The U.S. Department of Labor estimates that a whopping 75 percent of long-term disability claims are denied. With over six decades of collective experience representing both insurers and their policyholders, the lawyers at McKennon Law Group PC have seen insurers routinely deny valid claims. But that DOL statistic shocked even us! Irrespective of the precise percentage, one thing is certain: life, health and disability insurers often deny valid benefit claims. They deny claims at such an astounding level it leaves reasonable people wondering – is it an ingrained business practice aimed at maximizing insurer profits?
There is empirical support. According to a recent column in the Los Angeles Times about denied health insurance claims:
Insurance companies are playing the odds . . . They’re counting on people not having the stamina to challenge every denied claim, even when there’s a valid medical reason for a drug or treatment being covered.
(See January 17, 2017 article “How to fight back when an insurer denies your healthcare claim”). The DOL is so concerned about the alarming number of claim denials that, in December 2016, it published new regulations governing disability benefit claim denials. (See our article in the Daily Journal re-published on our website at https://mslawllp.com/robert-mckennon-and-scott-calvert-publish-article-in-the-los-angeles-daily-journal-new-regulations-will-benefit-claimants-in-disability-insurance-cases/). The regulations require disability insurers to ensure independence and impartiality in their decision-making process, and explain more thoroughly the reasons for their benefits decision.
It has been our experience in litigating hundreds of life, health and disability claims that many insurers do not get serious about paying these types of claims until they perceive a true threat of their insureds being represented by highly effective, experienced lawyers, especially where there is “extra-contractual exposure” (i.e., damages beyond the policy’s benefits such as emotional distress damages, attorney’s fees and punitive damages). Absent a realistic threat of potential liability via a looming bad faith judgment or an attorney’s fees award (attorney’s fees are potentially available under California law or under the Employee Retirement Income Security Act (“ERISA”)), insurers prefer to earn interest income on your policy benefits rather than promptly pay, or better yet, not pay at all what they rightfully owe under the policy. Absent a credible extra-contractual threat from an insured with a very good lawyer, life, health and disability insurers would rather delay paying benefits, hold on to your money and hope you give up. The lesson: hire experienced and aggressive lawyers like McKennon Law Group PC to handle your denied life, health or disability insurance claims.
This article is in a series of articles from McKennon Law Group PC that will be followed by additional articles explaining how insurance companies deny long-term disability and short-term disability insurance claims, health insurance claims and life insurance claims.