ERISA Disability Appeals: What the Insurance Company Hopes You Never Learn

Welcome to Season 6, Episode 26 of Winning Isn't Easy: Long-Term Disability ®. In this episode, we'll dive into ERISA Disability Appeals: What the Insurance Company Hopes You Never Learn.

Claimants appealing the denial of Long-Term Disability benefits under ERISA feel overwhelmed by insurance companies that appear to control every aspect of the claims process. Yet, insurers are bound by federal regulations that govern how disability claims must be evaluated, and understanding those rules can make all the difference during an appeal. In this episode, attorney Nancy Cavey takes an in-depth look at the hidden mechanics of the ERISA disability appeals process by examining the tactics insurers commonly use to deny claims and the legal standards that can be used to challenge those decisions. Through the analysis of three recent federal court cases, she explains how claimants can identify insurer strategies, build stronger appeals, and better protect their rights while pursuing the disability benefits they deserve.

In this episode, we'll cover the following topics:

One - Title 29 of the Code of Federal Regulations, Section 2560.503-1

Two - Three Federal Court Cases That Exposed the Insurance Company Playbook

Three - Building Your ERISA Survival Playbook 

Whether you're a claimant, or simply seeking valuable insights into the disability claims landscape, this episode provides essential guidance to help you succeed in your journey. Don't miss it.


Listen to Our Sister Podcast:

We have a sister podcast - Winning Isn't Easy: Social Security ®. Give it a listen: https://wiessdpodcast.buzzsprout.com/


Resources Mentioned in This Episode:

LINK TO ROBBED OF YOUR PEACE OF MIND: https://mailchi.mp/caveylaw/ltd-robbed-of-your-piece-of-mind

LINK TO THE DISABILITY INSURANCE CLAIM SURVIVAL GUIDE FOR PROFESSIONALS: https://mailchi.mp/caveylaw/professionals-guide-to-ltd-benefits

FREE CONSULT LINK: https://caveylaw.com/contact-us/


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Need help with your Long-Term Disability or ERISA claim? Have questions? Please feel welcome to reach out to use for a FREE consultation. Just mention you listened to our podcast.

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Please remember that the content shared is for informational purposes only, and should not replace personalized legal advice or guidance from qualified professionals.

Transcript

Nancy Cavey [00:00:12 - 00:01:10]

When you bought your disability insurance or enrolled in your employer's disability plan, you thought you were buying peace of mind. You paid for a safety net. Then when you've suffered a devastating illness or catastrophic injury, that turned your life upside down, a disability insurance company or plan tried to rip that safety net away exactly when you need it most. Today, I'm going to expose the topics and tactics that they hope you never consider and the strategies that can help you fight back. I'm Nancy Cavey, national ERISA and individual disability attorney, and I want to welcome you to Winning Isn't Easy. Before we get started, I've got to give you a legal disclaimer. This podcast isn't legal advice. The Florida Bar Association says I have to say this, and now that I've said it, nothing will ever prevent me from giving you an easy-to-understand overview of the disability insurance world, the games that disability carriers and plans play, and what you need to know to get the disability benefits you deserve.

Nancy Cavey [00:01:10 - 00:01:53]

So off we go. Now, today I'm going to do a deep dive into the hidden mechanics of an ERISA disability appeal. And during the course of this episode, we're going to pull back the curtain on the exact tactics that disability insurance carriers or plans use to deny your claim. More importantly, we're going to walk through the legal rulebook that we try to use to beat them. And I'm going to look at 3 recent federal court cases to help you prove your case. Now, if you're currently fighting a long-term disability denial or termination, you probably feel incredibly isolated. You feel like the disability insurance company or plan holds absolutely all the cards. After all, they've got billions of dollars, medical consultants on their payroll.

Nancy Cavey [00:01:53 - 00:02:31]

They've got all the time in the world while you're sitting at home wondering how you're going to pay your mortgage. I'm here to tell you that there is a set of federal rules that they have to follow, and it's not the Wild West. So let's dive in. I want to talk about 3 things today. I want to talk about Title 29 of the Code of Federal Regulations, Section 2560.503-1. Number 2, I want to talk about the 3 federal court cases that expose the disability insurance company or plan's playbook. And number 3, I want to help you build your ERISA survival playbook. Let's take a break for a moment before we come back.

Speaker B [00:02:32 - 00:02:50]

Have you been robbed of your peace of mind by your disability insurance carrier? You owe it to yourself to get a copy of Robbed of Your Peace of Mind, which provides you with everything you need to know about the long-term disability claims process. Request your free copy of the book at kvlaw.com today.

Nancy Cavey [00:02:56 - 00:03:49]

Welcome back to Winning Isn't Easy. Let's talk about Title 29 of the Code of Federal Regulations, Section 2560.503-1. Now, I know this sounds like an incredibly dry, boring string of numbers, but I promise you, if you're fighting a disability insurance denial or termination, This specific section of the federal code is your best friend. It's the Department of Labor's regulation that literally dictates step-by-step how disability insurance companies or plans have to handle your claim and your appeals. It's the rulebook for what federal courts call a full and fair review. So I want you to understand a little history here before we get started. The ERISA statute is a law that was enacted in 1974 in response to the Jimmy Hoffa pension scandals. And ERISA stands for Employee Retirement Income Security Act.

Nancy Cavey [00:03:50 - 00:04:54]

It was really designed to provide a framework for employee benefits like pensions, employer-provided disability insurance, health insurance benefits, and life insurance benefits. It was designed to make sure that companies didn't run off with the money just like Jimmy Hoffa ran off with the money. The intention was good, but over decades, the insurance industry has lobbied heavily, and ERISA, I think, has morphed into a shield for ERISA companies. Under ERISA, if your employer provided you with your long-term disability insurance or plan, you can't sue them for bad faith. You can't get punitive damages if they maliciously deny your claim, and you don't even get a jury trial. Instead, you get an administrative appeals process. And if you lose that, then you get to have a federal judge review your file. And that federal judge, quite frankly, might be handcuffed if the disability policy or plan has something called the arbitrary and capricious standard of review.

Nancy Cavey [00:04:54 - 00:05:38]

Now, because the insurance companies have so much power under ERISA, the Department of Labor created regulations in 29 CFR to try and level the playing field. And they created a standard called full and fair review. Now, let's talk about why this regulation is so critical and why insurance companies fight hard to get around it. For decades, the ERISA appeals process felt to me like a rigged game. Before 2018, insurance companies would give us vague language in a denial or termination letter And quite frankly, just hide the ball. And here's how the trap worked. You would get your denial letter, termination letter. You'd gather your appeal records and material.

Nancy Cavey [00:05:38 - 00:06:33]

You'd file an internal appeal. And behind closed doors, the disability insurance company or plan would take your file and hand it over to one of their not-so-independent, what I call liar-for-hire doctors. Now, I use those terms loosely. These are doctors who never examine you, never speak to you, who just kind of, I think, skim the complex medical file, relying on a summary provided by the disability carrier or plan's nurse, obviously edited and slanted in a way to support the disability carrier plan's decision. So predictably, that hired doctor wrote a report claiming that you were perfectly healthy, you were exaggerating your symptoms, you're capable of full-time work, et cetera, et cetera. But here's the worst part. Under the old rules, the insurance company didn't necessarily let you see that doctor's report. and they could keep it closely guarded right until the very day they issued the final decision denying your appeal.

Nancy Cavey [00:06:33 - 00:07:23]

And by the time you finally saw the evidence they used against you, the administrative record was permanently closed. It was a classic ambush. You can't fight a medical report you're not allowed to see. You can't point out that that doctor ignored the MRI or misinterpreted the records or did whatever they did. when you don't know that the doctor exists or the report exists. But the Department of Labor finally recognized how unfair that was, and in 2018, they updated 29 CFR to explicitly state that if an insurance company or plan generates new medical evidence or vocational evidence during the appeal, they have to give it to you in advance. What a novel idea. The law now strictly requires that they provide this new evidence to you as soon as possible and sufficiently in advance of their final decision.

Nancy Cavey [00:07:24 - 00:08:26]

Well, why? Because the law literally states that's to ensure that you have a reasonable opportunity to respond. Now, this regulation is a game changer because it forces transparency onto an industry that, in my view, prefers to operate in the dark. And it means that the disability insurance carrier plan can no longer just rely on a hired gun doctor who's living in the shadows. If they want to use the medical report against you, they have to bring it out into the light, and they have to hand it over to you and your attorney. They have to let your treating physician tear it apart before the appeal is closed. If they fail to do that, and they often do, or give it to you too late, they have violated federal law. They've deprived you of a full and fair review, and a federal judge can throw out their denial. Now, We all know just because a federal rule exists to help disability policyholders or plan beneficiaries, that doesn't mean that multibillion-dollar insurance companies are going to follow it willingly.

Nancy Cavey [00:08:27 - 00:09:41]

They're going to look for every loophole, every technicality, and every excuse to keep operating the way they always have because it's been profitable for them. Now, next, I'm going to walk us through 3 recent federal court cases where major insurance companies tried to cheat this exact system. And we're going to look at the specific games they played, how they got caught, and how they were held accountable. Got it. Let's take a quick break. Welcome back to Winning Isn't Easy. Let's talk about 3 federal court cases that exposed the disability insurance company or plan's playbook in violating ERISA regulations. Now, I talked about the full and fair review under the federal ERISA regulations, and we've talked about how the law demands transparency, requiring insurance companies to hand over new medical or vocational reports that they generate during your appeal before they make the final decision, so you can respond.

Nancy Cavey [00:09:42 - 00:10:30]

But I wanna talk about how insurance companies try to bend, break, or ignore these rules. And I wanna walk you through 3 specific cases that will highlight the games they play and how you can spot them. So let's first take a look at the landmark case from the First Circuit Court of Appeals called Jett v. United of Omaha. Karen Jett was a legal assistant who suffered from severe congenital spinal issues. She had degenerative joint disease, and she had multiple spinal surgeries. Her pain was so severe that she could barely sit or stand for 20 minutes at a time. Now, United of Omaha had been paying her long-term disability benefits, but, you know, they're just tired of paying benefits, so they decide they aren't going to pay anymore, and they cut her off, claiming she was suddenly capable of doing sedentary work.

Nancy Cavey [00:10:31 - 00:11:08]

She filed an administrative appeal, and during the appeal, United of Omaha required her to attend an IME with a neurologist they selected and paid for. Now, Karen Jett and her legal team knew the rules. When they filed the appeal, they officially asked in writing for a copy of any new medical records generated during her appeal so that she could review them and respond. But United of Omaha flatly refused. They decided they were going to play that old game of hide and seek. and they kept the neurologist's report completely secret. They argued that they weren't required to provide it until the appeals process was over. And that's exactly what they did.

Nancy Cavey [00:11:08 - 00:12:09]

They only provided that report to her on the exact same day they issued her final denial letter. Now, the federal court was not having it. The First Circuit Court of Appeals ruled that her— the entire underlying purpose of ERISA appeals is to have a meaningful dialogue between the claimant, and the insurance company. The judge noted that you can't have a meaningful dialogue if one side is hiding the evidence, and the whole point of the appeal is to allow a policyholder to adequately provide or prepare for further administrative review or federal court filing. So the whole point was to say, look, what they've done here is they withheld the report until the end. It's too late for me to respond, And United of Omaha has violated my right to a full and fair review. And guess what? The court vacated the decision and ordered a new, untainted review of her claim. Now, one can only hope that that's what they did.

Nancy Cavey [00:12:10 - 00:12:56]

I would've preferred that the court basically ordered the payment of benefits through the date of the court's decision and then said, okay, now United of Omaha, you know, do a review of her claim and go from that point. But they didn't. Now, United of Omaha isn't the only carrier that does these tactics. So let's look at the second case that went all the way to the 7th Circuit of Appeals. This is Zoll versus Standard Insurance Company. Dr. Zoll was a dentist who worked for 20 years before he became disabled, and he filed his claim back to 2013. So Standard approved his claim, paid his benefits for 6 years, and in 2019 they said, no, no, we're tired of paying benefits, and they terminated his benefits.

Nancy Cavey [00:12:56 - 00:13:13]

So Zoll appealed, and during his appeal, Standard hired a consulting doctor to review his medical records. And guess what? Just like United of Omaha, Standard refused to show Dr. Zoll the report that was the basis of the termination of benefits before upholding the denial of the claim.

Speaker B [00:13:13 - 00:13:13]

Wow.

Nancy Cavey [00:13:14 - 00:13:51]

But Standard's excuse in the court was a bit different. They tried an incredibly technical legal maneuver. They argued that because Dr. Zoll's original claim was filed way back in 2013, he was grandfathered into the older, weaker ERISA regulations. And they claimed that the strict 2018 Department of Labor rules regarding transparency and early disclosure just didn't apply to him. It was a very clever attempt to find a loophole. And Standard said basically, look, we don't have to follow the new rules because this is an old claim. The 7th Circuit Court of Appeals looked at the plain text of the law and shut that argument down.

Nancy Cavey [00:13:52 - 00:14:44]

The court ruled that based on the explicit text of the regulations, that the 2018 transparency rules applied to Zoll's appeal. And the court pointed out something very important. They noted that it would have been incredibly easy for Standard Insurance to simply hand over the report to Dr. Zoll without prejudicing their own interests in any way, but they chose not to do that. And because they withheld a document when they could easily have provided it to Zoll, they tainted the whole process. Standard was forced to reinstate Zoll's benefits, and the court ordered them to pay over $42,000 in attorney's fees to his attorney. Now, that brings us to our 3rd case, which happened right here in our own backyard in the Southern District of Florida. And this is Sammie versus Guardian Life.

Nancy Cavey [00:14:45 - 00:15:37]

This is a perfect example of an insurance company mismanaging their time, panicking, and then trying to blame the policyholder for their own incompetence. So Harry Sammie was a shipping supervisor, had a TIA, basically a mini stroke. along with severe vertigo and dizziness that left him unable to work. Guardian, in their generosity, paid him benefits for 2 years, but when the definition of his policy changed from own occupation to any occupation, Guardian suddenly decided he was capable of doing some kind of work, and as a result, they terminated his benefits. Now, Sammy appealed. Under the ERISA statute, they have a strict 45-day deadline to make a decision on the appeal. And as that deadline approached, Guardian realized that they hadn't finished their investigation. And at the last minute, they ordered new peer medical reviews of his file.

Nancy Cavey [00:15:38 - 00:16:25]

Knowing they were able to— about to miss those legal deadlines, they reached out to Sammy and asked him for permission to extend the review deadline. Sammy, who had been waiting for months without a single paycheck, was fed up and he said, no, I'm not going to agree to an extension. You've had enough time. Make your determination under the ERISA regulations. So what did Guardian do? When they finally got their doctor's reports, they realized they were out of time, and they emailed Sammy his final denial letter, and they attached the new medical records in the exact same email. It was a same-day document dump. In federal court, Guardian tried to argue that they had technically complied with the law because they gave them the reports as soon as possible. Even worse, they tried to blame him.

Nancy Cavey [00:16:25 - 00:17:29]

They argued that he had declined the opportunity to review those reports by refusing to grant them an extension. The federal judge called this defense an absolute absurdity. The judge pointed out 2 critical things. First, the law explicitly says that the reports have to be provided not just as soon as possible, but sufficiently in advance of the final decision so so that the claimant had time to respond, and sending the evidence on the exact same day as the denial makes a response literally impossible. Secondly, the judge reminded Guardian that under the ERISA law, the insurance company legally controls the clock. The law gives the insurance company or plan the statutory right to take one 45-day extension if they need it, and they didn't need SAMHSA's permission to take it. They had the power to extend the deadline themselves to ensure a full and fair review. They just mismanaged their own deadlines, tried a simultaneous document dump to save themselves, and got caught violating the law.

Nancy Cavey [00:17:30 - 00:17:55]

And in all 3 of these cases, the disability insurance company or plan tried to game the system. And in all 3 cases, the federal court demanded transparency and fairness. When we come back, I'm going to talk about the lessons learned from these 3 cases and help you try to build a playbook. I'm going to tell you exactly how you can protect your disability claim from these exact same tactics. Let's take a break.

Speaker B [00:17:56 - 00:18:28]

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Nancy Cavey [00:18:34 - 00:19:29]

Welcome back to Winning Isn't Easy: Building Your Own ERISA Survival Playbook. Now, in this podcast so far, I have talked about the strict federal regulations that govern a long-term disability appeal and how we have seen major carriers like United of Omaha, Standard, and Guardian try to manipulate these rules to their advantage. So let's talk about strategy. If you're watching this, I'm sure you are, or listening to it, you're facing a denied disability claim or terminated benefits. So how do you use these lessons that have been learned from these federal court cases to protect yourself? So I think there are 5 critical lessons. Number 1, demand transparency in writing immediately. You can't fight an enemy that you can't see. As an absolute first step, the minute you receive your denial letter or termination letter and decide to file an appeal, You should formally request your entire administrative claim file in writing.

Nancy Cavey [00:19:30 - 00:20:30]

Under federal law, the disability carrier plan has to provide it to you free of charge. But don't stop there. As we learned from the Karen Jett case, explicitly state in your appeal letter that you want copies of any newly generated medical reports, vocational reviews, or surveillance, or any other data that they've created before the final decision is made. Don't just ask for it, demand it, and cite 29 CFR in your letter. You want to put the insurance adjuster on plan— on notice, rather, from day one that you know your rights, you know the federal regulations, and you're not going to allow them to hide the ball. Number 2, don't let the insurance company deny you or blame you for their own delays. As we saw in Sammy versus Guardian Life, the insurance company operates under strict statutory deadlines. They have 45 days in which to file— to decide your appeal, and if they need more time, there is an ability to extend— request an extension, but it has to be done, of course, properly.

Nancy Cavey [00:20:30 - 00:21:30]

And just because they're delaying or fooling around getting stuff is not an acceptable reason. Now, I'm often asked if I will give the carrier a second 45-day extension, and for the most part, I don't. And I say in writing, no, you don't get the 45-day extension, second extension. I want you to make a decision, and I expect a timely decision, because if not, I'm going to file a lawsuit in federal court at the 46th day and argue a changed standard of review. So I'm going to use those time deadlines against the carrier or the plan. Now, very often the insurance company will— or plan will sit on your file for 40 days, realize they haven't done their job, send your file to a doctor on day 41, And then reach out begging you for more time while they are starving you of your disability checks. And they're going to try to pressure you into waiving your rights or agreeing to endless extensions outside of the law. Hold your ground.

Nancy Cavey [00:21:31 - 00:22:06]

They can't outsource their regulatory compliance to you. If they need more time, they have to invoke their statutory right to an extension and do so properly. So don't let them trick you into a procedural trap. where you accidentally waive your right to review the evidence just because they failed to manage their own time calendar. Lesson 3, when you finally get the reports, you have to use the evidence against them. The entire purpose of forcing the insurance company to hand over these reports in advance is so that you can fight back. Just don't read the company's report, get angry, and send a letter saying that their doctor is wrong. That's not enough.

Nancy Cavey [00:22:07 - 00:22:51]

You need to take the insurance company report directly to your own treating physicians. Have your physician read it. Ask them to write a detailed, aggressive, point-by-point rebuttal. And if, for example, your— the insurance company doctor said you can lift 50 pounds, your doctor needs to point to the specific MRI and physical therapy notes to prove you can't even lift 10 pounds. If the insurance company doctor ignores your chronic fatigue or the side effects of medication, your doctor needs to call them out. And if necessary, you may need to get your own independent medical exam or an FCE. You have to do it quickly, and you've got to create a paper trail that proves their independent review is fundamentally flawed. Lesson number four: Understand that the administrative record is everything.

Nancy Cavey [00:22:51 - 00:23:16]

I can't stress this enough. You have to build a bulletproof record during the appeals process. Now, many people, including lawyers, think that they're going to be able to go to federal court, stand in front of a judge, talk to a jury, and tell their story and offer new evidence. That is not how it works. In an ERISA case, you don't get a trial. You don't get to testify. Your doctors don't get to testify. You don't get to add new stuff.

Nancy Cavey [00:23:16 - 00:24:06]

The judge is only going to look at what's in that closed administrative record, the documents that were in the insurance company's file at the exact moment they made the final decision. So think of this as a time capsule. If a piece of evidence isn't in the time capsule when it gets sealed, the judge is never going to see it. And if you don't force the disability company or plan to give you the medical reports during the appeal, and you don't submit your own doctor rebuttals before the deadline, that evidence is not going to exist in the eyes of the court unless, of course, they have violated the ERISA regulations. And then you still have to go in court and fight about that. So I want you to understand that the battle is won or lost during the administrative appeal process. Lesson number 5, don't try to do this alone. Abraham Lincoln once said that a person who represents themselves has a fool for a client.

Nancy Cavey [00:24:06 - 00:25:29]

Now, I know that the idea of hiring a lawyer can feel overwhelming, and I want you to understand that if you don't hire an experienced ERISA disability attorney, what you're doing is going against an insurance company or plan who has massive teams of adjusters, consulting nurses, vocational experts, And lawyers whose sole job it is every single day is to protect the insurance company's bottom line by finding a way to deny your claim and terminate your benefits and keep that stuck. I mean, make sure— and make sure that the court is going to uphold that. They want to make their denial or termination stick. So the ERISA regulations I've talked about today are powerful tools, but they are incredibly complex and unforgiving. One missed deadline, one failure to submit the right objective medical evidence, or one procedural error can cost you your disability benefits permanently. Obviously, in my view, you need to have an advocate who knows this rulebook inside and out and knows the games that they play: the hide-and-seek game of United of Omaha, the grandfather timeline game the Stanford Standard played, and the Shut down the same-day document dump game that Guardian Life attempted. I know, look, a denial letter or termination letter is an awful thing to receive in the mail. It will cause panic, anxiety, and fear.

Nancy Cavey [00:25:29 - 00:26:03]

But a denial letter is not the end of the road. It is the beginning of the fight, and the law gives you the tools to fight back so long as you know how to use them. That's a wrap for today's episode. If you have any questions, please send those questions to us, uh, because at the beginning of each episode description, you're going to find a link where you can send us your questions or comments, and we might even feature them in a future episode. Please subscribe to this podcast and recommend it to your family and friends. Please join us next week for another insightful episode of Winning Isn't Easy.