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Denied Disability Insurance FAQ

What is short-term disability insurance?

Short-term disability insurance is usually the first step in an insurance claims process and is offered for employees who are temporarily unable to work due to a medical condition, including an injury or illness. Short-term disability insurance benefits provide payments to the policyholder, usually lasting between 90 and 180 days, although specific policies vary.

What is long-term disability insurance?

Long-term disability insurance is insurance that covers workers with longer-lasting injuries or illnesses, such as chronic health problems, that affect their ability to work.

What is first-party insurance?

First-party insurance is insurance that the policyholder has purchased him or herself, meaning the insurance has not been provided through an employer.

Some policyholders purchase their own insurance policy through a broker while other policyholders obtain insurance through their employer. Insurance obtained through an employer is covered by ERISA laws (see below for more).

Can I file a lawsuit if my claim is denied?

It depends on whether your insurance is provided through an employer or was purchased by you. If you purchased your own insurance, then you can generally file a lawsuit as soon as your claim is denied (check your insurance contract to be sure). If your insurance was provided through your employer, it is governed by the Employee Retirement Income Security Act (ERISA). ERISA-covered insurance policies require the policyholder to first exhaust the insurance company’s appeals process before filing a lawsuit.

What do I do if my claim is denied?

If your claim is unreasonably denied, talk to a lawyer to determine your rights. A lawyer can help determine whether you are eligible to file a lawsuit or file an appeal. He or she can also help you to ensure that the proper paperwork is filed, that you meet all your filing deadlines and that your appeal case is strong.

If your insurance is covered by ERISA and your appeal is denied, then you may be able to file a lawsuit. At that lawsuit, however, the judge will only consider your insurance file as evidence in your claim, so having the proper paperwork filled out correctly for the appeal can also help you with a lawsuit, if one is filed.

What is ERISA and how does it affect my insurance?

The Employee Retirement Income Security Act (ERISA) is the act that covers employer-sponsored benefits, including insurance. Under ERISA, if your insurance claim is denied, you must first exhaust the insurance company’s appeal process before you can file a lawsuit. The deadline for filing your appeal is 180 days from the date of the denial.

Only after you have exhausted the appeal process can you file a lawsuit. Through the lawsuit, however, you can only recover the money you would have received if the claim had been approved (including out-of-pocket medical expenses that would have been covered). You will not receive punitive damages, damages for emotional pain and suffering, or incidental damages.

What is bad faith insurance?

Bad faith insurance occurs when an insurance company recklessly or knowingly violates its contract with a policyholder, unreasonably delaying or denying a claim. Not all states allow policyholders to make a claim of bad faith insurance against an insurance company.

What are some invalid reasons insurance companies use to reject a claim?

Insurance companies use a variety of tactics and excuses to delay or deny a claim. These include denying that they received the proper paperwork by the deadlines, requiring policyholders to resubmit paperwork, having their own medical examiner overrule the policyholder’s doctor, misuse of policyholders’ medical records and retroactively canceling an insurance policy.

What is the statute of limitations on filing a denied disability lawsuit?

Different states have different rules on when a denied disability lawsuit must be filed. Check with an attorney to determine the statute of limitations in your state.

Have lawsuits been filed against insurance companies for wrongly denying insurance claims?

Yes, both class-action and individual lawsuits have been filed against insurance companies alleging they knowingly or recklessly breached their insurance contracts.
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Last updated on Aug-8-14

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