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What Is an Adverse Benefit Determination Under ERISA?

It’s not uncommon for long-term disability insurance companies to reject initial disability claims on employer-sponsored policies. There are countless reasons why an insurer might delay or deny your group disability claim; however, there are certain rules they must adhere to when they do.

When you file for monthly benefits on an ERISA disability insurance plan and your insurance company responds by granting you anything less than the full amount you sought, this is known as an adverse benefit determination. It’s important to understand the parameters of these determinations so you can lodge a timely, comprehensive and effective administrative appeal.

What Is an Adverse Benefit Determination Under ERISA Disability Policies?

Any delay or denial of monthly benefits you apply for on a group disability policy that’s governed by the Employee Retirement Income Security Act of 1974 (ERISA) is an adverse benefit determination. This includes any decision by the company to stop paying benefits once they’ve already started, or to reduce the amount of your monthly disability insurance benefits.

Your insurance company must adhere to certain requirements when providing you with notice of this adverse decision. It must issue a formal notification about what is to happen and the reasons for the outcome. These may include unfavorable interpretations of your medical records or vocational evidence, whether by company employees or independent medical experts. An adverse benefit determination letter must also advise you of your right to appeal and how to pursue this important course of action.

You must, by law, have access to all the information the insurer used to issue an adverse determination. You simply have to write to the company and request that they send you your full administrative record and/or claim file. Any refusal by the insurance provider to do this following an adverse benefit decision is usually unlawful and actionable.

Like many other things when it comes to employer-provided long-term disability insurance, these claim files can often be very difficult for a non-expert reader to comprehend, let alone understand. They are often thousands of pages long and they usually contain highly technical language. However, understanding why your insurance company denied your group disability insurance claim is crucial if you want to succeed at the mandatory administrative appeal stage. That’s why we recommend hiring a seasoned ERISA disability attorney as soon as you receive an adverse benefit determination letter or earlier, if possible.

How to Proceed When You Receive an Adverse ERISA Disability Benefit Determination Letter

Under the terms of ERISA, there is a mandatory administrative appeal process you must complete if you wish to challenge an adverse benefit determination. The first step is to compile an administrative record of all the medical, vocational, and financial records that are relevant to your claim and support the case you’re trying to make. You have a certain length of time within which you must submit this record; the length of time you get depends on your specific policy, but it’s usually 180 days.

Your insurer will then assess this appeal and may reverse its initial denial, or reaffirm the denial of monthly benefits again. In the latter case, you may sue the company in federal court. It’s important to note that you cannot sue your ERISA disability insurer prior to completing the mandatory administrative appeal process first.

You should also note that an ERISA disability lawsuit is not the same as other types of federal litigation. There is no jury trial, and no opportunity to introduce or cross-examine witnesses. Additionally, you cannot introduce any evidence that did not appear in your administrative appeal or your initial claim. Judges in these cases simply assess the sets of evidence both sides have submitted and make a ruling on this basis.

Compiling a timely, thorough, and comprehensive administrative appeal within the allowed time can be extremely difficult without top-class, expert legal help. Our award-winning Boston ERISA attorneys help clients across the United States with this process every day and we win.

What Is a Pre-Denial Letter?

ERISA disability insurers sometimes send what are known as “pre-denial letters” to claimants. These notices contain medical, vocational or adverse financial evidence from your insurance company suggesting your illness or injury may not qualify as a disability for the purposes of your policy. The pre- denial letter will invite you to respond within a certain timeframe or face denial of your claim. These letters may not currently constitute an adverse benefit determination.

Hiring an ERISA Disability Attorney Following an Adverse Benefit Determination

Receiving a denial letter following an ERISA disability claim can be a daunting experience. If you’re relying on insurance benefits to keep your finances afloat after sustaining a debilitating illness or injury, the last thing you’ll want to see is a message telling you you’re not going to receive them.

Remember, though, an initial adverse benefit determination does not mean all is lost. With the help of an award-winning long-term disability insurance lawyer, you can lodge the most effective administrative appeal possible and give yourself the best possible chance of emerging from the process with a great result.

Contact DarrasLaw today to schedule a free initial consultation, including a free policy analysis, claim assistance, or help with your appeal. If you’ve already received an adverse benefit determination letter, you should get help and begin the mandatory administrative appeal process as soon as possible to ensure you submit a timely, comprehensive appeal.

DarrasLaw is Americas' most honored and decorated disability litigation firm in the country. Mr. Darras has seen more, evaluated more, litigated more, and resolved more individual and group long term disability and long-term care cases than any other lawyer in the United States.

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