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How Do You Prove a Disability Related to Mental Illness?

If you or someone you love needs to file a disability insurance claim due to a mental health condition that makes it impossible to perform your occupational duties, you are going to need the advice, insights and services of a California disability insurance claims attorney.

How can you prove to an insurance company that you are suffering from a disabling mental health condition, a condition that cannot be observed or measured? What steps can you take if an insurance company denies your mental health disability insurance claim?

Keep reading this article concerning disability insurance mental health claims and you will learn why you may need the advice and services of a California disability claims lawyer in order to prevail with your disability insurance claim.

What Should You Know About Filing a Disability Insurance Claim?

People who struggle with certain mental health conditions may be eligible for benefits through employer-sponsored short-term disability insurance (STD) or long-term disability insurance (LTD). There are also STD and LTD policies purchased directly from an insurance company, typically through a life and disability insurance agent or broker.

Qualifying mental health conditions may include anxiety, depression, eating disorders, obsessive-compulsive disorder (OCD), panic disorder, and post-traumatic stress disorder (PTSD). These conditions are often as debilitating as any physical illness or injury.

Most STD and LTD policies require you to be covered by the policy for a certain period of time – called an “elimination” or “qualifying” period – before you may file a claim for benefits. That time period may vary, but most policies establish a two-year qualifying period.

In addition, most employer-sponsored STD and LTD policies have a limitation on the time period for which you can receive disability benefits. This period is typically 24-36 months. Most individual disability income policies have no time limitations for receiving disability benefits based on a mental health condition.

How Can You Prove a Mental Health Disability?

To prove your mental health disability claim to your disability insurer, you will need to submit a disability insurance claim form along with an attending physician statement signed by your treating physician or other medical provider who provides a statement of your mental health conditions and how and why you have restrictions and limitations as a result. You will also be required to provide your disability insurer with your medical records, test results and any other pertinent medical evidence which indicates that you are unable to perform your work or maintain full-time employment.

A comprehensive professional letter that discusses your condition should include a clinical diagnosis for the condition (i.e., depression, bipolar disorder or schizophrenia) and indicate that you cannot perform work or maintain employment because of that condition. The statement should also address how your mental health condition affects your activities of daily living. A statement of the restrictions and limitations you have should be clearly stated and your medical health professional should state why your medical condition renders you unable to perform your occupational duties.

Provide the insurance company with as much medical evidence as you can in order to strengthen your claim. Include statements from those who are closest to you (e.g., friends, co-workers and family members) because they are the ones who see how your mental health affects your ability to perform work, maintain employment and your activities of daily living.

If Your Claim is Denied, Can You File an Appeal?

In most situations, you will be able to appeal the denial of a disability insurance claim. Whether you are required to do so depends on whether your claim is covered by a federal law called the Employer Retirement Income Security Act of 1974 (ERISA). Often, an appeal will be necessary since insurers or their hired medical consultants will work hard to uncover any evidence to deny your claim for disability insurance benefits. For example, we often see insurers hire medical consultants who misrepresent that they attempted to contact our clients’ medical health professionals but were unable to do so. The insurer will then use this information to deny the claim, asserting that our clients’ doctors did not cooperate with claim investigation and infer that the clients’ doctors were afraid to have contact because they did not truly have support for the mental health disability claim. These medical consultants who are beholden to the insurers that pay them will ignore medical evidence or misconstrue it to justify a conclusion that you are not disabled.

If your disability claim is denied, you typically have the right to appeal the disability denial decision within a limited time period. To begin the process of filing an appeal, you should contact an experienced disability insurance claims attorney for help. You can appeal a denial of your claim for mental health disability insurance benefits, but the appeals process is usually more complicated if your insurance is employer-provided than if you purchased the policy privately.

Private sector, employer-provided disability policies are governed by ERISA, the federal law which sets legal requirements for group insurance, retirement and pension plans provided by private employers. As discussed in more detail below, if your disability insurance claim is governed by ERISA, you will be required to file an appeal of your denied disability insurance claim.

What Does ERISA Require?

ERISA requires you to pursue at least one “administrative” appeal through your insurance company before you may take the company to court. In most cases, you will have 180 days from the date you receive a claim denial letter to file an administrative appeal with the company.

If you fail to follow the insurance company’s administrative appeal process, you could waive your right to continue to pursue your disability claim. If you do not present adequate evidence of your disability claim to the insurer on appeal, you will likely have waived the ability to provide any further evidence in your subsequent court case against the insurer. Therefore, you can ensure that no mistakes are made by asking an experienced disability insurance claims attorney to handle your administrative appeal on your behalf.

Federal courts have jurisdiction in ERISA-related legal matters, but if you purchased disability insurance privately in California, and if you believe that your claim has been wrongly denied, a California disability insurance claims attorney can negotiate with the company on your behalf, or if necessary, take your case to the California or other state courts. Many attorneys handle disability claims nationwide, including the McKennon Law Group PC.

What is Bad Faith?

In California as in most states, if your disability claim for your mental health condition is denied by your insurance company, you may be able to bring a bad faith lawsuit against the insurer for your unpaid disability benefits as well as for:

emotional distress and other damages caused by the company’s bad faith
interest on past-due benefits
your attorney’s fees
possible punitive damages

Bad faith is the legal term for what happens when an insurance company handles a claim unfairly or, more precisely, unreasonably. An insurance company’s bad faith practices may include but are not limited to:

persistently trying to settle your claim for less than it is actually worth
unreasonable delays
rejecting your claim for disingenuous or false reasons
threatening to cancel your coverage unless you accept a “lowball” settlement amount
continually demanding more information as a delaying tactic
inadequate investigation of the disability insurance claim

How Will a Disability Insurance Claims Attorney Help You?

If you are struggling with either the claims process or the appeals process, contact a California disability claims lawyer at once for the legal assistance you need. In fact, the smart move is to consult an attorney even before you submit your initial mental health disability insurance claim.

Your disability claims attorney will ensure that all of your paperwork is accurate, complete, and on time, and your attorney will additionally ensure that there are no misunderstandings or mistakes on your part that could delay or derail the claims or appeals process.

If you let an experienced California insurance claims lawyer guide you through the claims or appeals process, you will be much more likely to prevail. In order to prevail, you should work from the beginning of the process with an attorney who has thorough knowledge of ERISA, disability insurance claims, your rights, and the law.

If you need to file a mental health disability insurance claim, or if you have already filed a claim that has been denied, arrange a legal consultation – at no cost and with no obligation – to discuss your case with an experienced and capable disability insurance claims lawyer as soon as possible. We believe McKennon Law Group PC should be that law firm.

In California Appellate Court Victory, McKennon Law Group PC Secures Reversal of Trial Court Decision Transferring Bad Faith Health Insurance Action to Germany

Claimants who have sued insurance companies for wrongful denial of their claims –including health insurance claims – occasionally find themselves faced with a defendant’s motion to dismiss or transfer their case to a different court. This request to transfer the case could be based on a number of factors, but typically the defendant insurance company argues that it would be more convenient to litigate the case in the alternative forum. In California, the doctrine of forum non conveniens permits a court to dismiss an action when it believes the case may be more appropriately and justly tried elsewhere. Stangvik v. Shiley Inc., 54 Cal.3d 744, 751 (1991). The doctrine of forum non conveniens is codified in Code of Civil Procedure Section 410.30(a), which provides, “When a court upon a motion of a party . . . finds that in the interest of substantial justice an action should be heard in a forum outside this state, the court shall stay or dismiss the action in whole or in part on any conditions that may be just.” In determining whether to grant a motion based on forum non conveniens, a court first decides whether the alternative forum is a “suitable place for trial” and, if so, the court then balances the private interests of the litigants and the interests of the public to decide whether the action should remain in California or be prosecuted in the alternative forum. Stangvik, supra, 54 Cal.3d at 751.

In the matter of Miriam Abu Sharkh, et al. v. Continentale Krankenversicherung A.G., et al., (May 17, 2021, B303219), the McKennon Law Group PC secured a reversal of the trial court’s decision granting such a motion and dismissing our clients’ case in favor of a German forum. The lawsuit arose from the defendant health insurance company’s wrongful and egregious termination of our clients’ health insurance coverage without sufficient explanation or reasoning at the time of the family’s greatest need – when our client’s son was hospitalized due to complications from a rare, terminal illness. Our clients were living in California at the time of the wrongful conduct but, due to the termination of their health coverage, were forced to leave the state to seek affordable healthcare abroad. The health insurance company filed a motion to transfer the case to Germany and dismiss the case, arguing that California was an inconvenient forum and that the case should be filed in Germany, where the insurance company was based. The trial court, focusing primarily on the residence of the parties, granted the motion. On appeal, the McKennon Law Group PC argued that the private and public factors weighed heavily in favor of a California forum and that the trial court had abused its discretion in dismissing the case based on forum non conveniens.

The Court of Appeal agreed that California had a substantial interest in this case, finding that “where Continentale issued insurance policies to three California residents, evaluated claims arising in California, paid claims to California providers and terminated coverage while the insureds resided in California, the ‘substantial interest of California in these transactions is obvious.’” (Citing People v. United National Life Ins. Co., 66 Cal.2d 577, 593 (1967)). The Court of Appeal also agreed that the lower court had placed too much emphasis on the parties’ residence. The Court recognized that while location of the parties at the time of the litigation is relevant to the court’s analysis, it cannot be the exclusive factor on which a court relies. See Stangvik, supra, 54 Cal.3d at 753, fn. 4 (“An undue emphasis on a single factor is especially threatening to a balanced analysis because some of the matters to be weighed will by their nature point to a grant or denial of the motion.”). Lastly, the Court of Appeal agreed that the lower court’s finding that California had no interest in the dispute was unreasonable given the facts of the case. After extensive briefing and oral argument, the Court of Appeal ruled that the Superior Court abused its discretion when it granted the defendant health insurance company’s motion to transfer the case to Germany and dismiss our clients’ bad faith health insurance lawsuit on the basis of forum non conveniens. The Court of Appeal remanded the case and ordered the trial court to weigh the interests of both forums, as well as all pertinent public and private factors.

This was a significant victory for our clients because they will now be able to again pursue their bad faith case against the German insurer and its third-party administrator in a California court. In situations such as this, it is imperative that claimants have retained experienced bad faith insurance attorneys such as the McKennon Law Group PC to ensure access to their chosen forum and pursue insurance bad faith remedies in a local court concerning their wrongly-denied health insurance benefits.

What does it take to prove bad faith in a life insurance denial?

Life insurance policies allow those with dependents, such as children and spouses, to provide some financial stability to the people who depend on them if they die unexpectedly or at least offset the costs of a funeral and end-of-life medical care. Many married couples invest in life insurance policies for both spouses, and it is also common for parents to purchase policies that will protect their children.

Unfortunately, at the moment when someone needs that coverage the most, the company involved could try to avoid their obligations. If the policyholder paid their premium and maintain coverage, their dependents have every reasonable right to expect a timely payout on the policy when they die.

However, insurance companies can take steps to avoid paying out on legitimate claims. This kind of behavior, known as bad faith insurance denials, can leave customers vulnerable despite the best intentions of their loved ones. Thankfully, the beneficiaries of a life insurance policy with a claim denied in bad faith can likely take legal action against the company.

Determine the grounds for the attempted denial

The first and most important step toward pushing back against a bad faith insurance denial involves obtaining a statement from the insurance company, preferably in writing, explaining why they will not fulfill their obligations.

They might claim that the investigation into the cause of death is still underway, or they might point to some clause that they claim the policyholder or the beneficiaries violated. Once you know the reason for the denial, you can begin to gather evidence to support your claim.

Insurance providers have an obligation to the people who pay for their policies

Insurance companies make the most money from people who carry coverage that they never need. These often for-profit businesses will take a financial loss when they approve a substantial claim. Clearly, the business makes more money when it denies more claims.

However, to prevent companies from rejecting valid claims, there are many laws and rules in place protecting those who carry various forms of insurance. A company may take steps to mitigate its liability by limiting coverage in certain situations, but they may not deny valid claims in bad faith or make their contracts so complex that most legitimate claims would wind up denied.

If you can show either that the alleged reason for the denial is inaccurate or that the terms of the policy would effectively preclude most people from bringing a claim, you may have a good case for a bad faith action against the insurance company. You could seek the full benefit, as well as damages in certain cases.

It’s important to remember that the insurance company has to answer to state and federal regulators, as well as to people who carry their coverage. Taking action after an unfair denial of a life insurance claim can protect your family during a vulnerable time and other people who have similar coverage.

Life Insurance Policyholders Beware: California’s Statutory Lapse Safeguards Do Not Apply to Policies Issued Prior to January 1, 2013

Life insurance lapse generally refers to coverage ending for insufficient or nonpayment of policy premiums. If premiums are not paid during the grace period to sustain the policy, then the life insurance ends. The lapse of a life insurance policy at the wrong time could have disastrous consequences for persons or families because policyholders could easily lose their life insurance if a single premium is accidentally missed, even if they have been paying premiums on time for years. On January 1, 2013, California added new sections 10113.71 and 10113.72 to the Insurance Code, as a way of providing consumer safeguards against life insurance policy lapse.

California Insurance Code Sections 10113.71 and 10113.72 primarily do three things: (1) mandate that life insurance policies issued or delivered in California have a 60-day grace period; (2) set forth notice of pending lapse and termination requirements; and (3) require insurers to provide notice to applicants and annual notice to policyholders of their right to designate someone other than themselves to receive lapse notices. The latter requirement, which applies only to individual life insurance policies, was an important addition to the California Insurance Code because it allows policyholders to designate persons who can receive lapse notices so that if the policyholder is too sick to read a premium notice and/or pay a premium, he may still be protected. While both statutes went into effect on January 1, 2013, a question remained as to whether these safeguards would apply to life insurance policies issued or delivered prior to January 1, 2013. As discussed below, the answer to this question is “no.”

In a recent decision, McHugh v. Protective Life Insurance, 40 Cal.App.5th 1166 (2019) (“McHugh”), the California Court of Appeals ruled that Insurance Code Sections 10113.71 and 10113.72 only apply to policies issued or delivered after January 1, 2013. William Patrick McHugh (“Insured”) purchased a life insurance policy (“Policy”) from Protective Life Insurance Company (“Protective Life”) on January 9, 2005, that provided for a 31-day grace period. The insured failed to make his 2013 premium payment; therefore, on February 9, 2013, the Policy lapsed per its express terms. Protective Life never received an additional premium payment or reinstatement application from the insured. The insured died in August 2013. Plaintiffs, the policy beneficiaries, sued Protective Life for breach of contract and insurance bad faith, alleging that Protective Life did not provide the insured with a 60-day grace period per code section 10113.71 and therefore, the lapse notices and subsequent termination of the policy were void. The court found that the 2013 statutes did not apply retroactively to the Policy, stating:

Sections 10113.71, subdivision (a)(1) and 10113.72, subdivision (a)(1), refer to term life insurance policies “issued or delivered,” a term that in California case law imports prospective application: “the terms ‘issued’ and ‘delivered’ must refer to the original issuance and delivery of the policy; they are fixed as to time and do not stretch into infinity.” (Ball v. California State Auto Assn. Inter-Ins. Bureau (1962) 201 Cal.App.2d 85, 87.) Therefore, as this policy was issued and delivered to McHugh in 2005, it could not incorporate the statutory amendments that became effective in 2013. Id.

Since the Policy was issued in 2005, Protective Life was not obligated to comply with California Insurance Code Sections 10113.71 and 10113.72. Thus, the express terms in the Policy dictated the duration of the grace period and any terms as to notice to the insured regarding the termination of the Policy. The court also rejected the contention that the statutes applied if the Policy was renewed after January 1, 2013.

This is an unfortunate ruling that does not protect insureds who have paid premiums for years and who may become too sick to pay a premium, thus allowing a policy lapse at the time the insured needs the life insurance the most. Policyholders need to be aware of the date their life insurance policy was first issued and/or delivered. If the policy was issued or delivered prior to January 1, 2013, a policyholder needs to carefully read the express terms of the policy to make sure they understand how their policies can lapse and they should take steps to protect themselves. When it comes to life insurance policies, a lack of knowledge can lead to big problems.

If you have questions about the lapse of a life insurance policy, McKennon Law Group PC has significant experience with most issues involving life insurance and we may be able to assist you. Please contact us for a free consultation.

Exhaustion of Remedies and the Failure to Raise an Argument on an ERISA Appeal: What Happens if an ERISA Claimant Misses a Key Factual or Legal Argument on Appeal?

Under insurance policies governed by the Employee Retirement Income Security Act of 1974 (“ERISA”), when an insurer denies a person’s claim for life insurance benefits, short-term-disability benefits or long-term-disability benefits, the beneficiary must request that the insurance company review the denial or termination if they intend to sue the insurer to obtain their benefits. Courts refer to this review as an “administrative appeal” and the obligation to pursue that appeal as the duty to exhaust administrative remedies. Courts have universally concluded that they “have the authority to enforce the exhaustion requirement in suits under ERISA, and that as a matter of sound policy they should usually do so.” Amato v. Bernard, 618 F.2d 559, 568 (9th Cir. 1980). The administrative appeals process is very important. Not only must a beneficiary pursue their administrative remedies in order to obtain the right to sue in court, but a beneficiary’s actions during the administrative appeals process can have serious ramifications for any resulting litigation.

When a beneficiary appeals an insurer’s initial decision, the documents submitted to the insurer become the “administrative record.” If an insured fails to submit a piece of evidence to the insurer, a Court may refuse to consider the evidence in any subsequent litigation. During litigation, a court usually only examines the administrative record. See, e.g., Blaj v. Unum Life Ins. Co. of Am., 2014 WL 2735182, at *2 (N.D. Cal. June 16, 2014) (citing Opeta v. Northwest Airlines Pension Plan, 484 F.3d 1211, 1217 (9th Cir. 2007), and stating that “a district court should determine whether the plaintiff is entitled to benefits based on the evidence in the administrative record, and evidence outside the administrative record may only be considered in ‘certain limited circumstances’”). Given the importance of building a strong administrative record, beneficiaries potentially imperil their claim by performing their own appeal. However, assuming an insured sends the insurer all relevant records, then a skilled attorney will likely possess most of the tools required to build their argument and win a case in court.

Given that a court rarely examines evidence outside the administrative record, a second question naturally arises: Can a beneficiary present arguments to a judge that they did not raise when pursuing their administrative appeal? The idea that a beneficiary cannot present an argument for the first-time during litigation is referred to as “issue exhaustion.” Thankfully, courts nearly universally reject insurance companies’ attempts to invoke this doctrine.

In Vaught v. Scottsdale Healthcare Corp. Health Plan, 546 F.3d 620, 630 (9th Cir. 2008), the Ninth Circuit rejected an insurer’s attempt to dismiss a claim because of an alleged failure to satisfy this doctrine. The Ninth Circuit explained that the Supreme Court has instructed lower courts that “issue exhaustion is typically a creature of statute or agency regulation.” Id. The Ninth Circuit subsequently reasoned that because, “No ERISA statute precludes courts from hearing objections not previously raised to the Plan, nor does any ERISA statute or regulation require claimants to identify all issues they wish to have considered on appeal,” ERISA does not require issue exhaustion. Id.

In Wolf v. National Shopmen Pension Fund, 728 F.2d 182, 186 (3d Cir. 1984), the Third Circuit reached the same conclusion. ERISA does not compel courts to enforce the doctrine of issue exhaustion. The Third Circuit explained that it had found no caselaw supporting the doctrine:

Section 502(a) of ERISA does not require either issue or theory exhaustion; it requires only claim exhaustion. 29 U.S.C. § 1132(a). The Pension Fund cites no case, nor are we aware of any case which holds that a district court cannot decide a claim relying on a theory different from that presented to the Trustees of a Pension Fund. All of the cases with which we are familiar concern themselves only with whether the internal union remedies have been exhausted before finding federal jurisdiction appropriate.

Id. (emphasis in original).

These rulings declining to impose an issue exhaustion requirement protect ERISA plan participants and their beneficiaries. McKennon Law Group PC receives many calls from people who conducted their own appeals after an insured denied their benefits. If, in fact, issue exhaustion applied, then we likely could not help these people. A lay person does not know what the law requires of an insurer or what to argue on appeal. Many appeal letters drafted by attorneys, such as those at this firm, contain pages of legal argument and citations to cases supporting the claim. If issue exhaustion applied, a beneficiary would be required to seek legal counsel during the appeals process. One honest misstep would result in the claim being unsalvageable.

Of note, the Ninth Circuit did state that an insurer could, in theory, include an issue exhaustion requirement in a policy. See Vaught, 546 F.3d at 629-33. An insurance policy is just a specialized form of contract. The plain language of the contract dictates the relationship between the parties. However, the Ninth Circuit concluded that language stating that a beneficiary must “clearly explain . . . the reason why you think the Claims Administrator should reconsider your claim” lacked sufficient specificity so as to impose a contractual issue exhaustion requirement. Id. at 629, 632. The Vaught court’s opinion also implies that any such contractual requirement would need to be very explicit. See id.

That courts do protect ERISA plan participants and their beneficiaries in this instance does not mean that it is wise to handle appeals on their own. There are many pitfalls and landmines to avoid and hiring experienced ERISA appeals attorneys like McKennon Law Group PC may make the difference between getting your long-term disability claim paid or not.

McKennon Law Group PC and Robert J. McKennon selected as 2019 Best Insurance Litigation Firm and Best Insurance Lawyer in California and in the United States

McKennon Law Group PC is proud to announce that it and its Managing Shareholder Robert J. McKennon have been selected as Best Insurance Litigation Law Firm and Best Insurance Lawyer in California and in the United States for the year 2019 by the following organizations:

Leading Advisor Awards
Worldwide Financial Advisor Awards Magazine
ACQ5 Global Awards
Lawyer International Legal 100
M&A Today Global Awards
Corporate LiveWire Global Awards
Global 100
Corporate Excellence Awards
Lawyer International Legal 100