• Bad Faith Disability Claim Denial and Lawsuits

Do I Have a Bad Faith Disability Claim Against My Disability Insurance Company?

There are only a handful of states that will allow an insured to bring a claim against a disability insurance company for bad faith claim handling or bad faith denial of benefits. In a recent video, Disability Attorneys Cesar Gavidia and Gregory Dell discuss common examples of Bad Faith Disability Insurance Claims. Bad faith claims are not permitted under group disability policies which are governed by ERISA. These types of claims are only permitted with private disability policies in certain states, the most prevalent being California. “Bad faith” can also be described as “unreasonable claim handling.”

Many claimants are of the belief that an insurance company acted in bad faith by merely denying their claim for disability benefits. Unfortunately a claim denial does not automatically mean an insurance company acted in bad faith. There are certain criteria that must first be met in order to prevail on a bad faith claim.

Some examples are:

1) the disability insurance company failing to comply with statutory time deadlines for responding to the claim;

2) failure to conduct a thorough investigation of a disability claim;

3) other unreasonable conduct such as relying on inconsistent or misleading reports as a basis for denying a claim for disability benefits.

Basically, an insurance company cannot put their own interests in front of the insured. It can be very difficult to prevail on a bad faith claim and often you must first prevail on other grounds, such as establishing breach of contract. In some states, the bad faith and disability denial claim can be present to a jury simultaneously. If your case proceeds to trial and the judge or jury find the disability insurance company did, in fact, act in bad faith, you may be awarded damages to include back benefits, compensation for debt incurred as a result of the benefit denial, bankruptcy, loss of your car, house, or other property – and in rare cases, awards of punitive damages may also be permitted.

Our law firm has handled numerous bad faith disability denials and it is important that you work with a disability law firm that is experienced in bad faith claim denials. Please feel free to contact any of our disability attorneys for a free consultation to discuss your potential bad faith disability insurance claim.

Comments (7)

  • Tabitha, if the policy was provided by your employer and is a group policy you can’t sue for bad faith. If it’s a policy you bought on your own separate from your job then you may be able to sue for bad faith if your state allows it. If you have a group policy and you can do your job in another workplace other than yours then you would not likely qualify as disabled under your group policy since your job is defined not as it is done in your place of work but how it’s defined in the national economy.

    Rachel Alters Feb 29, 2020  #7

  • I live in the state of Maine. I am now on my 3rd appeal with my short term disability company. In which they keep denying my claim do to work related. However, I am currently in controversy with works compensation. In the state of Maine there is a law called chapter 530. Which side ate the short term disability has to review on provisions and can’t deny do to work related. Yet they continue to do so. I do have the bureau of insurance investigation yet I feel they just giving me the runaround. At this point I know I am denied again for work related just haven’t received the letter. But called and heard it on the phone. So I am wondering at this point if I can file a lawsuit on bad faith. This is a private STD policy. Thank you for your time.

    Tabitha Feb 29, 2020  #6

  • Armando, did you file the administrative appeal of the denial? The law only provides 180 days to file same, and failure to do so could prevent you from pursuing your legal rights. Please feel free to contact our office to discuss your claim.

    Stephen Jessup Jan 28, 2018  #5

  • I have been on std disability since July. Cigna Insurance has closed my case. I filed a grievance and was told I would receive a response in 5 days. Claims manager never calls back. I always provided paperwork for Cigna because they said they never received any fax. Which is a lie. I sent a complaint with California insurance department and recieved a call from Cigna just asking for information. I wanna sue them and file a cival lawsuit in California against claim manager.

    Armando M. Jan 27, 2018  #4

  • Unfortunately, LTD carriers are NOT subject to good faith claims handling. They do every thing in their power to delay the payment of claims including committing what would be considered fraudulent acts. In my case, Cigna insurance independent medical reviewer downgraded the surgery that was performed on me in order to make sure my original appeal was denied. Cigna then back tracked and created a “persona” of me in order to make sure the independent medical review would prove what they said. They also knowingly create a situation where they are not able to get medical information and then blamed my doctor for not providing this information. When I advised them that if the doctor released this information to them, he would violate the law, they told me that was the way they did business.

    So in closing, when dealing with a LTD carrier, you need to advise them in writing to request all information from you doctor in writing and no just phone calls and faxing information, and also when it comes to your treatment make sure you see on occupational therapist and not just a physical therapist in order to document your disability.

    Theodore Dimarcello Apr 5, 2014  #3

  • Mark,

    Your options are dependent on the nature of your policy and the law governing same. Please feel free to contact our office to discuss how we may be able to assist you.

    Stephen Jessup Jan 24, 2014  #2

  • What are one’s option if the disability company has not responded nor made a decision on a claim after the 90 day elimination period? I am going on 4 months now, and the insurance told me 3 weeks ago that I was “pending”. I haven’t heard anything from them since. Total silence. When does bad faith come into play? I had a private policy. My doctor wrote a note stating that I was totally disable from my occupation.

    Mark Jan 23, 2014  #1

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