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Disability Insurer Denial Patterns

The disability insurers tend to follow certain denial patterns which reflect their own self interest in not paying benefits. The timing of the disability denial may have definite and serious ramifications.

The first set of claim denials occur at a time just prior to the transition from Short Term Disability to Long Term Disability. For most policies, Short Term Disability only runs up to six months of coverage. The disability insurer will deny payments with only one or two months of Short Term Disability remaining. Then, should the appeal be denied and a court proceeding takes place a year thereafter, the disability insurer will claim that no Long Term Disability claim was ever made and only the two months of back benefits are at issue. Then, you will need to start the entire Long Term Disability claim and denial process all over again.

The second common denial time is when Short Term Disability Benefits end. The insurer will deny the Long Term Disability application and force litigation on the issue. Many times, this is done in order to compel a buy out of the policy and reduce the long term disability liability for the insurer. This places the claimant in the position of risking it all only to receive payment of the back benefits only (as future benefits remained undetermined as disability must be proved in the future) if successful.

The third denial time just prior to the change in Long Term Disability definition from “own occupation” to “any occupation.” This play out similarly as to when the disability insurer denies benefits just prior to the expiration of the Short Term Disability period. The insurer will force litigation and claim that it never had the opportunity to administrate the “any occupation” claim and will try to limit recovery to a couple months of benefits.

The fourth denial event occurs during the exact transition from “own occupation” to “any occupation” coverage as this is the last time that the disability insurer has a defined review process available to it by which to deny coverage.

Thereafter, it is not uncommon for disability insurers to deny claims while alleging improvement in a claimant’s condition. The bases for such denials is usually weak, but, you can’t blame them for trying as they would otherwise remain on the hook until the conclusion of the plan payment period (age 65+ depending on the policy). Even then, I have seen many insurers deny coverage with less than two years remaining on the policy to see if the claimant is prepared to fight for the small amount of benefits left. Often, the claimant is already receiving Social Security retirement at this point and the offset may be sizeable enough as to make many attorneys reticent to take the case on a contingency basis.

As these denial patterns can be complex and need to be addressed carefully, you should retain an experienced counsel to handle your claim appeal or you will be faced with adverse consequences as set forth in this article.

Posted in General Disability Issues, Long Term Disability, Private Disability Benefits, Social Security, Social Security Disability Benefits | Tagged , , , , , |


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