees participate in this type of plan than any other type. In 2009, the Department of Labor revealed that only 38% of private industry workers participated in short-term disability plans and only 31% in long-term disability plans, whereas 52% participated in medical benefit plans, 57% in life insurance plans and 51% in qualified pension plans. If fewer employees participate in long term disability plans, why are these long term disability litigation numbers so high? Sean M. Anderson, a University of Illinois expert in employee benefit plan policy and regulation, explains that as a society, we’re spending a disproportionate amount of judicial resources on resolving disputes about this one type of plan, even though it’s not the most common one out there.
According to this study, disability cases also were more likely to be settled than cases involving other types of plans. Reason being that disability cases are typically about smaller amounts of money than other types of cases, they tend to involve individuals who are perhaps under more financial pressure to settle and take something- as opposed to waiting out the process in hopes of getting more money.
What do we think about the large number of long term disability cases? One explanation is that baby-boomers are aging, and with age comes a host of disabling conditions. Also, during the past 40 years, more and more women have entered the workforce. Although medicine can’t explain why, women tend to be impacted more than men by some severely disabling conditions. Both of these factors will drive up the number of disability claims.
Whatever the reasons may be for long term disability claims dominating the benefits litigation world, it is important to recognize why these claims are being denied in the first place, and why they move towards litigation. “It’s an insurance company that administers the plan, that decides on the claim, and ultimately has to foot the bill if the benefit is granted – and that’s a conflict of interest that everyone can easily see,” said Anderson. It is important to understand that long term disability insurers have a strong interest in the outcome of these claims. This interest, however, is typically not connected to the health and wellness of the insured. The bottom line is that the more disability claims insurers approve and pay out, the less financially healthy their profit will be.
As attorneys who represent clients unfairly denied long term disability benefits, we are unfortunately all too familiar with improper decisions and wrongful denials by insurance companies. For those who do participate in disability coverage, it isn’t worth much if your insurer doesn’t pay you benefits when you need them. We know that the rules governing disability claims can sometimes be complicated, and insurance companies are not looking out for your best interests. If you or someone you know is having difficulty with a disability insurer, contact us.