When it comes to claims for short term disability benefits under ERISA governed group policies, more often than not the short term disability policy is not underwritten by an insurance company, but rather it is administered by an insurance company. What this means is when a policy is underwritten by an insurance company the insurance company financially funds the disability benefit to be paid from its own assets; and in situations where an insurance company administers a short term disability policy, the insurance company will make all claims handling decisions as to whether a claim is to be approved or denied, but the actual disability benefit is to paid by the insured’s employer.
Although it is only my opinion, I believe that in situations where an insurance company administers the STD plan for an employer, fewer short term disability claims are denied simply because of the fact the actual disability benefit isn’t coming out of the pocket of the insurance company. However, it is very common to see a denial of benefits by an insurance company when STD ends and the long term disability period begins as now the insurance company is responsible for paying the benefits. In denials that occur during the transition period between short to long term disability period most people are rightfully confused as to how medical information that resulted in the award of short term disability benefits is now being used to deny the long term disability benefit.
Recently, however, I have noticed an increase in short term disability claim denials by Cigna that occur several weeks before the transition into long term disability. In denying a claim prior to the end of the short term disability benefits period, Cigna is giving itself more opportunities to build a case against an insured for potential further claim denials into the future as the denial allows Cigna to conduct additional reviews of the claim in response to any administrative appeals submitted. I have recently successfully appealed three short term disability denials with Cigna. In winning these appeals the only benefit that is initially secured are the past due short term disability benefits. Cigna does not automatically approve the claim for long term disability benefits following a successful appeal for short term disability benefits, even if the period of time that has passed would place the insured well within the long term disability benefit period. Rather, Cigna begins a separate review for entitlement to long term disability benefits. With this review comes the opportunity for Cigna to have another bite of the apple when trying to find a way to deny benefits; potentially forces the filing of more administrative appeals; results in more time being wasted and more financial hardship is incurred by the insured.
Needless to say this “delay” tactic has very real consequences for individuals who have already been without benefits for a significant period of time. Given this new trend in short term disability denials, your administrative appeal becomes all the more important, as not only are you establishing entitlement to past due short term benefits, but also building your case and arguing for entitlement to long term disability benefits to avoid and/or limit Cigna’s ability to deny the long term disability claim.
If your short term disability claim has been denied by Cigna do not hesitate to contact our office to consult with one of our disability insurance attorneys.