Canadian-based Sun Life provides group long term disability insurance policies throughout the United States, and like many disability insurance carriers, its disability insurance claimants tend to get their fair share of insurance benefit denial letters. But unlike some of the largest disability insurance carriers, Sun Life provides very thorough denial letters when it rejects a disability claim. Often weighing in at eight or nine pages to the more typical three or four, these letters can provide disability insurance claimants with a valuable roadmap to what they’ll need to prove to win a disability insurance lawsuit. Learn more about what happens after a Sun Life Disability insurance claimant has exhausted their disability insurance administrative appeals and is ready to sue this insurance carrier for disability benefits.
Sun Life Disability Lawsuits Are Usually Filed in Federal Court
Most Sun Life Disability policies are group policies paid by an employer, not individual policies purchased by a person. The Employee Retirement Income Security Act (ERISA) governs these policies and prescribes a strict set of procedures and rules that ERISA appeals must follow.
After a Sun Life Disability insurance claimant receives their denial letter, they’re required to appeal this denial (to, again, Sun Life) before they can sue. Filing a disability insurance lawsuit without appealing the disability insurance denial can prevent a claim from being litigated. If the administrative appeal results in a second denial, the claimant may file an ERISA lawsuit in federal court, applying federal law. This can be a double-edged sword; it can make it easier to predict how a particular case may go, but it can also present standards that can seem frustratingly rigid.
Discretionary Clauses Can Make Disability Claims More Challenging to Win
A discretionary clause provides the insurance carrier with the discretion to interpret the plan documents and deny a disability claim accordingly. This broad latitude can be a problem for ERISA claimants, who must not only show that they meet the policy’s definition of “disability,” but also that the disability insurance carrier’s denial was “arbitrary and capricious.” This is a much higher standard to satisfy than simply proving one is disabled, and when the insurance carrier has already been granted this broad discretion by the terms of the policy itself, meeting the “arbitrary and capricious” standard can require some significant evidence.
Most Common Ways a Long Term Disability Claim is Resolved
Because disability insurance litigation requires risk for both the claimant and the insurance carrier, most long term disability insurance claims result in some sort of settlement. This can provide certainty and finality for both sides, even if neither party is getting precisely the outcome they wanted. In some rare cases, an ERISA claim will proceed all the way through litigation, but this can be expensive for an insurance carrier; avoiding this known cost in addition to the risk of being found liable for past-due disability benefits is often one of the major factors driving settlement.
Usually, when a Sun Life Disability claim settles, the insurance carrier will offer a lump sum buyout of the policy based on a percentage of the present value of future payments. Again, this can provide both parties with some greater certainty – Sun Life is able to terminate the claimant’s policy and close the case for good while the claimant has cash on hand to pay past debts or fund future expenses.
If you’ve recently received a denial letter from Sun Life Disability and are wondering about your next steps, the long term disability insurance attorneys at Dell & Schaefer can help. We serve clients all across the country and have years of experience in negotiating with Sun Life and other major carriers. Set up your FREE consultation today to discuss your case with us.