Last week I received several phone calls from insureds who told me basically the same thing: “I contacted several attorneys early on, but I didn’t want to pay them anything until my claim was actually denied. Now it’s denied what do I do?”
Well, that’s really unfortunate since no one with a disability claim should ever want a denial, an appeal, or litigation. I can’t blame insureds entirely since this is what the attorneys themselves are telling them, “Come back when the claim is denied.”
I pulled out my Federal 26 Rule listing of depositions I’ve done in the last 20 years and it came to 85. Believe me when I tell you that the preferred strategy is do manage claims in ways that satisfy the definitions of disability, making it much more difficult for insurers to deny payable claims in the first place.
In fact, in a recent article I wrote, “The best solution to an appeal is to avoid one in the first place.” This is still true. ERISA appeals usually cost somewhere between 30% of back benefits and 40% of future benefits to age 65. Do you realize how much money this really is? Try six figures, depending on the monthly benefit. The actual amount received by claimants is often less than 35% of pre-disability earnings, with the majority of the benefit taken by attorneys.
At this point most claimants tell me, “Something is better than nothing.” But, is that really true?
It’s not just a matter of cost. ERISA litigation is mostly “Motion” and “Answer” writing – back and forth several times. Most insurers will request removal of cases from state to federal court; there may be a motion to request ERISA jurisdiction over state. Then there are a series of Summary Motion requests asking the judge to dismiss the case. Requests for Summary Motions need to be defended and answered. If that’s not successful, a long list of interrogatories, depositions and filings take place.
Once in court ERISA law restricts decisions based on “standards of review.” Finally, judges either are sympathetic to claimants or they aren’t. The risk of ERISA losses are pretty darned good. Most attorneys cover their losses by settling cases on the courthouse steps. Again, claimants lose their shirts on actual benefit recovery.
IDI claims with state jurisdictions fare no better since the majority of cases take many years to resolve with attorney fees mounting exponentially. Therefore, “No” I don’t understand the rationale of claimants or insureds who allow their claims to be uncontested through the claims process knowing full well claims will be denied. Are you really looking forward to “your day in court?”
What does it tell you when an attorney says, “Come back when the claim is denied?” Could it be that’s where his money is? Do you know enough about your policy to manage your claim by yourself? Can it also be true that you cannot contest what you don’t know about? Do you have a copy of your policy or Plan, and have you read it?
As someone who is experienced and knowledgeable when it comes to disability claims please let me give you the top five primary reasons for claim denial:
- Lack of clear, precise, and specific medical restrictions and limitations connecting the dots between medical impairment and functional capacity for work.
- Lack of response and documentation added to the claim file supporting YOUR own, and your doctor’s, opinions.
- Ignorance. Attempting to support a disability claim based on Internet misinformation, old wives tales, and opinions from family, friends and neighbors.
- Lack of knowledge. Someone who tells me, “I don’t care about surveillance, I never do anything wrong anyway”, doesn’t know anything about how disability insurance works.
- Speaking with insurance reps on the phone that provides you with the opportunity to share information that can be adversely used against you. OVER SPEAKING claims is a primary cause of subsequent denials.
Although I could go on with the above list I think you get the idea. If you can change two or more of the above, your disability claim assumes less risk of denial.
Again, the most successful appeals and litigation is in the avoidance of both. It does not make sense to me that anyone would want to appeal or litigate a disability claim. Not to mention that just letting a claim fall by the wayside so it can wind up in court is not logical.
The odds of winning do not justify the cost. Maybe I’m a little daft, but I just don’t get the rationale.