Thursday, March 1, 2007

Arthritis Foundation

I spoke to the Arthritis Foundation support group today that meets in Levittown. A major concern was the amount of time that it frequently takes to get disability benefits approved.

Disability claimants face a dilemma when applying for benefits. On the one hand, if they hire an attorney, they have to give away part of their benefits as compensation for the legal services. On the other hand, if they apply on their own, statistics show that they are less likely to obtain benefits, and even when they are successful, it takes them longer to get them as compared to when they have legal representation.

The decision to retain an attorney in connection with disability benefits should be approached in the same manner as financial planning. You need to figure out how long you can afford to live without benefits, the estimated amount of your benefit, how likely you are to succeed in securing benefits, and so on.

In the Social Security Disability (“SSD”) context, where benefits are capped at roughly $2,000, the more you need the benefits, the more you need an attorney because you will most likely secure your benefits sooner. This needs to be considered along with the fact that the Social Security Administration (the “SSA”) tends to find those people who make more money to be more credible. The SSA reasons that a person would continue to work if they could earn more than $2,000 a month.

In the long term disability (the “LTD”) context however, logical thinking is replaced by the insurance company’s financial conflict of interest. The insurance companies target the claims of higher salaried individuals for denial or termination in order to increase the company’s profitability. Even though high earning claimants might be able to forego benefits for a longer period of time, the insurance companies are more likely to go to greater lengths, usually unreasonable ones, to avoid having to pay these larger claims. It also needs to be remembered that the federal court litigation involving LTD claims normally takes much longer than the litigation involving SSD claims.

In the individual disability policy context, claims can be brought in state court where the federal statute known as ERISA does not apply, which does apply to group LTD claims in federal court. In the absence of ERISA, punitive and bad faith damages are possible, jury trials are available, and no deference needs to be given to the insurance company’s decision, all of which makes for a more level playing field. On the other hand, state court litigation involving individual disability policies normally take more time for a resolution than LTD cases in federal court.

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