The Incredible Disappearing Disability Insurance Coverage

Many consumers in Florida go to work each day confident that they are covered if something happens to them that will keep them from physically being able to do their work.  These folks are confident because either they, or their employers, are paying for disability insurance that is supposed to help consumers pay their bills when they become too disabled to work.

What most people do not realize is that the law as it related to disability insurance carriers is so stacked in the insurance companies’ favor that the insurance company essentially gets to decide for itself whether the insured in disabled, and whether it will pay any benefits.  The reason for this is a broad group of federal laws commonly known as ERISA (the Employee Retirement Income Savings Act).  The law was originally passed in the 1970’s with the idea that it would help make disability and health insurance policies uniform enough that people across the country could understand them.  Instead, the law has been interpreted over the years in such a way as to provide virtually no protection to consumers, and practically every protection to the huge insurance companies who write disability and health insurance policies.

Under ERISA, a disability carrier can decide on a whim one day that the disabled person is no longer disabled.  The insurance company does not have to have a doctor or other trained professional examine the claimant in person.  The insurance company does not have to take the claimant’s own doctors’ word for it.  The insurance company can ignore the Social Security Administration’s finding of disability.  The carrier can simply look at medical records and decide the claimant is no longer disabled.  Under ERISA, the claimant who has been cut off (and is now receiving no disability income) cannot immediately sue for benefits.  Instead, the claimant must go through a mandatory appeals process with the insurance carrier as a pre-condition to filing suit (while all the while not receiving benefits.)

Months later, once the insurance company appeals process is completed, the consumer can file suit, but suit must be filed in federal court – not state court.  Federal court has much more stringent rules about jury selection, rules of evidence, and trial procedure, and is generally perceived as more amenable to large corporations and their lawyers.  Furthermore, the federal law that applies to these disputes under ERISA gives almost complete deference to the decision-making by the insurance companies such that, as long as the insurance company can provide any reason at all for cutting off benefits, the company’s decision-making will be upheld.

Consumers would be wise to do their research regarding the different insurance companies that sell disability insurance.  A quick Google search should reveal whether a particular company has been the subject of lawsuits or disputes regarding cutting off benefits.  Similarly, a wise consumer should read the terms of the disability policy, and particularly the way that “disability” is defined in the policy, before deciding whether he or she wants to pay good money for coverage.

In the event that you are receiving benefits, and suddenly find that the insurance company is paying attention to your claim, repeatedly asking for medical information, or actually cutting of your benefits, it would probably be wise to contact a Florida attorney experienced in handling insurance disputes.