McKennon Law Group HomepageMcKennon Law Group

E-Book Download Now

Free Phone Consultation Nationwide

(949) 504-5381

We Offer No Fee or Cost Unless You Get Paid

CALL US NOW
ERISA
Get Legal Help Now

Common Reasons Life Insurance Claims Are Denied

Why Life Insurance Claims Are Denied—and What You Can Do About It

Life insurance exists to provide financial protection and peace of mind to beneficiaries after the loss of a loved one. Yet for many grieving families, that promise is shattered when the insurer denies the claim. While insurers often pay out valid claims, denials still occur with alarming frequency—often for reasons that beneficiaries do not expect and sometimes do not understand. At McKennon Law, we specialize in challenging wrongfully denied life insurance claims and holding insurers accountable. In this article, we break down the most common reasons life insurance claims are denied and what you can do if you are facing a denial.

Misrepresentation or False Information on the Application

One of the most common reasons insurers deny life insurance claims is misrepresentation on the original life insurance application. This means the policyholder provided inaccurate or incomplete information that was requested on the policy application.

Common misrepresentations include failing to disclose a pre-existing medical condition, underreporting smoking or alcohol use, omitting details about dangerous hobbies, or not reporting other life insurance policies. Insurers use the application to assess risk. If the applicant did not disclose some significant medical information that was requested on the application and later dies from a related (or even unrelated) cause, the insurer may refuse to pay out the claim. If the misrepresentation is deemed “material,” the insurer may void the policy, even after years of premium payments. However, the law requires that these misstatements must have actually affected the insurer’s decision to issue the policy, and courts closely scrutinize such denials—particularly if the policy has been in force for more than two years.  

Most life insurance policies have a contestability provision that limits the insurer’s ability to “contest” a policy more than two years after the policy is issued.  During this time, the insurer can investigate the accuracy of the application if the policyholder dies. The claim could be denied if the insurer finds that the policyholder misrepresented material information, even unintentionally.

Lapse in Premium Payments

Life insurance is a contract. You pay premiums, and the insurer agrees to pay a benefit when the time comes. But if those premiums stop, so does the coverage. However, California law (and many others) provides strong protections for policyholders, including mandatory grace periods and advance notice requirements before a policy can be terminated.  In California, life insurance policies must follow specific rules that protect policyholders from losing coverage due to missed payments. Under California Insurance Code §10113.71, life insurance companies must provide a 60-day grace period after a missed premium before a policy can lapse and send a written notice at least 30 days before terminating the policy for nonpayment.

Lapses can be largely avoided by setting up automatic payments. If you are struggling financially, contact your insurer immediately to explore options. Some may offer reduced coverage or temporary relief to help keep the policy active.

At McKennon Law, we frequently litigate claims where insurers failed to comply with these statutes. If an insurer did not provide timely and proper notice, the policy may still be in force—despite a missed payment.

Cause of Death Is Excluded

Not all causes of death are covered under every life insurance policy. Some policies specifically exclude specific causes of death. Common exclusions include suicide within the first two years of the policy, death during the commission of a crime, war or terrorism-related deaths, or death from drug or alcohol overdose.  These exclusions must be clearly stated in the policy and interpreted narrowly under the law.  In many cases, McKennon Law has  successfully argued that an exclusion does not apply, or that the insurer misinterpreted the facts surrounding the insured’s death.

Beneficiary Issues or Disputes

One of the most common reasons we see life insurers not pay claims is that there is a dispute about who is the rightful beneficiary of the death insurance proceeds.  A claim may be denied not because of the policy terms but because of problems with the beneficiary designation  or fights about undue influence upon the insured who named a beneficiary.  Some disputes might include no named beneficiary, a deceased beneficiary, a divorce situation, or when legal restrictions apply, such as minor children without a legal guardian. In some cases, community property laws or ERISA law may affect who is entitled to the death benefit. These disputes are legally complex, and McKennon Law  routinely assists clients in resolving them, whether through negotiation or litigation.

Fraud or Suspicious Circumstances

A less common reason for denial exists if the insurer suspects fraud in some manner not including misrepresentations in the application.  Insurers may launch an investigation and put the claim on hold or deny it entirely. Fraud might involve falsified documents, staged deaths, or suspicious beneficiary behavior. Insurance fraud is taken seriously, and even if the claim turns out to be valid, a lengthy investigation can delay the payout.

The Policy Was Never Activated Because There Was No Evidence of Insurability Provided

Another troubling basis for denial of life insurance claims under employer-sponsored ERISA plans arises when the insurer or employer failed to obtain required Evidence of Insurability (EOI)—even though the insured was told they had coverage. At McKennon Law, we have handled numerous disputes involving life insurers and an ERISA plan participant not qualifying for a policy because they are deemed ineligible for coverage because no EOI was provided. In many cases, employees elect supplemental life insurance during open enrollment and begin paying premiums, only for their beneficiaries to learn after the insured’s death that the insurer never received or approved the necessary EOI forms. Despite confirming enrollment, deducting premiums, and even issuing benefit confirmations, insurers may later claim the coverage was never actually effective. This post-claim underwriting like this is unjust and deeply unfair to employees who reasonably believed they were insured.

Courts have increasingly scrutinized this tactic. Under ERISA, when an employer or plan administrator fails to follow proper procedures or misleads the employee into believing coverage is in place, courts may find that coverage is valid under principles of equity or breach of fiduciary duty.  We have successfully litigated numerous cases where insurers attempted to deny claims on the basis of missing EOI—despite years of premium payments and confirmation of coverage. If you are facing a denial on these grounds, it is critical to have experienced ERISA counsel review whether the insurer or employer mishandled the enrollment process.  We can usually get the life insurer and/or the plan participant’s employer to pay all of most of the death benefit and our attorneys’ fees and costs too.

What You Can Do If a Claim Is Denied

If your life insurance claim has been denied, the first and most important step is not to panic—and not to accept the denial at face value. Insurance companies often deny claims for reasons that do not hold up under legal scrutiny, including alleged misrepresentations, lapses in coverage, lack of EOI, or improperly applied exclusions. Make sure to request a written explanation of the denial that explains the full basis for the denial, along with the claim file and the policy documents. Carefully review the reasons given and the timeline of events surrounding the denial. You have the right to fight the denial decision, and doing so promptly is essential.

Next, consult with an experienced life insurance attorney. Life insurance policies—especially those governed by ERISA—are complex and involve strict legal standards and deadlines. At McKennon Law, we have successfully handled many denied life insurance claims, holding both insurers and employers accountable for wrongful denials. Whether the insurer is claiming a lapse for non-payment, a failure to submit Evidence of Insurability, or asserting a policy exclusion, we know how to navigate these disputes. Often, a denial can be reversed through a strong appeal or litigation if necessary.

Finally, be sure to act quickly, as deadlines for contesting a denial can be short, particularly under ERISA plans. The earlier you engage counsel, the better your chances of preserving evidence, building your case, and recovering the benefits you are owed. At McKennon Law, we offer personalized, aggressive representation aimed at achieving full recovery for our clients. If your life insurance claim has been denied, contact us today for a consultation to evaluate your rights and next steps.

Ninth Circuit Again Addresses California’s Lapse Statutes: A Mixed Ruling in Siino v. Foresters Life

Life insurance lapse disputes have become increasingly common in recent years, especially after the California Legislature enacted Insurance Code sections 10113.71 and 10113.72 (Statutes) to prevent policyholders from inadvertently losing coverage. The Statutes impose specific requirements on insurers before terminating a life insurance policy for nonpayment, including mandatory grace periods and advance notice obligations. The Statutes set forth a “single, unified pretermination notice scheme” consisting of “three components” designed to minimize the chance that policy holders would inadvertently default. McHugh v. Protective Life Ins. Co., 12 Cal. 5th 213, 240 (2021). First, the Statutes require insurers to give policy owners a 60-day grace period to pay a missed premium payment (the Grace Period Requirement). Cal. Ins. Code § 10113.71(a). Second, they require insurers to notify policy owners of their right to designate a third party to receive notices regarding overdue premiums or impending terminations of their policy (the Designee Notice Requirement). Id. § 10113.72(a), (b). Third, and finally, the Statutes require insurers to provide notices regarding any unpaid premium, within 30 days of the missed payment, and notices regarding impending termination for nonpayment, at least 30 days before termination (the Pretermination Notice Requirement). Id. §§ 10113.71(b), 10113.72(c).

In Siino v. Foresters Life Insurance and Annuity Co., __ F.4th___ (9th Cir. 2025), the Ninth Circuit Court of Appeals recently issued a published decision clarifying how these statutes operate and what a policyholder must prove to sustain a challenge to a policy lapse. The result was a split decision that both affirmed protections under the law and emphasized the continued importance of showing causation in breach of contract claims.

The facts in Siino are a cautionary tale about the risks of missed notices. In 2010, Pamela Siino purchased a $100,000 term life policy from Foresters Life Insurance and Annuity Company (FLIAC). In 2014, she moved and attempted to update her address with the insurer, but the change was rejected for lack of a signature. As a result, notices sent by FLIAC regarding upcoming premiums and potential lapse were sent to her old address. After failing to pay the premium due in January 2018, her policy was deemed lapsed. Although FLIAC sent a notice on February 26, 2018, advising her that her policy had lapsed and that she could reinstate the policy within 30 days, Siino never received it. She discovered the lapse only in 2019 after her husband contacted their insurance agent. Rather than reinstating her policy, she eventually purchased new coverage and filed suit under California’s lapse statutes. She filed a putative class action suit against FLIAC asserting claims for declaratory relief under state and federal law, breach of contract, and violations of California’s Unfair Competition Law.

Siino’s claim centered on two critical violations of California law. First, she alleged that FLIAC failed to provide a pretermination notice at least 30 days before terminating her policy, as required by Insurance Code § 10113.71(b). Second, she claimed that FLIAC never informed her of her right to designate another person to receive lapse or termination notices, a violation of Section 10113.72. The district court ruled in her favor, granting declaratory relief and concluding that her policy remained in force so long as she paid back the missed premiums. Siino complied, tendering the overdue amounts with interest. FLIAC appealed.

The Ninth Circuit affirmed in part and reversed in part. In a detailed opinion by Judge Milan D. Smith, the court held that the district court correctly found that FLIAC violated both the Pretermination Notice Requirement and the Designee Notice Requirement. The court noted that FLIAC’s letter to Siino in February 2018 came after the policy was already considered lapsed and thus failed the statutory requirement of providing notice before termination. As the court explained: “FLIAC’s notice failed to provide Siino with the pretermination warning she was owed under the Statutes” because it offered reinstatement rather than warning of an impending lapse.

Likewise, FLIAC failed to produce any evidence that it ever advised Siino of her right to designate someone to receive notices. Siino declared she never received such a notice, and the insurer’s representative could neither confirm nor deny that it had been sent. This, the court held, constituted a clear violation of Section 10113.72. She could properly prove this in part because she was getting her mail at the old address until 2015 and the requirement became effective under California law in 2013. “Because Siino affirmatively declared that FLIAC never sent her notice of the right to designate, and FLIAC failed to bring forward opposing evidence… there is no genuine dispute of fact,” the court wrote.

But the court stopped short of awarding Siino full relief. It reversed the portion of the district court’s order declaring that her policy remained valid and enforceable. Citing its recent decision in Small v. Allianz Life Insurance Co. of North America, 122 F.4th 1182 (9th Cir. 2024), the Ninth Circuit emphasized that declaratory relief premised on breach of contract requires a showing of causation under Small. That is, a plaintiff must show the statutory violations caused the lapse. The court concluded that Siino failed to meet that burden. “Because the record makes clear that Siino moved in 2014 and failed to successfully update her address on file,” the court explained, “any additional notices sent by FLIAC would have been directed to an old address where Siino would not have received them.” Thus, FLIAC’s violations were not the legal cause of her injury.

In conclusion, Siino underscores both the power and the limits of California’s lapse statutes. The Ninth Circuit affirmed the importance of strict compliance by insurers, particularly with respect to pretermination and designee notices. At the same time, the ruling serves as a reminder that plaintiffs still bear the burden of proving causation when seeking contract-based remedies. As life insurers face increasing scrutiny under these statutes, Siino clarifies that while procedural violations matter, they do not guarantee reinstatement absent a clear connection to the loss of coverage. For policyholders and insurers alike, diligence in notice and communication remains paramount.

When ERISA Plans Fail to Speak Clearly: The Ninth Circuit Upholds Benefits Denial Reversal in Residential Mental Health Treatment Case Under De Novo Standard of Review

In the world of ERISA litigation, the stakes are often high for families trying to secure essential health benefits, particularly for residential mental health care. The most contested issue in this realm is whether a treatment is “medically necessary” under the plan’s terms. The Ninth Circuit’s recent unpublished decision in Dan C. v. Directors Guild of America – Producer Health Plan, __ F. App’x __, 2025 WL 1419920 (9th Cir. May 16, 2025) (before Circuit Judges Owens, Bennett, and H.A.Thomas) offers important insights into how courts interpret plan language and fiduciary responsibilities under ERISA.

The case arose when Dan C., the father of a nine-year-old boy (“R.C.”), challenged the Plan’s denial of coverage for his son’s residential mental health treatment. The Plan determined the treatment was not “medically necessary,” citing a lack of clinical criteria such as danger to self or others and severe impairment in daily functioning. Dan C. filed suit under two provisions of ERISA: Section 1132(a)(1)(B) to recover plan benefits, and Section 1132(a)(3) for breach of fiduciary duty. The district court ruled in favor of the plaintiff on both claims, and the Plan appealed.

The Ninth Circuit affirmed the district court’s (Fernando Aenlle-Rocha) decision to award benefits, agreeing that de novo review was appropriate. Though the Plan conferred discretion on its Board of Trustees, the court emphasized that this authority was not unambiguously delegated to the Benefits Committee, which had rendered the final decision. It reached this decision because the board “did not unambiguously ‘delegat[e] its discretionary authority’ to the Board’s Benefits Committee, which made the final decision at issue here.” The court stated that although “the Plan delegates the task of ‘determining claims appeals’ to the Committee and provides that the Committee ‘will have discretion to deny or grant the appeal in whole or part,’ this language falls short of the unambiguous delegation contemplated by our precedent.” This was because “[n]one of the Plan’s provisions expressly ‘grant [the Committee] any power to construe the terms of the plan[.]’”As the court explained, “[m]erely using the word ‘determine’ in the policy does not ensure that the denial of benefits will be reviewed for abuse of discretion” (citing Newcomb v. Standard Ins. Co., 187 F.3d 1004, 1006). In the absence of express language granting the Committee authority to construe plan terms or determine eligibility, the Ninth Circuit upheld the district court’s application of a de novo standard.

The court also rejected the Plan’s argument that the district court had misapplied the “medically necessary” standard by relying on “clinical criteria” instead of the Plan’s four-part definition. The Ninth Circuit clarified that the district court simply mirrored the Plan’s own reasoning. The Plan denied benefits on the grounds that R.C. did not meet the clinical criteria for residential treatment—namely, that he was not a danger to himself or others and did not have serious functional impairments. The Ninth Circuit noted that these criteria implicated the Plan’s medical necessity standard, particularly whether the treatment was consistent with generally accepted medical practice and whether it was the most cost-efficient form of care.

Perhaps most compelling was the court’s endorsement of the district court’s factual findings. The record showed that R.C. repeatedly exhibited violent and disturbing behavior: threats to kill peers and staff, detailed fantasies of violence, and serious behavioral problems such as urinating in inappropriate places and pulling out his own hair. According to the Ninth Circuit, these findings “supported the conclusion that R.C. did pose a danger to himself and others and did experience serious problems with functioning that could not have been managed without residential treatment.”

Even if the more deferential abuse of discretion standard applied, the court found that the Plan’s review process fell short of ERISA’s requirement for a “full and fair review.” The Plan failed to clearly inform the plaintiff that it required evidence of attempts at lower levels of care, such as an intensive outpatient program (IOP) or partial hospitalization program (PHP), before approving residential treatment. Instead, its denial letters generically referenced “outpatient services,” which the plaintiff reasonably understood to include therapy that R.C. had already undergone without success. As the court explained, this “inadequate notice deprived Plaintiff of the opportunity to ‘answer[] in time’ the Plan’s questions about lower levels of care, to engage in ‘meaningful dialogue’ on the issue of medical necessity, and to receive a ‘full and fair’ review of the denial of his claim” Salomaa v. Honda Long Term Disability Plan, 642 F.3d 666, 679–80).

However, the Ninth Circuit reversed the district court’s judgment on the breach of fiduciary duty claim under ERISA Section 1132(a)(3). The court held that because the plaintiff had already obtained adequate relief under Section 1132(a)(1)(B)—namely, the reinstatement of benefits—no separate equitable relief was available under Section 1132(a)(3). Citing its own precedent in Castillo v. Metropolitan Life Ins. Co., 970 F.3d 1224, 1229 (9th Cir. 2020), the court reiterated that Section 1132(a)(3) is a “catchall” provision and does not apply when relief is available under another ERISA section.

In conclusion, Dan C. is a significant case for ERISA practitioners, particularly in mental health benefits litigation. It underscores the importance of clear plan language delegating discretionary authority, the necessity for consistent and comprehensive communication with claimants, and the courts’ willingness to scrutinize administrative processes that fall short. While the plaintiff did not prevail on the fiduciary duty claim, the Ninth Circuit’s affirmation of his right to benefits based on both procedural and substantive grounds is a strong reminder that ERISA protections, when enforced properly, can make a profound difference for families in crisis.

Mundrati v. Unum: An Important Decision on How Insurers Are to Characterize a Claimant’s Occupation in Long-Term Disability Disputes

The case of Mundrati v. Unum Life Insurance Company of America, __ F. Supp. 3d __, 2025 WL 896594 (W.D. Pa. Mar. 24, 2025), serves as a significant illustration of how courts will apply the abuse of discretion standard of review in disability claims under the Employee Retirement Income Security Act (ERISA). The decision rendered by the United States District Court for the Western District of Pennsylvania on March 24, 2025, reveals the dynamic of long-term disability (LTD) claims and the responsibilities of insurance companies to properly classify the claimant’s occupation and the evidence of disability a claimant provides.

Brief Factual Background

Dr. Pooja Mundrati, a Physical Medicine and Rehabilitation Physician with interventional spine and sports fellowship training, was employed by Summit Orthopedics, Ltd. (Summit), as an Interventional Spine Physician (ISP). Her duties included evaluating patients, performing examinations, administering treatments, and conducting fitness physical examinations. Unum issued a group LTD plan and administered benefits under Group Policy No. 421054001 to Summit, Dr. Mundrati’s former employer (Policy) On February 27, 2018, Dr. Mundrati was involved in a motor vehicle accident that resulted in a traumatic brain injury (TBI). Despite her initial recovery and return to work, she experienced a major setback in January 2019 due to increased workload. Her condition worsened over time, leading to her termination by Summit on January 15, 2021.

Procedural History

Dr. Mundrati filed a claim for LTD benefits with Unum Life Insurance Company of America (Unum) on March 26, 2021, citing her TBI as her disabling condition. Unum denied her claim, leading to her filing a lawsuit on October 27, 2023, under ERISA. The parties filed cross-motions for summary judgment, which were fully briefed and argued on January 22, 2025.

Key Issues in the Case

Misclassification of Occupation: Unum classified Dr. Mundrati’s regular occupation as a physician, a light-duty position, rather than recognizing her specific role as an Interventional Spine Physician, a medium-duty position. This distinction is crucial because it directly impacts the definition of disability under the policy. Dr. Mundrati argued that her actual job duties required significant physical demands that were overlooked.

Evidence of Disability: The court scrutinized Unum’s assessment of Dr. Mundrati’s ongoing health issues, particularly its reliance on the opinions of external paper reviewers, a family medicine physician and an ophthalmologist, over those of her treating physicians. Unum’s denial was based on these reviews and a review of medical records, which the court found to be selective and lacking the necessary depth to accurately reflect Dr. Mundrati’s condition.

Time Relevance of Evidence: Unum denied the relevance of certain medical evaluations conducted after the elimination period, arguing they did not pertain to Dr. Mundrati’s condition during the period in question. The court found that this rationale was unfounded, as there were no substantial changes to her condition that would justify disregarding later evaluations.

Court’s Analysis and Holding

The court concluded that Unum’s decision to deny benefits to Dr. Mundrati was arbitrary and capricious and therefore granted summary judgment in her favor. The court found Unum’s characterization of her position as a physician with light duty activities significant. Under the terms of the plan, while there was language in the Policy that Unum was required to look at Dr. Mundrati’s medical specialty as it is normally performed. It was clear to the court that Unum did not do so and that this failure was an abuse of discretion. Indeed, even if the Policy had a provision that allowed it to look at how her occupation was performed in the “national economy,” Unum was required to also consider how she performed her occupation. The court stated:

Thus, although Unum was not required to look at Dr. Mundrati’s occupation as specifically performed at Summit, and certainly not exclusively so, it was required to consider her specialty in the practice of medicine. Unum has not explained why it chose to categorize Dr. Mundrati as a “physician,” a light-duty occupation, rather than as an ISP or physiatrist which, according to the DOT, is considered a medium-duty occupation “as performed in the national economy.” Its briefs do not discuss Lasser, Weiss or any other case on the issue of “regular occupation.” Indeed, Unum does not dispute Dr. Mundrati’s supplemental statement about her job duties, nor does it contend that they are inconsistent with how the position is performed in the national economy.

Id., 2025 WL 896594, at *15 (Emphasis added).

The court also concurred with Dr. Mundrati that Unum abused its discretion by rejecting crucial pieces of evidence as “not time relevant” even though they related back to her original injury without any evidence of an intervening event1. To the court, Unum could not justify its decision to exclude the vocational report and the Functional Capacity Evaluation (FCE) as not time-relevant. Nor could the court disagree with Dr. Mundrati that it was problematic Unum’s reviewing doctor ignored critical evidence, including the opinions of her treating physicians. While Unum was not required to accept the opinions of the treating physicians, the court found Unum’s “decision to rely on [its own doctor’s] unreasonable and selective paper review over [Dr. Mundrati’s] treating physicians is another factor to take into account in determining whether its review was arbitrary and capricious.”

Finally, the court considered Unum’s decision not to order an independent medical exam (IME), and found that coupled with everything else it further supported Dr. Mundrati’s contention that Unum’s denial of her appeal could not withstand even deferential scrutiny. For these reasons, the court granted Dr. Mundrati’s motion for summary judgment and denied Unum’s motion for summary judgment.

Conclusion

The Mundrati case highlights the importance of accurately classifying an insured’s occupation and thoroughly considering all relevant evidence when evaluating disability claims under ERISA. The court’s decision underscores the need for insurance companies to adhere to the terms of their policies and to conduct fair and comprehensive reviews of disability claims. This case serves as a reminder that arbitrary and capricious denials of benefits will not be upheld by the courts.

ERISA and Mental Health Disability Claims: What You Need to Know

In today’s evolving healthcare landscape, mental health care has taken center stage and our society continues to better understand the effects mental health can have on peoples’  well-being and ability to function productively in daily life and in their work. In recent years, mental health has emerged as a central focus within the disability insurance claims, highlighting both the necessity for comprehensive care and the challenges claimants face when their conditions extend beyond the typical benefit durations.

For many people, mental health issues such as major depressive disorder, anxiety disorders, post-traumatic stress disorder (PTSD), and bipolar disorder are not only life-altering but also lead to significant, long-term disabilities that interfere with the ability to work. For those covered under employee benefit plans governed by the Employee Retirement Income Security Act of 1974, or ERISA, the pathway to accessing mental health benefits can be complex and can include many challenges to receiving these important benefits. A common hurdle in these cases is that most long-term disability policies limit benefits to 24 or 36 months regardless of whether a person remains unable to perform his job due to his mental health condition.

What Is ERISA?

Understanding ERISA is essential to navigating this complex landscape. ERISA is a federal law that sets minimum standards for most insurance plans offered by private employers. ERISA’s primary stated goal is to protect the interests of plan participants and beneficiaries by ensuring that plan administrators adhere to strict standards of conduct and clearly communicate the terms of the plan. While ERISA does not require employers to offer specific benefits, once a plan is in place, ERISA governs how the plan is administered, including how claims must be processed and disputes resolved. This framework is intended to protect the interests of participants and beneficiaries, but when it comes to mental health disability claims, the interpretation and application of ERISA can become particularly complicated.

ERISA and Mental Health Claims

Disability claims are generally challenging and difficult to navigate, which is compounded when the claim involves a mental/nervous condition. Many physical conditions can be objectively confirmed through physical exams and imaging. If you have a bulged disc in your spine, your claim will be supported with x-rays and MRIs. Mental health conditions typically do not present themselves in a way that can be objectively proven. There is no objective physical evidence that can be reviewed for anxiety, depression, PTSD and other mental health conditions, so it is harder to demonstrate to disability insurers that you have such a condition, and if you do, how severe it is and what are your resulting restrictions and limitations. On top of that, the claims process can be incredibly stressful, presenting an additional challenge to someone living with one or more of these conditions.

As noted above, an important feature of mental health claims is that the benefit period is typically limited to 24 or 36 months, whereas physical disability benefits can be paid until the policy term, as long as you are disabled from the condition(s). This limitation can uniquely impact a claimant with a long-term or chronic mental health condition, given the stress that comes with knowing that even if you get all the benefits available to you under the policy, you will receive them for a relatively short time.

Common Challenges with ERISA Mental Health Claims

Insurance companies have a financial interest in denying disability claims, especially mental health claims. This means they will deny such a claim for many reasons, including for the fact that there is no objective evidence to prove a mental health claim. It is common for them to challenge the severity of mental health conditions. They will downplay the medical evidence and take the position that your symptoms are not severe enough to stop you from being able to work in your occupation.  In addition to the benefit duration limitations, here are other common challenges:

·  Ambiguity in Policy Language: The language in disability policies can be vague, leading insurers to interpret the coverage more narrowly than claimants believe is warranted, especially when defining the extent and duration of mental health impairments.

·  Evidentiary Requirements: Establishing the severity and chronic nature of a mental health condition requires comprehensive and detailed documentation. Insurers often challenge whether the submitted medical evidence—such as psychiatric evaluations, treatment histories, and expert opinions—sufficiently proves the claim.

·  Discrepancies in Treatment Expectations: Insurers may argue that the claimant’s condition has stabilized or improved, even when ongoing symptoms persist, which can lead to disputes over whether continued benefits are justified.

·  Inconsistent Application of Standards: Variations in how different plan administrators interpret and apply policy terms can result in inconsistent outcomes, making it difficult for claimants to predict or understand decisions regarding their benefits.

·  Delays and Administrative Hurdles: The process for reviewing and approving mental health disability claims can be lengthy, with administrative delays that further complicate access to timely care.

What to Do If Your Mental Health Claim Is Denied

If your ERISA disability claim is denied or if the insurance company has stopped paying your benefits before the end of the benefit period, it is imperative to understand the timeline you face and act accordingly. When you receive a denial, immediately consult with an attorney with ERISA expertise, like the attorneys at McKennon Law Group PC. You will have 180 days from receipt of a written claim denial to appeal the denial. Keep in mind the amount of time it can take to get all the necessary evidence for your appeal, like your medical records, doctor certifications, personal statements and preparation of strong arguments in support of your claim. Additionally, you should gather documentation related to the policy and document your communication with the insurance company, including calls and any evidence you send them.

If the insurance company denies your appeal, you will be able to bring a legal action against them in federal court. In many cases, especially in California, the court will decide your case under a de novo standard of review, meaning that it will review the administrative record and determine whether you are disabled as defined by the policy without giving any deference to the insurer’s prior decision. The administrative record is all the evidence available to the insurance company when it made its final determination on your claim. Any evidence that supports your claim should be submitted to the insurance company before a final decision is made on your claim. Therefore, it is crucial to gather and organize all the evidence that supports your claim when your claim is denied.

Conclusion

Mental health claims under ERISA inherently present unique challenges for claimants and can be especially stressful relative to physical claims. By understanding the claims process, challenges involved, and the importance of acting quickly to gather your evidence and consulting with an attorney, you can minimize the stress associated with the process and increase the likelihood that you get the maximum benefits available to you.

What is ERISA and How Does It Impact Your Employee Benefits?

Understanding ERISA as an Employee

If you have health insurance, life insurance, disability insurance, accidental death and dismemberment insurance or retirement benefits through your employer, your plans may be covered by the Employee Retirement Income Security Act of 1974, or ERISA, a federal law governing how insurance claims and benefits must be handled.

What Is ERISA?

ERISA stands for Employee Retirement Income Security Act. This is a federal law that was passed in 1974 and has been updated multiple times to add protections and ensure compliance with other federal laws. ERISA sets minimum standards that the administrators of certain employee benefits plans must meet.

ERISA is a landmark federal statute that sets the minimum standards for retirement, health, and other welfare benefit plans offered by private-sector employers. Designed to protect plan participants and beneficiaries, ERISA imposes strict fiduciary responsibilities on those who manage and control these plans, ensuring that the interests of employees are prioritized over those of the plan sponsors. By establishing clear guidelines for plan participation, vesting, benefit accrual, and funding, ERISA has fundamentally reshaped the landscape of employee benefits, providing a consistent framework that safeguards the financial security of millions of workers.

Beyond its regulatory structure, ERISA emphasizes transparency and accountability in the administration of employee benefit plans. Plan administrators are required to provide detailed disclosures about plan features, funding levels, and participants’ rights, enabling individuals to make informed decisions about their benefits. Moreover, ERISA empowers participants with the right to seek legal recourse if fiduciaries breach their duties or if the plan fails to operate in accordance with established standards. This robust system of protections not only enhances trust in employer-sponsored benefit plans but also reinforces the commitment to fair and equitable treatment of employees across the United States.

ERISA applies to a wide range of benefits. Some types of benefits that ERISA may cover include:

  • Retirement plans such as 401(k) plans, pension plans, profit-sharing plans, and Employee Stock Ownership plans;
  • Health insurance plans, including medical insurance, dental insurance, and prescription drug plans;
  • Disability insurance, including short-term and long-term disability coverage plans;
  • Life insurance; and
  • Accidental death and dismemberment plans.

What Is Covered By ERISA?

ERISA applies to employer-sponsored benefits offered by private-sector employers. It does not apply to benefits provided by government employers at the federal, state, or local levels. There are other exceptions as well, such as church-affiliated employers and self-funded policies.

ERISA governs a broad range of employee benefit plans offered by private employers, including retirement plans such as defined benefit pension plans, defined contribution plans (like 401(k)s), profit-sharing plans, and employee stock ownership plans. It also covers welfare benefit plans, which encompass health insurance, disability insurance, life insurance, and other related benefits such as severance pay and tuition assistance programs. While ERISA sets minimum standards and fiduciary responsibilities for these plans, it is important to note that it does not require employers to offer any benefits; rather, it ensures that if benefits are provided, they are managed and administered fairly and transparently.

If you believe an insurance company has improperly denied your claim and you want to know whether your benefit is covered by ERISA, you should consult with an experienced ERISA attorney.

How Does ERISA Protect You and Your Employee Benefits?

ERISA protects individuals participating in employer-sponsored benefits plans, helping to ensure that they receive the benefits they are promised fairly and transparently. ERISA provides several requirements that administrators must follow in maintaining coverage and the processing and reviewing of claims. It has time requirements for plan administrators for reviewing claims. It allows for access to seek recovery in federal court when an administrator fails to meet the requirements or otherwise acts improperly in the administration of a claim or the plan.

ERISA protects employees by establishing stringent fiduciary duties that require those managing employee benefit plans to act in the best interests of plan participants. This means that plan administrators must follow strict guidelines and procedures when investing plan assets, handling claims, and managing the overall plan. Additionally, ERISA mandates that employees receive detailed disclosures about their benefits, including information about plan features, funding levels, and the rights they have under the plan. These requirements not only ensure transparency but also help employees make informed decisions about their retirement and health benefits.

Furthermore, ERISA provides employees with the right to seek legal recourse if their benefits are mismanaged or if fiduciaries fail to uphold their responsibilities. This legal framework empowers individuals to hold employers and plan administrators accountable for any breaches of duty, thereby safeguarding the financial security and well-being of employees. By creating clear standards for benefit administration and offering a mechanism for enforcement, ERISA plays a crucial role in protecting workers’ interests and ensuring that the promised benefits are delivered in a fair and equitable manner.

ERISA Requires Certain Disclosures

ERISA requires that plans operate transparently, ensuring participants fully understand their benefits and have some insight into how plans are run. This transparency is accomplished through required disclosures of information such as Summary Plan Descriptions, Summaries of Benefits and Coverage, or regular statements of retirement account balances.

ERISA Protects Your Retirement Benefits

ERISA outlines some provisions regarding when employees become fully vested in retirement plans. It also protects your benefits once you earn them. Under ERISA, employers must keep retirement and pension funds separate from operating funds. Doing so helps ensure that employees have access to their benefits even if the employer experiences financial trouble or the employee leaves the company.

ERISA Ensures Your Right to Appeal

If your claim for benefits under an ERISA-covered plan is denied, you can appeal the decision. This is true for any type of claim covered by ERISA, including health insurance, life insurance, disability, and retirement benefits claims. These appeals must adhere to strict time deadlines, which vary depending on the type of claim. Consult with an experienced ERISA attorney as to the deadlines in your particular situation.

ERISA Protects You From Retaliation

Employers cannot act negatively against you because you asserted your rights under ERISA. They cannot fire, discipline, demote, or otherwise harass you for filing a claim or appeal, testifying in an ERISA investigation, requesting plan documents, or taking other actions supported by ERISA protections.

ERISA Lets You Continue Your Health Coverage If You Leave Your Job

One of the many updates to ERISA over the years was the Consolidated Omnibus Budget Reconciliation Act (COBRA). This ERISA amendment ensures that employees covered by an employer-sponsored health insurance plan could maintain that coverage for up to 18 to 36 months after leaving a job.

You have the right to COBRA benefits if you leave a job voluntarily, are laid off, or are fired—outside of situations that involve gross misconduct. You can also leverage COBRA benefits if you reduce your working hours and are no longer classified as full-time to maintain benefits. Your covered spouse might also be able to use COBRA benefits if you pass away or get divorced and are no longer eligible for regular benefits through your employer.

Asserting Your ERISA Rights

ERISA allows you to seek recovery by filing a lawsuit against the plan administrator, and sometimes the employer, when your claim has been improperly denied or you have been damaged by mismanagement of the plan. However, ERISA requires you to exhaust all administrative remedies prior to filing a lawsuit, which means completing whatever administrative appeals process is described in the ERISA plan documents.

If you believe that your ERISA rights are being infringed upon or that your plan administrator or insurance company is acting in bad faith, consult with an experienced ERISA attorney about your matter. Call the expert ERISA attorneys at McKennon Law Group PC at 949-504-5381.

Get the Answers and Assistance You Need

  • This field is for validation purposes and should be left unchanged.