If my long term disability benefits are governed by ERISA and I win at trial, does the insurance company have to pay me for the remainder of the policy life, or a lump sum amount?
Should your case go to trial under an ERISA governed disability plan and you win the insured is only entitled to an award of disability benefits that have not been paid by the insurance company. This is further contingent on whether the insurance company denied your claim under the “own occupation” or “any occupation” definition of disability. Many courts throughout the country have held that if the claim was denied under an “own occupation” definition of disability and then became subject to litigation in which the insured won at trial, the insured is entitled only to the remainder of benefits for the “own occupation” period. The Courts then often “remand” (send back) the claim to the insurance company to do a review for entitlement to benefits under the “any occupation” definition of disability.
As disability benefits are never a guaranteed benefit, meaning the insurance company can and will conduct reviews on a month to month basis, courts do not award future benefits. This position was recently reiterated in a recent Florida case against Aetna. The insured, after prevailing at trial, moved for an award of future benefits. On this issue the Court stated, “There is no question that the Court may not award payment for disability benefits beyond the period of final judgment.” The judge presiding over the matter found that an award of future benefits would deprive Aetna of the right to potentially terminate the insured’s benefits in the future for failure to comply with provisions of the policy; based upon new information gathered; or even the insured’s return to work.
It is important to remember that if you win an appeal of a denial of benefits, or even win at trial, there is no guarantee that benefits will continue for the maximum period of disability (under most policies, age 65). As such, Courts do not award “future benefits” only benefits that have not been paid by the insurance company, with a potential limitation to even that based upon an “own occupation” or “any occupation.” It is important to never let your guard down and always do everything possible to protect your long term disability insurance benefits.