Why Do I Have to File a Lawsuit?
When an ERISA long-term disability appeal gets denied, the next step is, potentially, to file a lawsuit in federal district court. Some clients already know that they would like to settle their case and ask, why can’t we just negotiate a lump sum settlement with the insurance carrier? Why do I have to file a lawsuit? In short, while plaintiffs’ attorneys would likely be amenable to negotiating informally, insurers generally refuse to come to the table until a formal complaint has been filed. The weight of a formal lawsuit perhaps creates more real incentive and pressure for the insurer to settle, and the process is well established and well understood. Having already filed suit, one benefit of going through the court process for a plaintiff is that, in the event a settlement can’t be reached, there is the possibility of taking the case to trial within a shorter timeline –the complaint has already been filed, a judge has been assigned, and certain deadlines have already been put on the court calendar. The desirability of accepting a lump sum settlement varies from case to case.
What Does a Win at Trial Look Like?
There is the obvious risk of losing altogether if the case is taken to trial, but what does it actually mean to win at trial? A couple of key things to understand about winning at trial: (1) Unlike in some other types of litigation, in ERISA trials the insurer does not pay punitive damages, so the only remedy is reinstatement of the benefit, meaning repayment of back benefits owed plus the plaintiff’s law firm recouping attorney’s costs and fees; (2) subsequent to a win a trial, the benefits continue to be subject to review. It is important to note that the claimant’s benefits can get terminated at any point in the future. Most often, a claimant will get terminated when the definition of disability changes from the “own occupation” to “any occupation” threshold. When a claim is terminated after winning at trial, it is essentially the same as starting over with a brand new denied claim, where, again, there is an opportunity to appeal before filing another lawsuit.
While most cases do settle before going to trial (this applies to ERISA disability litigation as well as most other types of litigation), there are cases that do go all the way through to trial. Positive trial outcomes can be a great result for certain claimants, and these wins at trial help to establish legal precedent favorable to similarly situated plaintiffs. Just bear in mind that a win at trial in an ERISA long-term disability case usually does not mean “case closed.”
If you are anywhere in the process of a long-term disability claim or appeal and have questions about your situation, please call Kantor & Kantor for a free consultation at 800-446-7529 or use our online contact form.