STEP 1:  TO OBTAIN AND REVIEW

            The first step the practitioner should take in evaluating the denial of a LTD claim is to obtain and review the following materials:

1.      Disability Plan Document—The Disability Plan Document (“the Plan”) is the insurance policy. It is a legal document, which states all of the employees’ rights and obligations for benefits. 

2.      Summary Plan Description (“SPD”)—The SPD is a summary of the Disability Plan Document. It describes the plan in plain language. It specifies the employee’s rights and obligations concerning the administration of the plan.[i] [ii]

3.      Denial Notice –ERISA requires the plan administrator to notify the beneficiary of the specific grounds for the denial, the manner in which the denial can be reviewed, and additional information that would be useful in reconsidering the decision. The denial notice will refer to the specific plan language used as the basis for the denial. It is therefore the best place to start when evaluating a denial of benefits claim.

4.     All medical records (including medical records related to medical history).

5.      Plan Amendments—Because most companies reserve the right to modify, amend, suspend or delete, in whole or in part, any or all of the provisions of the company’s LTD plan, it is important to obtain and review all plan amendments.

STEP 2: PLAN PROVISIONS

          Once the necessary materials have been received, it is important to pay particular attention to the following plan provisions:

1.      Definition of Disability— Depending on the way in which the plan defines “disability” will often mean the difference between benefits and no benefits. Thus, it is probably the most important provision of any LTD plan. LTD plans usually define “disability” in one of three ways: (1) own occupation--unable to perform the material duties of the claimants own or regular occupation; (2) any occupation--unable to perform the material duties of any occupation; or (3) experience level--unable to perform the material duties of any occupation to which the claimant is qualified by reason of education, training or experience. 

2.     Time Limits—Time limits are critical and must be strictly followed. Failure to do so may completely bar the claim.

3.      Elimination Periods—The elimination period is the time that must elapse before a claimant can become eligible for benefits. 

4.      Pre-existing Conditions—Pre-existing conditions are typically excluded.  However, on occasion, benefits will become payable for a pre-existing condition which exists on the effective date of the policy once the claimant has been covered under the plan for a set period of time. 

5.      The Length of Disability Benefits—Each policy is different with respect to the length of time a claimant is entitled to receive LTD benefits. 

6.      Internal Appeals (Administration)—This provision is extremely important since the Courts have routinely found that claimants must exhaust administrative remedies prior to initiating Court Action.

7.      Mental and Nervous Limitations—Most LTD plans distinguish between mental and/or nervous limitations and physical limitations. Because many physical disabilities have mental effects such as depression, claims administrators often use the mental and nervous limitation provision of the policy as a way to cut-short benefits. It is therefore important to make sure that the treating physician clearly indicates that any mental or nervous disorders are secondary to the physical disability. 

8.      Offset Provisions—Offset provisions provide that the claimant's monthly benefit will be reduced by other income, such as Workers’ Compensation benefits, Social Security Disability benefits, retirement benefits, money received from a third-party lawsuit, money received from a personal insurance policy, and money earned for any work done while disabled from the job.

9.      Exclusions— Like all insurance policies, LTD plans contain a number of exclusions, such as: war-related injuries; injuries arising out of self-employment; injuries sustained during the commission of a crime; self-inflicted injuries; and pre-existing conditions.

10.  When Coverage Ends—The plan will define when disability coverage ends.  Occasionally, the administrator will rely on this provision as a justification for denying benefits. 

If a claim for benefits is denied, ERISA requires that the claimant be adequately informed of the denial, the basis for the denial, and the review procedure.[i] Likewise, ERISA requires that there be a “full and fair review by the appropriate named fiduciary of the decision denying the claim.” Thus, all ERISA plans will have an internal appeal process, which spells out exactly what to do “internally” if a claim is denied, in whole or in part. It is imperative that the internal review process be followed and exhausted prior to initiating court action.

STEP 4:  THE RECORD

          The “record” is complete at the close of the internal administrative process. Thus, the only evidence that a Court will review is the “administrative record” that was before the Plan Administrator at the time the decision to deny the benefits was made.  Failure to load the record during the internal process is the most common mistake claimants’ attorneys make when attempting to handle an ERISA governed LTD claim.

  STEP 5:  THE FIDUCIARY

          ERISA imposes “fiduciary” status on anyone who exercises decision-making authority with regard to plan benefits. 29 U.S.C. § 1133(2) and 29 CFR 2560.503-1(g) requires that each ERISA plan have a “named fiduciary.” The named fiduciary is typically the insurer in plans that are fully insured, and the Employer in plans that are self-funded.

STEP 6:  COURT ACTION

          Only after the appeals process has been exhausted, can a civil action be initiated.  Among the possible defendants are: The Plan Administrator; Plan Sponsor; employer; or anyone else with “fiduciary” status (i.e., decision making authority).   
          ERISA jurisdiction rests exclusively with the federal district courts. Venue provisions are rather lenient and give the claimant the choice of filing where he or she lives, where the Plan Administrator or employer is located, or where the claim arose.