Long Term Disability Traps: Trap #5 Switch of LTD Carriers
Many people have long term disability benefits through their workplace, but it is only helpful if it actually insures what you think it insures. Over the last few weeks, we've discussed long term disability traps. A trap is a device that catches you unaware. These traps deal with time limits, the definition and location of the occupations which you are able or unable to perform, earnings qualifiers, and others.
The fifth and final trap of this series is a switch of long term disability carriers right about the time a claimant becomes disabled.
To illustrate this trap, let me tell you a story.
Cheryl Wallace was a registered nurse. She had a good job working at Oakwood Healthcare. She enjoyed her job and worked hard. After a trip to Belize, she came back very sick, and as a result, in October 2012, she had to take medical leave. Unfortunately, her problems didn't resolve, and she remained on leave for a while until she finally made a brave attempt to return to work in April 2013.
Then, after a month of being back to work, it was clear that she had not recovered sufficiently and was not getting better. As a result, her only recourse was to file a claim for long term disability benefits. However, she discovered that in January 2013, just four months prior, her employer had switched long term disability carriers. When she first took medical leave in October 2012, she still had hopes of returning to work. At that time, Hartford was the long term disability carrier for her employer; however, at the time of her filing a claim for long term disability, her employer had switched to Reliance Standard.
Here's the trap.... in this situation, neither insurance company wants to pay the claim because of the switch.
Hartford claimed Reliance Standard needed to pay the claim and vice versa. Ms. Wallace filed a claim with Hartord, and it was denied. She then hired an attorney, and the attorney contacted Reliance Standard. Reliance Standard noted that a claim had not been filed, but even if a claim was filed, it would be denied. They then submitted an appeal to Hartford, and Hartford again denied the claim.
After reviewing the summary plan description and finding no exhaustion procedures, she and her attorney filed a lawsuit in 2016 against Reliance Standard, being convinced that was the company who should pay the claim since they were the carrier when she filed the claim for disability. Reliance Standard immediately filed a Motion to Dismiss, noting that it was Hartford's responsibility to pay the claim and contending that Ms. Wallace had not exhausted administrative procedures. Reliance claimed that they included administrative procedures in a letter to Ms. Wallace. The Court denied their Motion to Dismiss, stating that if the administrative procedures were not included in the plan document, then Ms. Wallace had no responsibility to exhaust those procedures.
The District Court eventually ruled in favor of Ms. Wallace. However, despite the fact that the District Court ruled in favor of Ms. Wallace, Reliance continued to fight and filed an appeal with the Sixth Circuit. The Sixth Circuit found that the District Court was mostly right, but there was some question that needed to be resolved. Accordingly, they remanded the case back to the District Court.
It is now 2020, eight years after Ms. Wallace was first disabled and seen years after she filed for disability, and she still has not received a dime of disability benefits because of this trap.
When your employer switches long term disability carriers, it can create problems such as these suffered by Ms. Wallace. Perhaps she will someday receive her disability benefits; however, nonetheless, she has ventured into an ERISA trap that might have been avoided with the involvement and help of experienced ERISA counsel early on in her claim.
If you or a client have been caught in this trap, you need the help of an experienced ERISA attorney. Whether you or your client needs advice before applying or appealing for ERISA benefits such as long term disability, short term disability, life insurance, pension, or retirement, contact an experienced ERISA disability attorney or long term disability lawyer at The Martin Law Group at 800-284-9309.
The information presented in this video should not be construed to be formal legal advice nor the formation of a lawyer/client relationship. Therefore, no information of any kind that you provide us before such a relationship is created is confidential or privileged.