Have you exhausted all of your disability claim appeals? Has your disability claim been denied? Gregory Dell with Attorneys Dell and Schaefer sat down to discuss these exact scenarios for private and group disability policyholders. If you want to know what to expect next, keep reading.

GREGORY DELL: Let’s talk about the differences between a group policy and a private policy.

RACHEL ALTERS: OK, and you’re referring to just litigation?

GREGORY DELL: Right. 

RACHEL ALTERS: There are many differences between a group and a private disability policy.

A group disability policy is governed by the ERISA, governed by federal law – The Employee Retirement Income Security Act. The ERISA has specific regulations, and these types of claims do not allow for a jury trial. So for litigation purposes, you are only going to have a bench trial with a judge, no witnesses, no depositions, and no testimony. The judge will only be looking at the administrative record, which is the claim file, and deciding whether the insurance carrier Principal was arbitrary or capricious in denying the claim. 

If the judge finds that the insurance carrier was arbitrary and capricious, they will favor the claimant. The claimant can recover past benefits that they are owed, possibly get attorneys fees, and then it gets remanded back to the Principal for another review. 

GREGORY DELL: OK, and then the individual policy, how does it differ? 

RACHEL ALTERS: Individual disability policies allow you a jury trial of your peers. Many people prefer this. There can also be depositions and testimonies. You don’t have to rely solely on the administrative record. 

Individual private policies have more options and benefits than group policy. You have more rights and possibly more remedies, such as bad faith or punitive damages. I always tell my clients, yes, a group policy is good to have, but a private policy will always benefit you more.

GREGORY DELL: Right, and a private policy is probably five to six times the price of monthly premiums than a group policy, but people who have the group policies may not have necessarily bought an individual policy or even knew they could buy one. 

RACHEL ALTERS: Exactly. 

GREGORY DELL: When it comes time to file the lawsuit, whether it’s individual or group, the frames are going to be the same. What should a person expect for time frames in a lawsuit against Principal?

RACHEL ALTERS: You want to make sure you get your lawsuit filed promptly because of the statute of limitations. 

GREGORY DELL: Right. 

RACHEL ALTERS: Usually, it’s three years from the date of proof of loss, depending on the state. Sometimes it’s one year, so the attorney filing your lawsuit needs to pay close attention to the statute of limitations because you don’t want to make a mistake there. If you miss your opportunity, you won’t have a claim anymore.

Once the lawsuit is filed, the timing of a trial depends on the individual court. If it’s a federal court, it usually takes about a year to get to trial. Sometimes it’s shorter. Once the judge enters the order, there will be a mediation attempt required by law. The claimant will be required to show up for mediation with the insurance company to attempt to settle the claim outside of court. 

If that’s not successful, you can expect to go to trial. In a group claim, the claimant isn’t actually going to the trial. It’s usually just the plaintiff’s lawyer versus the defendant’s lawyer’s motion, and the judge will review. Sometimes it’s an oral argument, but generally, that’s not the case. 

GREGORY DELL: Many people have a misconception about what they get if they win the trial. It’s the same misconception that they have when they get approved claims for benefits. They think it’s going to last forever, but what do claimants actually win at trial? 

RACHEL ALTERS: Usually, with a group policy and a private policy the claimant will be rewarded past benefits and in some cases, punitive damages can also be involved. The judge is not allowed to award future benefits, this also applies to a group policy. 

If you win your case, you get whatever you are owed to date or to the date the complaint was filed. Anything future benefits are determined by the insurance carrier once it’s remanded back to them to decide if you’re still disabled and deserve benefits. So you can win your trial, and then get another review from the Principal. 

Insurance companies can decide they don’t think you’re disabled, and then you’re back doing the same thing again, appealing it and going to trial a year later. Unfortunately, that is how it works. You can’t be awarded future benefits.

GREGORY DELL: How do these Principal Financial claims usually resolve once a lawsuit is filed?

RACHEL ALTERS: I would say 95% to 97% of them end up in a settlement of a lump sum because claimants don’t want to be in that vicious cycle of winning the trial, getting past benefits, and going back to get reviewed with Principle again. 

GREGORY DELL: There is a level of certainty for a claimant taking a settlement. These claimants don’t have any income coming in. If a claimant loses the trial or the appeal, there’s not going to be a recovery, and we make them aware of this. That is why these things often resolve.

Some claimants believe they could work with some adjustments on their own terms, but these policies just don’t allow them to do that. If they get a settlement, they can do whatever they want. It’s a complete release. The next day, they can start looking for a more suitable job and will have several years’ worth of benefits prepaid to them. That is the real benefit of taking a settlement in a lawsuit. 

Can you talk us through what could happen if a claimant loses a case? What is the appeal process, and how long could that take?

RACHEL ALTERS: If you lose in federal court, this simply means you’re not getting benefits. This happens when a judge decides the Principal was not arbitrary and capricious in the denial of your claim. In other words, the judge had a reasonable basis for denying your claim.

GREGORY DELL: What are their subsequent remedies? 

RACHEL ALTERS: Well, they can appeal to the next level of court. 

GREGORY DELL: How long will that take? 

RACHEL ALTERS: A long time. It can take an additional year or more, and once you go to trial, it takes a very long time for the appellate court to make a decision. Once the decision is made, there is another level you can appeal to, but it’s very costly. Most people don’t want to go through that.

GREGORY DELL: Right, so even if you win, sometimes at the trial, the other side can appeal and tie up your money for another year. We’ve been through that process with clients. The claimant will need reserves, or family support to ride out that process.

And unfortunately, a lot of disability carriers strong arm claimants into settlements because they financially can’t pay their mortgages, or expenses, or whatever it may be. So that’s a very challenging process. Can you talk for a minute about how we charge and the litigation process to represent claimants? 

RACHEL ALTERS: Usually, we charge on a contingency basis. So we get paid if and only if we recover for the claimant.

GREGORY DELL: Right. 

RACHEL ALTERS: This is good for the claimant because there’s no risk taken when hiring us. There is nothing to lose. Our clients don’t have to pay us, so we can work 100 hours on a claim and spend a few thousand dollars, but the client pays nothing if we don’t win the case.

This is a big incentive for us to get the case won or settled for a good amount of money because that’s how we get paid on the case.

Want to Know More?

We provide an initial free phone consultation. Within 15-20 minutes, we can tell you if we can help you, costs, and time frames. Our clients are located all over the country.

If you are looking for additional information, please watch some of our videos on our YouTube channel, or look through our website. 

We would love to discuss your claim with you.