LTD Plan Limitations

Many disability plans provide for the payment of benefits through an insurance policy. When an insurance carrier is liable for paying benefits under a disability plan it usually also acts as the plan’s claims administrator. In those circumstances, the insurance carrier has a conflict of interest because if it approves a claim as claims administrator, then it has to pay those benefits under the policy it issued that provides for the payment of benefits. Consequently, the insurance company’s decisions as claims administrator favor avoiding the payment of claims.

One way that carriers avoid liability is by intentionally mischaracterizing physical disability claims as mental disability claims. I just received an approval of both a short and long term disability claim where the carrier’s conflict of interest obviously influenced its decision.

The claimant submitted evidence that her mental and physical impairments precluded her from being able to work. Jefferson Pilot approved disability benefits based upon the mental condition, but asserted that there was insufficient evidence of physical impairments to support total disability. That assertion was false because there was just as much, if not more, evidence to support disability based solely upon the claimant’s physical impairments. As it typical of many disability plans, the claimant’s limited benefits for a mental condition for 24 months. Jefferson Pilot’s decision was a baseless attempt to limit its liability to 24 months.

Under these circumstances, I always send a letter to the carrier immediately, advising that the claimant rejects the decision insofar as it rejected disability benefits based upon the physical impairments. This avoids the carrier from subsequently arguing that a claim based upon physical impairments is waived. I expressly notify the carrier that the claimant will pursue disability benefits beyond 24 months because the medical evidence establishes an inability to work due solely to physical impairments.