Mastering Long Term Disability Benefits

Due to their depth and breadth of knowledge, the attorneys at Kantor & Kantor are frequently asked to speak at seminars, conferences, or give presentations. In June of 2019, partner Brent Dorian Brehm was asked by a national continuing legal education (CLE) provider to speak about long term disability benefits.  The seminar was titled “Mastering Social Security, Long-term Disability & Government Benefits.” Mr. Brehm took the attendees on a journey from the start to the end of a long term disability claim – and everything in between. He also covered relevant differences between disability claims governed by state law and those governed by ERISA.

While we cannot provide you with the actual presentation or the question and answer segment that followed, we can provide Mr. Brehm’s outline. This information is valuable to anyone at any stage in the long term disability claim process. It starts from the beginning – explaining what LTD benefits are. It then goes through tips on making a successful LTD claim. It addresses what needs to be done during the claim stage to avoid litigation – but be ready for it if that must happen. And finally reviews the nuts and bolts of litigating both an ERISA and bad faith disability claim.

What are long term disability benefits?

  • They provide income replacement when unable to work due to injury or illness
  • They have an elimination period generally between 90 days and 1 year (180 days is most common)
  • The claimant must remain disabled through entire elimination period before benefits begin
  • Disabled is defined as inability to perform “own occupation,” “any occupation,” or have a transition from the former to the latter (usually after 24 months of benefits)

What are common features of long term disability insurance?

  • If disabled through elimination period, the LTD insurance pays a percentage of pre-disability income minus “offsets” or a predetermined amount of monthly benefit
  • If benefits are a percentage of pre-disability income, benefit is usually a last dollar guarantee up to the percentage – meaning other income like Social Security disability insurance, Workers’ Compensation payments, or severance payments, count against the benefit so policy makes up the difference up to the benefit percentage
  • Maximum benefit amount regardless of percentage
  • Maximum duration (usually to age 65 or SSA Normal Retirement Age, sometimes a set number of months)
  • Residual disability – some benefit if working but diminished earnings due to impairment

What are common limitations on long term disability benefits?

  • Mental and Nervous conditions (depression, PTSD, anxiety, sometimes bipolar, etc.)
  • Neuromusculoskeletal conditions (usually specify conditions that are not limited if objective evidence of )
  • Self-reported condition limitations (fibromyalgia, chronic fatigue syndrome/systemic exertion intolerance disease/myalgic encephalomyelitis, migraines)

Check policy language for potential ambiguities (“due to” versus “caused or contributed to by”)

The Three stages of long term disability claims

  • Making a claim
  • Claim denied or terminated and given ability to appeal to non-judicial entity
  • Litigation

Two legal frameworks impact each of the three stages

  • Governed by state law
  • Governed by federal law – Employee Retirement Income Security Act of 1974 (ERISA)

How to determine if long term disability benefit is governed by ERISA or state law

  • Group or individual benefit provided through and endorsed by Employer
  • Exceptions to be aware of
    • Owners not covered by ERISA (“E” stands for “employee”)
      • Many owner benefits get ERISAfied if intertwined with employee benefits
    • Government employers (federal, state, county, city, possibly quasi-government like Federal Reserve)
    • Religious organizations (watch for hospitals – Advocate Health Care Network v. Stapleton, 137 S.Ct. 1652 (2017)).
    • “Safe Harbor” – 29 C.F.R. § 2510.3-1(j)
  • If no ERISA preemption, state law applies – meaning “bad faith” if recognized by that law

Making a long term disability claim

  • Little difference between ERISA or state law claims
  • Contact insurance company within period provided for in the policy (if your state recognizes notice-prejudice rule this applies to both state law and non-self-insured ERISA Plans – Unum v. Ward, 526 U.S. 358 (1999))
  • Complete the required claim forms in a timely manner
    • Claimant’s Statement
    • Attending Physician Statement
    • Employer’s Statement (ERISA)
    • Authorization for Release of Medical Information
  • Usually telephonic interview (opportunity to not just answer questions but explain disability)

Additional items to consider submitting with claim

  • Medical records supporting diagnosis and disabling symptoms
  • Other favorable disability findings (SSDI, state disability, disability retirement)
  • Detailed job description
  • Narrative declaration from claimant detailing symptoms of condition(s) upon which disability is claimed and impact of these symptoms on functional capacity as applied to work capacity (including medication or treatment side effects)
  • Statements from claimant’s family, co-workers, or friends describing personal observations of symptoms experienced by claimant and how symptoms adversely affected claimant’s functional capacity at work or home

What can or will the insurance company do to investigate the claim?

  • “Paper” medical review
  • Background checks – including checking social media (Facebook, Twitter, Instagram, etc.)
  • Physical medical examinations – check independence of examining provider
  • Surveillance
  • Field interview
  • Employment or Financial records

What to expect as a basis for denial of a claim?

  • Coverage
  • Failure to establish that you are disabled under definition of disability

Common coverage denials

  • Enrollment Period
  • “Active at Work” Requirement – usually a stated hourly minimum (i.e. 30 hours per week) claimant must be working prior to the claimed disability. Reducing hours due to injury or sickness and not making a claim during this time may compromise a subsequent claim
  • Pre-existing Conditions (3/12 provisions common)

Common disability denials

  • No objective findings substantiating the disability. Some policies require objective evidence, but this is a common reason even under policies without an objective evidence requirement
  • Disability is related to specific job as opposed to own occupation
  • Failure to fulfill the Elimination Period
  • Not under the care of an appropriate treatment provider

What steps to take once a state law claim is denied?

Ordinarily a claimant may bring a civil action after the denial of benefits and is not obligated to complete an appeal process. In all cases, the language of the policy must be consulted to ensure that the claimant completes all steps in the claim process – including arbitration or further review prior to commencement of action.

What steps to take once an ERISA claim is denied?

  • Must appeal within time provided for in governing plan documents (usually 180 days)
  • Failure to timely appeal or complete all mandatory appeals may result in a failure to exhaust administrative remedies – usually a complete defense to a lawsuit
  • Because this may be the last opportunity to provide evidence in support of the claim, provide all the information previously discussed and consider providing functional capacity evaluation findings, neuropsychological examination findings, vocational reviews, cardiopulmonary exercise testing, independent medical examination findings, or any other information supporting the claim

What rights does the claimant have after an adverse benefit determination?

  • Request Plan documents from Plan Administrator if have not already done so (29 U.S.C. § 1024(b)(4) – failure to provide documents within 30 days may warrant penalties (29 U.S.C. § 1132(c)(1) and 29 C.F.R. § 2575.502c-1)
  • Request the claim file and all information relevant to the claim (29 C.F.R. § 2560.503-1 (h))
  • Receive a full and fair review
  • Before a decision on appeal is made, claimant must be provided with any new or additional evidence considered, relied upon, or generated in connection with the claim and a reasonable amount of time to respond (29 C.F.R. 2560.503-1(h)(4))
  • Decision on appeal made within 45 days and in “special circumstances,” a 45 day extension upon notice in writing
  • A statement of when administrative remedies have been exhausted and a lawsuit may be filed (voluntary appeals may be offered in addition to this)

Where to file suit if appeals exhausted or not required?

  • Non-ERISA claims – state court, however, if the insurer is incorporated and/or has its principal place of business in a state other than the claimant’s, there is a strong likelihood the insurer will remove the case to federal court if the amount in controversy exceeds $75,000
  • ERISA claims – In most instances the claim will be under 29 U.S.C. § 1132(a)(1)(B) which provides concurrent jurisdiction to federal and state courts. ERISA federal common law will apply in either instance. In practice, ERISA cases filed in state court will be removed to federal court based on subject matter jurisdiction

Whom to sue?

  • Non-ERISA claims – bring an action against the insurer and any other entities or individuals who may have contributed to the wrong (i.e. brokers, agents, etc.)
  • ERISA claims – The circuit courts are divided on this. Some allow suit against only the entity responsible for payment (i.e. the insurance company). Others require that the ERISA Plan is named.

Litigating non-ERISA long term disability claims

  • Depending on state, may have claims for breach of insurance contract, breach of the implied covenant of good faith and fair dealing (aka bad faith), misrepresentation, negligence, or other state law causes of action
  • Bad faith claims may arise where the insurer unreasonably withheld benefits by either refusing in full, paying less than was due, or unreasonably delaying payment. Sloppy claims investigation does not normally equate to bad faith.
  • Claimant is entitled to conduct discovery, present witnesses at trial, and has a right to a jury trial upon demand (if in federal court and want a jury it is essential you make a timely demand for a jury trial)

Litigating ERISA long term disability claims

  • No jury
  • Standard of review
    • De novo (preponderance of evidence)
    • Abuse of discretion (unreasonable conduct informed by conflict of interest)
  • Valid grant of discretion?
    • Does the controlling Plan document grant discretionary authority to entity that made claim determination?
    • Is grant of discretion subject to an insurance law voiding grants of discretion that is saved from preemption (e.g. Cal. Ins. Code § 10110.6)?
  • Discovery, if any, is limited and determined by the standard of review
    • De novo – usually limited to evidence necessary to make adequate determination that could not have been provided during administrative process
    • Abuse of discretion – generally limited to information regarding administrator’s conflict of interest (Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105 (2008))
  • Evidence usually limited to the claim file/administrative record (making the appeals process the time to provide evidence to support claim enough to prevail in litigation)

Non-ERISA remedies

  • Breach of contract – contractual benefits owed, interest, reinstatement to policy
  • Breach of the implied covenant of good faith and fair dealing
    • Attorneys’ fees incurred in obtaining contractual benefit (if available, check how your jurisdiction calculates fees as it may not be a lodestar)
    • Emotional distress damages
    • Future benefits paid now
    • Punitive damages (check for statues multiplying punitive damage awards to disabled claimants (i.e. Cal. Civil Code § 3345)
Conduct Damages
Wrongful Conduct Breach of Contract Damages
Unreasonable Attorneys Fees and Emotional Distress
Malice, Fraud, Oppression Punitive Damages


ERISA remedies

  • Benefits to date of judgment or to change in definition of disability plus interest
  • Attorneys’ fees – usually includes costs ordinarily charged to client

As you can see, there are several levels of nuances the long term disability process.  For these reasons and many others, individuals come to us for our decades of experience and expertise.  If you have questions about any of stages of your long term disability claim, please don’t hesitate to give us a call at 877-783-8686 for a free consultation, or use our online contact form.


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