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.