ERISA LTD Policies vs. Individual LTD Policies: Your Rights and Remedies

Disability Wiki.


All employer group long term disability (“LTD”) plans are covered by ERISA unless the employer is a governmental or religious entity. ERISA is short for the Employment Retirement Income Security Act, a federal law originally enacted to protect employees and their beneficiaries. Unfortunately, over time ERISA has become more of a protection for insurance companies than employees.

Individual LTD policies, on the other hand, are purchased and paid for by the insured person.  ERISA does not apply to them.  Individual policies are governed by state contract, insurance, and tort law.

The procedures for fighting a claim denial and the remedies available to the claimant are significantly different for the two kinds of policies.  Individual LTD policy cases are similar to other types of insurance cases.  ERISA disability claims, on the other hand, are unlike any other type of case. Specialized knowledge is needed to handle them correctly.  It’s vitally important to hire experienced New York ERISA disability lawyers when pursuing a claim for ERISA LTD insurance.

The Claims Process

ERISA policies.  ERISA requires every employee benefit plan to provide a reasonable claims procedure. A reasonable procedure must provide for an initial determination and at least one level of appeal. If your claim is denied initially, you must file an appeal with the insurance company’s appeal unit before you can sue in court.

Your initial claim and subsequent appeal is your only chance to submit evidence to support your claim. As a general rule, you will not be allowed to submit any new evidence to the court should a lawsuit be necessary. Our New York ERISA disability lawyers understand this crucial limitation and will ensure that you receive all the tests and evaluations that are necessary to document your condition. We respond to each of the insurance company’s reasons for denying your claim.

Individual policies. Your New York ERISA Disability Lawyers will need to review your policy to determine your rights if the insurance company denies your claim for benefits under your individual policy. In most cases, you can initiate a lawsuit immediately, although some policies may require you to submit to arbitration first or instead of court.

Bringing a Lawsuit

ERISA policies.  An ERISA lawsuit is different from an ordinary lawsuit. You have only a limited right to discovery, no right to a jury trial, and will probably not have an opportunity to testify or present witnesses before a judge.  As previously mentioned, the only evidence the court will consider is the evidence you have already submitted to the insurance company (the “claims file”) along with your lawyer’s legal arguments.

Individual policies.  The procedures for suing the insurer after your claim is denied are just like those for any other lawsuit.  You are entitled to discovery from the insurance company, which gives you the opportunity to uncover evidence of how the company improperly handled your claim. If your case proceeds to trial, you can testify, present witnesses, and demand a jury. You can introduce new evidence to the court that you did not provide to the insurance company when you first made your claim.


ERISA policies.  The remedies for an erroneously denied ERISA LTD claim are more limited than those for an individual LTD claim. If the court rules in your favor, it can award you the benefits that have become due (“back benefits”), plus interest and possibly attorneys’ fees. These are the only remedies available. You cannot collect compensation for your emotional distress or punitive damages.

Individual policies.  What damages you can recover depends on the law of your state. Your lawsuit will doubtless include a claim for breach of contract. If you win the breach of contract claim, you can be awarded back benefits, plus interest, and attorneys’ fees and reinstatement of your disability benefits.

In some states you can make additional claims, such as negligence and bad faith. If you succeed on these claims, you could be entitled to damages for pain, suffering, emotional distress, and punitive damages.  Bad faith means the insurance company placed its financial interests ahead of yours. To succeed on a claim of bad faith, you need to prove more than that your claim was erroneously denied. You have to prove that it was denied unreasonably, which can be difficult.  Exactly what must be proven varies by jurisdiction. One example might be the insurer denying a claim after deliberately ignoring important medical records. To recover punitive damages, you have to prove the insurer’s denial of your claim was particularly egregious, spiteful, or intended to harm you.  You should not count on receiving punitive damages as they are not often awarded.

Settlement. As a general rule, the court does not award future benefits, so at some point in the future, the insurer could decide your condition has changed and you are no longer disabled.  Sometimes LTD cases are settled with the insurance company for a “buy out” of the claim that compensates you for future benefits and requires you to release the right to future coverage. You will need a skilled New York long term disability insurance lawyer to evaluate whether the insurer’s settlement offer is fair. Without such advice, you risk settling for a fraction of what you are owed.

Contact Our New York ERISA Disability Lawyers

If you are pursuing a claim for long term disability insurance, whether you have an individual or an ERISA group policy, our New York ERISA disability lawyers can assist you.  Call Riemer Hess LLC at 212-297-0700 to arrange for your consultation.

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