A short-term disability insurance plan can provide essential income to people who are left unable to work due to an injury or illness. While many people obtain these policies as a benefit of working for a generous employer, they often must still navigate a difficult path with the insurance company who oversees the policy.

In addition, these short-term benefit plans are usually subject to the federal law known as the Employee Retirement Income Security Act (ERISA). This law complicates any appeals processes and can significantly delay a policyholder’s attempts to get a court to intervene in a dispute.

Short-term disability insurance denials may seem like an inescapable end to your economic wellbeing. However, if you receive a denial letter after seeking disability benefits, you still have options. A knowledgeable insurance attorney could help you understand the reasons for your denial and pursue appropriate legal recourse.

Why an Insurer Might Deny a Claim

A short-term disability insurance policy is much like any other insurance policy—in a nutshell, the insurance company agrees to pay benefits if a policyholder suffers a loss. However, one common dispute between companies and policyholders is whether a loss falls under the terms of an individual contract.

For example, short-term disability insurance plans only cover injuries that happen when an employee is not at work. Car accidents, serious illnesses, and even slips and falls can all qualify as grounds for benefit distribution under these plans. However, the insurance company may believe that an injury was the result of an employee doing their job. If so, it would be a matter for a workers’ compensation insurance claim to address.

Other examples of common disputes in short-term disability insurance denials include the following:

• The injury is not severe enough to prevent the employee from working
• The employee did not miss enough time at work
• The policy was not yet in effect at the time of the incident that caused the disability

Legal Options Following a Denial

Any time an insurance company issues a denial, they must do so in writing with instructions on how to appeal that denial. Unfortunately, this appeal process can be very complex.

As discussed above, all insurance policies are contracts. Typically, a party to a contract may ask a court to intervene if they believe that the other party has failed to uphold their end of the bargain, and this is also true in short-term disability insurance disputes. However, the process to do so is complicated significantly by the Employee Retirement Income Security Act (ERISA).

ERISA is a federal law that regulates all employer-provided benefit plans. Because the vast majority of short-term disability benefit plan holders obtain these plans through work, ERISA typically governs the administration of these plans. This most directly effects policy holders when they need to appeal a denial.

ERISA states that all plan administrators must create an internal appeals process for handling disputes. In addition, a court may only hear a case alleging breach of insurance contract if a policy holder exhausts these procedures. As a result, a policyholder may need to wait many months after a short-term disability insurance denial before taking a case to court. Fortunately, an attorney may be able to help policyholders perform these inconvenient but necessary steps to protect their legal rights.

A Short-Term Disability Insurance Denial Could Delay Much-Needed Emergency Income

Receiving a denial following an application for short-term disability benefits can be incredibly demoralizing, especially if you need this money to cover vital expenses while you make a recovery from an illness or injury. Unfortunately, many insurance companies have a good-faith reason for issuing a denial and the legal remedy to protect your rights is complex.

If you have received short-term disability insurance denials, an insurance attorney could help you understand the stated reasons provided by the insurance company and explore your legal options. Many times, though, this will require a multi-step appeals process before asking a court to intervene, so getting in touch with legal counsel sooner rather than latter could allow them to more effectively work to protect your rights. Call today to learn more.

J. Price McNamara

Following graduation from Loyola Law School in New Orleans in 1990, Price McNamara served as a Federal Judicial Law Clerk to the Honorable John M Shaw, Chief Judge, United States District Court Western District of Louisiana.

Mr. McNamara founded the Law Offices of J. Price McNamara, and began putting his past experience to work for the injured and disabled clients he now represents against the insurance companies in personal injury and long term disability and other insurance disputes in both federal and state courts