If I File For Bankruptcy Can I Still Pursue a Claim for ERISA Long Term Disability Benefits?

Unfortunately, it is extremely common to be stricken with financial difficulties after an insurance company denies or terminates your long term disability benefits. Often times when a person is stricken by illness or has an accident and is rendered disabled and unable to work, their financial situation becomes dire as they are not earning any income, have not yet been approved for social security disability benefits and their insurance company has denied payment of their disability benefits. When faced with this situation, many are forced to file for bankruptcy. If you find yourself in this situation…

You MUST Notify the Bankruptcy Court of your ERISA or Non-ERISA Disability Claim or You Will Possibly Lose Your Rights To Those Benefits.

Even though it may be tempting to hide this information from the bankruptcy court for fear that if you prevail on your ERISA claim, the bankruptcy court will garnish all of your past and future benefits, it is absolutely imperative that you notify the bankruptcy court of your long term disability claim. If you fail to notify the court of your claim, you may be “judicially estopped” from pursuing your ERISA or non-ERISA LTD claim altogether.

What Is Judicial Estoppel?

The doctrine of judicial estoppel seeks to preserve the integrity of the courts by generally preventing a party from prevailing in one phase of a case on an argument and then relying on a contradictory argument to prevail in another phase. Though there are no inflexible prerequisites for judicial estoppel, the courts have applied the doctrine to bar employment related claims not disclosed in prior bankruptcy proceedings where (1) the debtor assumed a position contrary to one she asserted under oath while in bankruptcy; (2) the bankruptcy court adopted the contrary position either as a preliminary matter or as part of a final disposition; and (3) the debtor’s omission did not result from mistake or inadvertence. Kimberlan v. Dollar General Corp., 520 F. App’x n.1 (6th Cir. 2013).

In a recent case out of Ohio called Javery v. Lucent Technologies, Inc. Long Term Disability Plan, decided February 3, 2014, the Defendant argued that the Plaintiff should be judicially estopped from bringing his claim for long term disability benefits since he failed to notify the bankruptcy court of his ongoing LTD claim. Both the district court and the court of appeals rejected the Defendant’s argument that the Plaintiff should be estopped from bringing the LTD claim, but ONLY based on the circumstances that surround this particular claim.

The court found that since the Plaintiff inadvertently failed to notify the bankruptcy court of his long term disability claim, he was not trying to intentionally hide information. Testimony and affidavits showed that he provided the information about his LTD claim to his bankruptcy attorney, who in turn failed to provide the information to the court. Therefore, since it was a mistake due to carelessness or inadvertent error as opposed to intentional, strategic concealment or impermissible gamesmanship, the court ruled that the plaintiff was not estopped from bringing the LTD claim.

However, if the court determines that a claimant intentionally or knowingly kept the information about his or her LTD claim from the bankruptcy court, he or she will lose all rights to their long term disability claim. It is also very important to note that if your claim is not governed by ERISA, a bankruptcy filing could delay a lawsuit for benefits. Whether or not your LTD claim is governed by ERISA, you should always disclose your disability benefits or disability claim to the bankruptcy court.

Comments (2)

  • Steve,

    Unfortunately, since we do not handle bankruptcy cases we would not be able to advise you as to your available options. Please feel free to contact our office and we can attempt to assist you in speaking with another bankruptcy attorney who may be able to give you better insight.

    Stephen Jessup Nov 8, 2015  #2

  • My Bankruptcy was discharged less than 2 years ago. my lump sum payment due to my insurance co. was included in that discharge. the insurance co. was notified of the bankruptcy & did not contest. The bankruptcy judge knew the lump sum was part of discharge. I continued to receive offset receipts monthly from my insurance co. My attorney sought to stop them from continuing the practice & reopened the case. They were absolutely positive we had a concrete case. 3 days prior to the court date, she cancelled the case. Said a 1999 ruling was still good & used so we wouldn’t win. Now I’m told i have to repay the 23,000 that’s left. That it was just recognized in the bankruptcy. That money is gone to home repairs & lawyers fees. What happens next? its obvious that my attorney with decades of erisa experience is not very good. Can they put a lien on my Florida home if it is in both i & my wife’s name? Can they take my decades old IRA? Thank You.

    Steve Nov 7, 2015  #1

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Do you work in my state?

Yes. We are a national disability insurance law firm that is available to represent you regardless of where you live in the United States. We have partner lawyers in every state and we have filed lawsuits in most federal courts nationwide. Our disability lawyers represent disability claimants at all stages of a claim for disability insurance benefits. There is nothing that our lawyers have not seen in the disability insurance world.

What are your fees?

Since we represent disability insurance claimants at different stages of a disability insurance claim we offer a variety of different fee options. We understand that claimants living on disability insurance benefits have a limited source of income; therefore we always try to work with the claimant to make our attorney fees as affordable as possible.

The three available fee options are a contingency fee agreement (no attorney fee or cost unless we make a recovery), hourly fee or fixed flat rate.

In every case we provide each client with a written fee agreement detailing the terms and conditions. We always offer a free initial phone consultation and we appreciate the opportunity to work with you in obtaining payment of your disability insurance benefits.

Do I have to come to your office to work with your law firm?

No. For purposes of efficiency and to reduce expenses for our clients we have found that 99% of our clients prefer to communicate via telephone, e-mail, fax, GoToMeeting.com sessions, or Skype. If you prefer an initial in-person meeting please let us know. A disability company will never require you to come to their office and similarly we are set up so that we handle your entire claim without the need for you to come to our office.

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When you call us during normal business hours you will immediately speak with a disability attorney. We can be reached at 800-682-8331 or by email. Lawyer and staff must return all client calls same day. Client emails are usually replied to within the same business day and seem to be the preferred and most efficient method of communication for most clients.

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My husband had paid for private disability insurance from the first year he worked. 30 some years later he filed a claim, it was denied. Together we submitted the claim 3 times, all times denied. We had no income and were rapidly using up any small savings we had. I searched on the internet, specifically looking for success with my husbands disability provider and found this firm. Within 2 months we had disability payments and when, yet again, the company stopped them after a year with no warning, this firm kept going. We could always call or email and get answers. Everything was explained to us and if there were options, we were given them. It has been a long process but we have a settlement and our lives can move forward. We are grateful for the help we were given by this firm and we recommend them highly.

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