Insurance companies that provide disability coverage can lose a lot of money when approving claims. If someone cannot work due to a short-term or long-term disability, the benefits they require could add up to thousands of dollars. Therefore, insurance companies are often quick to reject seemingly reasonable disability benefits claims.
When someone has disability coverage provided by an employer, that coverage is subject to rules instituted by the Employee Retirement Income Security Act of 1974 (ERISA). Those rules include imposing a fiduciary duty on insurance professionals. Is a disability claim denial a violation of that duty?
How fiduciary duty works
A fiduciary duty is the highest level of obligation the law can impose on one party. Someone who has a fiduciary duty to another person must put the best interest of the other party ahead of their own. When it comes to ERISA disability claims, fiduciary duty means putting the needs of the policyholder above the financial interest of the company.
When is a denial a violation of fiduciary duty?
To determine if an insurance decision violates the fiduciary duty imposed by ERISA, a policy review is often necessary. People need to know with confidence that their circumstances justify the claim that they filed.
An insurance company may have provided details about the reason for the denial. Reviewing any official communication from the company can further assist in the process of fighting the determination. It may sometimes be possible to appeal what seems like an unfair claim denial or to take an insurance company to court after an unsuccessful appeal.