Can You Sue the Long-Term Disability Insurance Company for ‘Bad Faith’?

No one expects to have their long-term disability benefits denied or terminated– we completely understand how stressful it must be to suffer through the loss of expected benefits. Unfortunately, disability claim denials are not uncommon and many claimants like you are left wondering what the next steps are.

You never imagined that you would be in this position and now you have to go out and find an experienced long-term disability attorney to appeal the denial or file suit – the attorney will cost money.

The big question is, “can you hold your insurance company liable for the stress they’ve caused?” One option that comes to mind is to sue the insurance company for “bad faith” – but can this really be done?

Unfortunately, No…if your policy is governed by ERISA (most employer-sponsored policies are), then the answer is no, you cannot sue your insurance company for bad faith to recover additional money.  Usually, you can only recover what they already owe you – nothing more.

What is a Bad Faith Lawsuit and When Can it Be Applied to Long Term Disability Cases?

What exactly is a bad faith claim? A bad faith claim means that the claimant is asserting the insurance company handled their claim without any regard at all for the claimant’s rights under the policy. Some states have better “bad faith” laws than others. Virginia has very, very weak bad faith laws and “bad faith” claims are almost non-existent in Virginia

Many claimants have the misunderstanding that the insurance company acts in bad faith simply if they deny their benefits – unfortunately, this is not true. In order to have a case for bad faith (only if your policy is not governed by ERISA), there are certain criteria that must be met.

Even in states with good “bad faith” laws, bad faith claims are extremely hard to win because you have to prove that the insurance company breached their contract with you – if you win, the only damages recoverable are your attorney fees; plus, it is a very high bar that you must reach to recover bad faith damages.

So You Can’t Sue the Insurance Company for Bad Faith – What Should You Do?

Reach out to an experienced ERISA long-term disability attorney and ask them their thoughts on whether you have a valid argument to appeal the insurance company’s decision.

If they believe you have a case, they will help you gather the evidence before you file the appeal. Just remember that you have a tight window (sometimes as short as 60 days) to appeal so reach out quickly – don’t waste any time!

Takeaway

The bottom line is that disability insurance companies have a huge economic advantage over you in these cases. They know that on their worst day the most they usually face in court is having to pay you what they owed you in the first place.

How BenGlassLaw Can Help

Any long-term disability insurance denial can be devastating, particularly if you have no other income. If your disability claim was denied, we highly recommend that you contact an experienced ERISA long-term disability attorney to help you understand your options and appeal the decision.

For more information about disability appeals in Virginia, please download a free copy of my book, Don’t Try This at Home: A Guide to Your Disability Insurance Appeal, from our website.