To Overturn Denied Disability Insurance, Vigilance Is Key

Los Angeles, CAIt seems apparent that the primary modus operandi for most insurance carriers is to deny insurance claims as a default, expecting that policyholders will appeal the denial and fight for their benefits. An earlier article by LawyersandSettlements.com’s Heidi Turner noted that many policyholders tend to throw in the towel at the first stage of denial, when in actual fact a California ERISA denied claim - either out of sheer meanness or a legitimate reason such as incorrect or incomplete data - can just be the first stage in a lengthy process that will often result in benefits following a protracted negotiation.

Sometimes, a denied ERISA disability decision is reversed through the courts. In either scenario, perseverance appears to be key.

Case in point is a claim made by a former employee of Boeing Co., who suffered complications and a negative impact to her health following a hysterectomy. The surgery occurred June 4, 2012 and Ruth Duarte, 53, submitted a claim through her employer’s claims administrator for short-term disability (STD) benefits. The carrier, Aetna Life Insurance Co., initially agreed to pay benefits from June 11 of that year through August 2, a time frame identified as the expected duration of Duarte’s short-term disability.

Aetna duly advised Duarte that in order to extend her benefits beyond August 2, if necessary, her health care providers would be required to complete an updated certification with regard to Duarte’s health and condition, under California insurance law.

This, Duarte’s physicians proceeded to do. Nonetheless, Aetna came back on two separate occasions in September with a decision of long-term disability denied, due in part to a 26-week elimination period required for LTD benefits that Aetna claimed Duarte failed to meet.

Her STD benefits had expired August 2 of that year, according to the original predicted length of Duarte’s disability.

Following Duarte’s appeal of the LTD decision, Aetna informed Duarte early in 2013 that it had rescinded its original decision to terminate her STD benefits. Aetna also informed its client that a review would have to be completed to determine her eligibility for LTD benefits beyond December 2, 2012.

It gets better. On February 13, 2013, Aetna notified Duarte’s denied disability insurance attorney that it changed its mind again, and overturned its most recent decision to rescind its decision to terminate her STD benefits.

In so doing, Aetna rescinded its decision to rescind its earlier decision to reinstate benefits.

Thus, there would be no STD benefits paid beyond the original end date of August 2 for her disability following surgery.

Aetna also stamped her LTD application long-term disability denied.

Duarte and her denied ERISA disability legal team sought a judicial review of Aetna’s position. On appeal, The US District Court for the Central District of California upheld the qualification of Duarte’s short-term disability through December 2, 2012 and ordered Aetna to forward STD benefits to her for the three-month period ending December 2 of that year.

The Court had another surprise for Aetna. The judicial review held that Aetna’s position that Duarte had not met the 26-week waiting period didn’t hold water because Duarte was found to have been disabled through to the end of the maximum duration of her STD benefits period. Thus, with that finding, the need for an LTD waiting period was no longer valid.

Rather than order Aetna to provide its client LTD benefits, the Court vacated Aetna’s decision on the STD benefits and - given that the 26-week elimination period for LTD benefits was no longer valid and thus no longer a factor in the case - remanded to Aetna in order to give the insurer another opportunity to review the medical evidence Duarte’s medical team had duly provided and determine, in good faith, Duarte’s qualification for LTD benefits.

The inference here is that Aetna acted in bad faith.

As any good California denied disability insurance lawyer will tell you, stalling is a way of life in the insurance industry. Vigilance is often key, in exhausting all attempts to stonewall a claim.