SUCCESSFUL PERA DISABILIY APPEAL TO UNUM INSURANCE

The Law Office of Shawn E. McDermott was recently successful in obtaining PERA disability retirement benefits on behalf of a former teacher suffering with Marfan’s syndrome and several other medical conditions.  Standard Insurance agreed our client could no longer perform her job as a teacher, and that she was fully disabled for a brief four-month period of time, during which PERA short term disability (STD) benefits were payable.  However, it contended she then recovered the ability to perform other jobs, and therefore, terminated her PERA STD benefits.

This claim is one of many this office has handled that has arisen during the transition from Standard Insurance Company to Unum Life Insurance Company of America.  Let me provide a quick background.  By statute, PERA is required to contract with a disability program administrator (DPA) to evaluate PERA Members’ medical entitlement to PERA disability benefits.  PERA had previously contracted with Standard for this purpose.  However, that relationship ended as of January 1, 2011, at which time Unum became the designated DPA.  When applying for PERA disability benefits, PERA Members are not permitted to opt between disability retirement or STD.  Instead, the claim is supposed to be reviewed by the DPA, who evaluates an applicant’s entitlement to either benefit.  However, the system has been complicated over the past year due to this change in DPAs.  Standard has retained the authority to decide the STD portion of claims that were submitted before January 1, 2011.  Then, Members have been required to submit a separate claim to Unum for PERA disability retirement.  It is our opinion that this improperly burdens claimants, and has certainly caused much complication and duplicative work during the appeals process.

Returning to our recent case, our client was told in her termination letter that she had the right to pursue disability retirement benefits with Unum, if she thought she was entitled to them.  We assisted her with filing that claim and concurrently appealing the PERA STD denial.  Ultimately, upon reviewing her claim for the first time, Unum disagreed with Standard’s previous conclusion, determined our client was totally and permanently disabled, and reinstated her benefits. 

IMPORTANT DIFFERENCES BETWEEN AN INDIVIDUAL DISABILITY POLICY AND A GROUP (ERISA) DISABILITY POLICY

If you have insurance, it is most likely through a group disability policy purchased by your employer.  For the most part, these policies and claims thereunder are governed by the federal statute known as the Employees Retirement Income Security Act (“ERISA”).  Most state and federal employees as well as employees of church groups are not covered by the federal ERISA laws. 

If you have purchased a policy directly from an insurance company or insurance agent, then you have an individual as opposed to a group policy.  Your individual policy will not be governed by ERISA, and instead be guided by the statutes and case law of your particular state.  The state laws can differ.  In Colorado, for example, a “bad faith” denial of your claim can lead to the recovery of extra-contractual damages.  Some states do not have these bad faith laws.  Colorado also has a powerful statute which provides for a recovery of double the contract benefits and attorneys’ fees if the claim is “unreasonably delayed or denied.” 

What to do if your claim is denied?

The answer to this question depends greatly on whether you have an individual or group policy.  If an individual policy, you may or may not have to pursue an internal appeal of the denial with the insurance company, although we may recommend that you do so for a variety of reasons.  However, for a claim arising under a group (ERISA) policy, there are certain statutory and regulatory obligations which cannot be overlooked.  You are required to file an internal appeal with the entity which denied your claim.  You must be provided at least 180 days within which to submit the appeal.  The appeal is a prerequisite for the subsequent filing of a lawsuit, if that becomes necessary. We always inform our clients that this internal appeal stage in an ERISA-governed claim is the most important stage of your claim.  Your appeal should include all documentary evidence supporting your claim.  In representing our clients, we employ different tactics to ensure a well prepared appeal.  A well documented appeal has a greater chance of success and, if litigation becomes necessary, is crucial to the potential success of a lawsuit. 

The Litigation Process.

If a lawsuit becomes necessary, litigation of a claim denial under an individual disability policy looks very different than that of a group policy.  Under an individual disability policy, you will likely be entitled to a jury trial.  The types of damages you can claim greatly exceed those which are recoverable under a group (ERISA) disability policy. 

ERISA long term disability litigation is often resolved by the decision of the trial court judge.  These cases end up in federal as opposed to state court most often.  The decision of the trial court judge is usually rendered after the parties have filed motions for summary judgment.  These motions and accompanying briefs can be quite extensive.  We submit extensive briefs arguing the facts, the law, and all other relevant factors of the claim in this written document.  Importantly, the judge’s review of the evidence relevant to the claim is limited to the “administrative record” (better known as the insurance company’s claim file which was prepared prior to the filing of suit).  Generally speaking, in an ERISA disability case, no evidence concerning the claimant’s disability can be added to this claim file following the underlying appeal decision by the insurance company.  In other words, all evidence in support of your disability claim must be submitted long before the lawsuit is initiated.  This is not true with respect to individual disability policy claims and denials.

Chances of Success.

In our experience, you have a much greater chance of success in your disability claim under an individual policy versus a group policy governed by ERISA.  Because of a lack of damages that can be awarded in your favor and against a group disability insurance company, the insurer knows that its only true exposure is the payment of the past-due disability benefits, interest and possibly an award of attorneys’ fees.  Knowing that its exposure is limited, the insurance company is less concerned about its conduct in processing a claim under an ERISA long term disability policy.  The ERISA laws were passed in 1974 to supposedly protect the plan participant (employee) but it is generally accepted that the opposite is true.  The employer who provides the disability benefit and more typically the insurance company that insures that group disability benefit, faces little exposure as a check on its conduct and decision making authority.  An insurer of an individual long term disability policy faces much greater scrutiny, will have the decisions analyzed and decided by a group of your peers through a jury trial most likely and can face significantly higher exposure for reaching a wrong or unreasonable decision.

JUDGE OVERTURNS SUN LIFE INSURANCE DENIAL OF LONG-TERM DISABILITY AND LIFE INSURANCE CLAIMS

A client of the Law Office of Shawn E. McDermott, LLC will finally receive the long term disability and life insurance benefits she has been pursuing for four years!  We recently received a favorable decision on her case from Judge Brooke Jackson, the newest member of the bench for the United States District Court for the District of Colorado.  This claim was governed by the Employee Retirement Income Security Act (“ERISA”), and involved the denial of long term disability benefits and a life insurance benefit claim by Sun Life and Health Insurance Company.  This case took more than four years to wind its way through the ERISA internal appeal and litigation process, but our client was ultimately successful.  She has been awarded long term disability benefits, survivor benefits under the LTD policy and the full amount of the life insurance claim due to the death of her husband.

The court’s Order (and now Final Judgment) can be found at:
Bray v. Sun Life & Health Ins. Co., 2012 U.S. Dist. LEXIS 24131 (D. Colo. 2012)

Our client’s husband was a high-level travel executive.  In 2005, his work performance began to suffer (as confirmed by numerous clients, co-workers, and others).  He also started exhibiting odd behavior in his personal life.  His physician incorrectly diagnosed these issues as depression.  Shortly thereafter, he was terminated from his job, because his small (3 person) division was not as successful as it had been in the past and was no longer “a good fit” for the company.  About six months later, he learned he had a massive brain tumor, which accounted for the pre-termination performance issues.  Sun Life denied the disability claim, based solely on the fact that he continued to attempt work (albeit unsuccessfully) following his termination, and that his termination was not officially due to the disability.  Sadly, this gentleman eventually died due to this brain tumor.  A life insurance claim was then filed (under the “waiver of premium” provision found in his group life insurance claim), which Sun Life also denied. 

It was quite apparent to us (and now the judge who has decided the case) that Sun Life made up its mind to deny the claim at the outset, and nothing was going to change its decision.  The way Sun Life treated our client in the end of his life and his widow following his death was appalling.  Sun Life’s decision has now been overturned by the court.  All benefits are now payable, along with pre- and post-judgment interests and costs.  We will also be seeking an award of attorney fees, as is permitted by ERISA statute.  

Once in a while a wrong in the world can be righted . . . even in the world of ERISA