Gary P. Koederitz has represented numerous individuals who have been denied disability insurance benefits after submitting legitimate claims. These suits have been brought in both state and federal courts. Most of these insurance disputes have arisen when the insurer claims the insured is not actually disabled, or that the cause of the disability is excluded from coverage.
Some disability benefit claims have been brought by Mr. Koederitz pursuant to Louisiana’s insurance statutes, and others have been brought pursuant to Federal laws. A summary of the laws related to disability insurance is provided below. However, to assist in understanding the effect of the applicable laws, the following is a brief explanation of disability insurance, the types available, sources of benefits, and other issues.
Disability insurance is one of the primary ways in which Americans protect themselves from an unexpected loss of income due to illness or injury. Disability benefits typically replace about 60 percent of a worker’s lost income. Some statistics show that over 40 percent of people that are now age 40 will have a disability lasting 90 days or more by the time they reach age 65.
Disability benefits may be obtained as an employee benefit available to employees. These employment disability benefit plans may be paid for by the employer, employee, or by both together. These disability plans may provide benefits through an insurance policy or they may be “self-funded” by employer and/or employee contributions. Although “self-funded” plans are not really insurance, for our purposes, we will use the term “disability insurance” to include both insured and self-funded disability benefits.
Additionally, individuals may purchase insurance policies with their own funds independently of their employment. Finally, some disability benefits are provided through “association” plans. Typically, these are disability insurance plans offered to members of particular members of particular associations, such as accountants, doctors, lawyers, etc. These plans are usually underwritten by insurance companies, and are not self-funded.
Disability benefit insurance policies typically provide separate requirements for short-term disability and long-term disability. Ordinarily, a short-term disability is one in which the insured is disabled from working at his or her usual occupation for a period of up to two years. Long-term disability benefits will usually pay benefits after the expiration of the short-term disability period until the insured reaches a specific age, such as 65, or becomes able to return to work. Most importantly, to qualify for long-term disability benefits, most plans require the insured to be disabled from any occupation he or she is capable of performing, which is a much more stringent test than being disabled only from a previous occupation. It is most important to review your policy and to know in advance the requirements to qualify for benefits, especially the definition of “disability”.
Disability benefit plans and policies contain many provisions, limitations, and exclusions. Most contain an elimination period, which requires the insured person to be disabled for a certain amount of time, such as 90 days, before any benefits become payable. Some exclude categories of conditions which may cause disability, such as “mental/nervous” conditions, drug or alcohol related conditions, etc. Some policies allow the insured to qualify for benefits for these conditions for short-term disability but not for long-term disability.
Other significant provisions include requirements placed upon the insured if a benefit claim is denied. Most policies require an appeal to the insurer or plan administrator if benefits are denied before a lawsuit can be filed. Plans typically provide a limitation on the period of time in which a lawsuit can be filed, and that time may be shorter than the time granted by applicable state laws. In Louisiana, these contractual reductions of the time allowed to file a lawsuit have been upheld.
Other important provisions which may be included in a disability insurance policy include non- cancellation provisions, waiver of premium provisions, guaranteed level premiums, guaranteed future coverage options, and guaranteed indexing of benefits for inflation.
Typical Disability Insurance Disputes
Gary P. Koederitz has represented many individuals who have been unable to obtain their disability benefits. The most frequent claim arises when an individual becomes disabled and submits the appropriate medical documentation to the disability insurer, but is denied benefits. The insurer will often claim that it disagrees with the opinion of the insured person’s physician, and believes that the individual is able to work.
Sometimes, if the claim is for long-term disability benefits, the disagreement centers on whether the individual is able to perform some other job, even though it might be clear that he or she is disabled from the occupation they previously held. In many cases, the disability insurer will forward the individual’s medical records to another physician, who may even be employed by the insurer, and obtain an opinion supporting the insurer’s claim that the insured person is not disabled.
Another frequent dispute occurs when the insurer denies payment of benefits and claims that the cause of the disability is excluded from coverage by the policy. Examples are disability caused by on-the-job injury, use of alcohol or drugs, and mental/nervous conditions, if any of those causes of disability are excluded by the insurance policy.
Taxation of Disability Insurance Benefits
Generally, although there are always exceptions to any statements regarding income tax, disability benefits are taxable if they are received through an employer’s benefit plan, and they are not subject to tax if they are received through disability insurance purchased by an individual using after-tax funds.
Other Types of Disability Benefits
The disability benefit information provided above does not apply to other, similar disability programs. Social Security Disability Benefits and “VA” Benefits through the United States of Veterans Affairs, provided for by federal law, are distinct and separate from disability benefits. Also, individuals injured while on the job may qualify for workers’ compensation benefits for their disability, and these benefits are separate from disability insurance. Workers’ compensation benefits may be provided for by Federal law (such as the Longshore and Harbor Workers’ Compensation Act), or by state workers’ compensation laws. It is also possible that an insured person can receive disability benefits while also receiving another benefit, such as social security disability benefits.
Disability Insurance Benefit Offsets
Many disability insurance policies include provisions allowing a reduction in the amount of benefits paid to the insured person if the insured person also receives other benefits. For example, most disability insurance benefit policies will pay a significantly reduced monthly benefit to the insured person if that person is also receiving social security disability benefits. Those policies also include a provision requiring the disabled person to apply for social security disability benefits and the insurers will sometimes even hire attorneys to represent the disabled person in his or her claim for those benefits.
Some disability insurance policies include a provision referred to as “subrogation”. This provision allows the disability insurance company to collect the benefits it pays to you back from any other person that caused you to become disabled. For example, if you are disabled from an automobile accident, your disability insurance policy may pay benefits to you and then try to recover those payments from the insurance company of the driver that hurt you. Subrogation can become an expense to the insured person if the individual that causes you to become disabled does not have enough insurance to pay both your damages “pain and suffering, etc.” and the disability benefits that have been paid.
Some Louisiana Statutes Related to Disability Insurance Claims
Louisiana R.S. 22:657
This statute relates to the payment of claims pursuant to health and accident policies. Although this statute appears to cover health and accident contracts, it is apparent from the text of the entire statute, and the few appellate decisions interpreting it, that it also provides coverage for disability insurance claims. The legislature may have intended the term “accident” to include disability claims.
This statute provides that claims arising under the terms of health and accident policies issued in this state, except for accidental death, shall be paid no more than 30 days from the date on which written notice and proof of claim, in the form required by the insurance policy, or furnished to the insurer, unless there are just and reasonable grounds that would put a reasonable and prudent business man on his guard. The insurer must pay disability benefits at least every 30 days during the period an insured is entitled to benefits. If the insurer violates this statute, it is subject to a penalty, payable to the insured, of double the amount of the health and accident benefits due under the terms of the policy during the period of delay, and for attorney’s fees to be set by the court.
For accidental death claims arising out of these contracts, the insurer is required to settle the claim within 60 days of receipt of due proof of death, and if it fails to do so without just cause, the amount due will bear interest at the rate of 6 % per annum from the date the insurer receives due proof of death, until paid.
If an individual is employed by a private company which is self-insured for health and accident benefits, this statute applies to that employer as if it was an insurer. However, the statute does not apply to collectively bargained union welfare plans except for health and accident plans. More importantly, private employer benefit plans will be covered by the Federal Employee Retirement Income Security Act of 1974, 29 U.S.C. §1001, et seq. That statute, discussed below, preempts or nullifies this state law with regard to private employers, or even an insurer subject to that same federal law. This statute also provides numerous detailed rules regarding health insurers and health maintenance organizations, and preferred provider organizations, and other managed care organizations related to health care benefits.
Louisiana R.S. 22:1220
This is Louisiana’s broadest penalty statute applicable to insurers. The statute begins by stating that insurers owe a duty to their insured of good faith and fair dealing. They also have an affirmative duty to adjust claims fairly and promptly, and to make a reasonable effort to settle claims with the insured, a claimant, or both. Insurers are liable for damages caused by their breach of these obligations. However, court decisions have limited the application of this statute to some extent when the claimant is a third-party, i.e., the claimant is not the customer of the insurance company.
Louisiana R.S. 22:1220 also lists certain specific acts or omissions which will constitute a breach of the insurer’s obligations, including misrepresentation of pertinent facts or insurance policy provisions relating to coverage, failing to pay a settlement within 30 days after a written agreement is reached, misleading a claimant as to the applicable prescriptive period, and other acts.
Louisiana R.S. 22:1220 provides that an insurer may be liable for any general or special damages which the claimant may be entitled to because of the insurer’s breach of the duty imposed by the statute, and a penalty of two times the damages sustained or $5000.00, whichever is greater. The statute exempts health and accident insurance policy claims, and claims against Louisiana’s Insurance Guaranty Association Fund.
The Koederitz Law Firm, LLC seeks to protect the rights of those who have been wrongly denied by disability insurance companies.
If you or a loved one has been denied disability insurance benefits you need an attorney skilled at handling these claims and an attorney that considers insurance litigation a major focus of the law practice.
Koederitz Law Firm, LLC has the experience and complete understanding of these types of claims and will ensure that you receive full compensation in the event you or a loved one has been denied benefits.
At Koederitz Law Firm, LLC if your case is accepted, an experienced Louisiana disability insurance denial attorney, supported by qualified staff in numerous fields, will fully investigate your Louisiana insurance claim without obligation to you. If we believe that your case has merit, our Louisiana lawyers will aggressively enforce your rights.
Our Law practice handles cases that encompass the State of Louisiana, including West Baton Rouge Parish, East Baton Rouge Parish, St. Bernard Parish, Orleans Parish, Caddo Parish, Lafayette Parish, Calcasieu Parish, Rapides Parish, the Louisiana Gulf Coast, Houma, New Orleans, Hammond, Metaire, Lafayette, Lake Charles, Shreveport, Monroe, Alexandria, Slidell, New Iberia, Chalmette, Tallulah, Bogalusa, Covington, Franklin, Abbeville, Morgan City, Minden, Winnsboro, Gonzales and all Louisiana cities in between. Louisiana Car Accident Law
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