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Department of Labor Finalizes New Rules, Improving Long Term Disability Claim Appeal Procedures

We previously reported the United States Department of Labor (DOL) had proposed new rules making the appeals process for denied long term disability insurance claims more fair to insured individuals. Those rules are now final. The new rules provide significant protections for individuals seeking long term disability benefits through employer sponsored plans.

What Do the New LTDI Claim Appeals Rules Mean for Workers?

Commonsense tells us the insurance company has a vested interest in denying claims and thus saving money. If your claim for long term disability benefits is denied by the long term disability insurance company and you feel the denial is unfair, you may appeal the denial. The new DOL rules are meant to make the appeal process more fair for individuals whose claims have been denied.

LTD Insurers Must Avoid Conflicts of Interest

When reviewing appeals, long term disability insurance companies have an incentive to use reviewers who will support the denial of the claim. The new DOL rules make it clear that insurance companies cannot provide incentives to reviewers who deny claims. For example, an insurance company cannot pay a bonus to a vocational expert based on whether the vocational expert writes a report supporting the denial of the claim.

More Transparency About Claims Procedure

The new DOL rules require that long term disability insurance companies fully disclose all reasons for denying a claim. Specifically, the new rules force insurers to meaningfully discuss their decision to deny benefits when an applicant has been receiving Social Security Disability benefits. This requirement is especially meaningful because often insurance companies will reduce long term disability benefits by the amount of Social Security Disability benefits an applicant receives. These same insurance companies may still deny long term disability benefits, but fail to explain why they disagreed with the Social Security Administration’s decision. The new rules make the insurer explain this kind of double-talk.

Right to Respond to New Information

Another issue the new DOL rules address involves the use of new information by the insurance company when denying a claim. After reviewing the applicant’s appeal, long term disability insurance companies will sometimes deny the claim based on a vocational or medical opinion the applicant has never seen. In certain circumstances, the applicant have been unable to respond to this new information before the final denial was issued. This was devastating because once the administrative record was closed, the applicant could not provide any rebuttal evidence, creating yet another burden to overcome in court. Insured individuals now have the right to respond to any new information used in a long term disability insurance denial before the appeal decided by the court.

Summary

The new DOL rules address some very basic inequities for individuals whose long term disability benefits have been denied. While the law still favors long term disability insurance carriers, we believe these new rules will help prevent some wrongful denials of benefits. If you have a long term disability claim and would like to speak with an experienced disability attorney, contact us for a free consultation today.

William Parsons

Shareholder at Hawks Quindel, S.C.
Bill practices as a long term disability lawyer and workers compensation attorney at the Madison office. His practice focuses on representing individuals with Wisconsin workers compensation claims, long term disability insurance claims, and unpaid wage disputes.