There are many reasons a disability claim may be denied, and no two cases are identical. However, the following are some common reasons that disability claims are denied, based on our experience.
Pre-Existing Condition Exclusion
The Affordable Care Act prohibits pre-existing condition exclusions in group policies of health insurance, but not in group policies of disability insurance. As such, if you enroll in group disability insurance through your employer and become disabled within 12 months of your coverage effective date, your claim may be denied on the basis of a pre-existing condition exclusion. Your disability plan administrator will conduct an investigation to determine if you received medical treatment or prescription medicine related to the disabling condition during the “look back” period (usually three to six months prior to the effective date of coverage). If so, your claim will be denied, regardless of the extent of your disabling impairment.
Short term disability policies generally do not contain pre-existing condition exclusions, so you may be eligible for STD benefits even if you are ineligible for LTD benefits. Individual policies of disability insurance do not contain pre-existing condition limitations but instead contain “incontestability” provisions that allow a disability insurer to revoke coverage on the basis of misrepresentations in the application for coverage. Typically, the revocation must be made within one to two years following the issuance of the policy.
Not “Actively at Work” at the Time the Disability Arose
Nearly all disability insurance policies require that you be “actively at work” at the time the disability arises. Most policies also state that coverage will continue even if the disability arises on a holiday, weekend, or regularly scheduled vacation. Confusion can arise, however, if the disability occurs while the insured is on a leave of absence, unless the leave is for medical reasons. For example, if you cease working temporarily to care for a loved one or run for political office, your disability claim may not be covered. That is true even if you continue to pay premiums and the coverage itself does not lapse.
Failure to Submit Timely Proof of Loss
Most group and individual insurance policies contain strict deadlines that govern when a claim must be filed. Usually, proof of loss must be received within 30 to 90 days, but in no event later than a year from the time of disability. Many states have adopted a notice-prejudice rule that puts the burden on the insurer to prove it has been prejudiced by the late notice of claim. However, other states, including Illinois, continue to adhere to strict notice requirements. The notice-prejudice rule only applies to insurance policies and, thus, is inapplicable to self-funded plans. You may be able to overcome late notice of claim if you can establish that you were mentally incapacitated during the time period in question, for example, due to depression.
Not Continuously Disabled Through the “Elimination Period”
Most long term disability and individual disability insurance policies contain an “elimination period” that can last anywhere from 90 days to one year. You must be continuously disabled throughout the elimination period to qualify for disability benefits. If you return to work unsuccessfully during the elimination period, that could extend the duration of the elimination period. If your medical condition improves during the course of the elimination period, the disability plan administrator may cite the improvement as evidence you are no longer disabled, even if you remain unable to work. Failure to satisfy the elimination period is a common reason disability claims are denied at the initial application stage.
Lack of “Objective” Evidence of “Measured Restrictions and Limitations”
Your disability claim may be denied due to your alleged failure to submit “objective” evidence of “measured restrictions and limitations.” The forgoing language is often included in denial letters, and its meaning is not always immediately apparent. In a nutshell, your diagnosis must be supported by objective laboratory test results, imaging studies, or clinical findings, and must result in measurable restrictions and limitations that preclude you from working. Thus, it is not sufficient for your doctor to say you are “unable to work.” Rather, he or she must explain why you are unable to work, for example due to limited tolerance for sitting, manipulative limitations, cognitive impairment, etc. Usually, your doctor must provide an estimate (in minutes/hours/days) of your tolerance for work-related activities. Difficulties may arise in the case of disabilities characterized primarily by subjective symptoms, such as fibromyalgia, for which no laboratory test results exist and which is characterized by episodic symptom flares such that a functional capacity evaluation may show limitations one day but not another.
Failure to Submit Proof that You Are Under the “Regular Care of a Physician”
Most disability insurance policies require that you be under the “regular care of a physician,” meaning that you are receiving medically appropriate treatment from a doctor with the appropriate training and expertise. Often, disability claimants undergo extensive medical workup at the onset of a disability but then it gradually tapers off, usually because the claimant finds the treatment was not helpful and/or the claimant is pursuing alternative medicine. It is important that you continue to see your primary care doctor and specialist(s), even if you feel discouraged at the lack of progress, since failure to keep up with regular appointments could result in denial of your disability benefits. If you lose health insurance coverage, you should still try to visit a free or sliding scale clinic. Also, you may also be eligible for free or reduced-cost health care coverage from Medicaid or www.healthcare.gov.
Disability Definition Changes From “Own” to “Any” Occupation Standard
Most group policies of disability insurance contain a 24-month “own occupation” definition of “disability,” followed by an “any occupation” standard that requires you to establish the inability to perform any occupation for which you are qualified based on education or work experience. Thus, if you were employed as a trucker, which is considered a medium-duty occupation, you will no longer qualify for disability benefits after two years unless you can establish the inability to perform both sedentary and light work. Some policies imply a “gainful threshold” of 60% to 70%, such that your disability plan administrator must identify alternative occupations that pay at least 60% to 70% of your indexed pre-disability earnings. Even if your policy does not contain such language, the plan administrator must take into account your station in life. Erreca v. W. States Life Ins. Co., 19 Cal. 2d 388, 394 (Cal. 1942). Thus, your disability plan administrator cannot terminate your disability benefits based on your alleged ability to perform a minimum wage job if you were previously employed in a professional capacity. Likewise, if you possess a high school diploma and no relevant work experience, your disability plan administrator cannot deny benefits based on your alleged ability to perform occupations that require a college degree or trade school diploma.
Limited-Duration Benefits for Mental and “Subjective” Conditions
Many disability plans include two-year limitations on benefits for disabilities caused by mental/nervous conditions; so-called “subjective” conditions, such as chronic fatigue syndrome; and neuromusculoskeletal and soft tissue disorders. Thus, even if you are totally disabled and overcome all of the other claim hurdles discussed above, your benefits could be terminated if the plan administrator determines that your disability is caused or contributed to by a limited-duration benefit condition. You can overcome those policy limitations by establishing that you are independently disabled due to a non-limited condition, but this can be difficult. See Krolnik v. Prudential Ins. Co. of Am., 570 F.3d 841, 843–44 (7th Cir. 2009). The burden of proving the applicability of policy limitations is on the plan administrator.
Can You Appeal Disability Denial?
If your disability claim is denied, you have the right to appeal. In fact, if your disability claim is subject to the federal ERISA statute, you must appeal the denial in a timely manner, since failure to do so could later bar you from filing suit. Under ERISA, your disability plan administrator is required to notify you of an adverse benefit determination in writing and provide you with at least 180 days to appeal (or, in some cases, as little as 60 days). You have the right to request a copy of your claim file and the underlying plan documents.
Even if your claim is not subject to the federal ERISA statute (for instance, because it’s through a governmental or church plan, payroll practice, or individual policy of insurance), you may still have the right to appeal. You should consult the denial letter and policy or plan document to confirm. Alternatively, you may proceed directly to court.
Do You Need an Attorney to Appeal a Disability Denial?
There is no requirement that you hire an attorney to assist you with appealing a disability claim denial, but an experienced disability claim attorney can help maximize your likelihood of success, both during the appeals process and in any subsequent litigation. In the case of disability benefit claims subject to the ERISA statute, you may not get an opportunity during litigation to supplement the claim file developed during the pre-suit appeal process. Thus, it is critical that the claim file be fully developed.
An experienced attorney will request the claim file and plan document to confirm that the plan language quoted in the denial letter is accurate. The attorney will identify what additional evidence, if any, is needed to perfect your disability claim. The attorney may suggest additional testing, such as neuropsychological testing or a functional capacity evaluation, to help prove your disability claim. Additionally, the attorney may request opinion evidence from your doctors.
Once the appeal is submitted, the attorney will respond to any new evidence generated by the insurance company to ensure you get the last word. The attorney will make sure any loose ends are tied up before the final decision to ensure your best chance of success. Even if the appeal is unsuccessful, hiring an attorney that also litigates benefits claims will ensure a seamless transition should your case go to court, and help to maximize your recovery in litigation.
In the case of disability plans subject to ERISA, disability claimants are typically given 180 days to appeal a denial of disability benefits. Once the appeal is submitted, the plan administrator has 45 days to issue a decision, but it can extend that deadline by an additional 45 days due to “special circumstances,” provided it notifies the claimant prior to the expiration of the initial 45-day review period. The ERISA claims regulations permit “tolling” of the appeal deadline, but only “due to a claimant’s failure to submit information necessary to decide a claim.” 29 CFR § 2560.503-1(f)(4). A disability plan administrator can, thus, toll the appeal deadline to obtain medical records on behalf of the claimant, but not to obtain a medical file review, vocational report, or other piece of evidence for which the plan has primary responsibility.
How Many Times Can You Get Denied Disability?
Unfortunately, there is no limit on the number of times a disability plan administrator can deny a disability claim. In other words, you might succeed in appealing the initial denial of your disability claim, only to be denied again two years later, for example based on a change in the definition of “disability.” Disability plan administrators try to avoid frivolous claim denials, since they look bad to a reviewing court. However, the lack of compensatory and punitive damages under the ERISA statute has made many disability plan administrators more brazen. In the case of non-ERISA plans, repeated denials of benefits could be considered an unfair or deceptive claims practice that exposes the insurer to liability for bad faith.