From the Insurance Companies perspective, the answer is simple- there is no reason for them to pay.
My clients are universally surprised to learn that under ERISA the only thing you can sue for are the unpaid LTD benefits. There is no claim for emotional distress, or pain and suffering. There is no claim for bad faith or anything else. The vast majority of Long Term Disability claims are governed by a federal law (ERISA) because they are part of an employer provided benefits package.
I regularly hear tragic tales of financial devastation. Clients are unable to pay their bills, are losing their cars and their homes. Clients are forced to rely on their friends and families and the charity of strangers.
Guess what? The insurance companies could care less. You see, the LTD insurer gets to review your claim and decide if they want to pay or not. If they decide they don’t want pay your claim, they simply deny your application and hope you give up. If they approve your claim, then they have to pay and in turn make less money. Every dollar they pay on your claim is a dollar less of profit to line their pockets.
Lost your car? Lost your house? Lost the safety and security for your family? So what, the insurance company got to keep all of the premiums paid for the insurance and never has to pay your claim. Check out how many billions of dollars in profit the insurance companies make. They do it one claim at a time.
So you decide you are not going to accept this lying down. You are going to fight the insurance company. You find a good lawyer who knows this area of the law and is willing to take your case on a contingent basis since you have no money to pay otherwise. You go to Court and prove your case and ……………. the court orders the insurance company to pay the overdue benefits that it should have been paying for the last two years. To bad your car is gone, to bad your house has been foreclosed, to bad for you there is simply no incentive for the insurer to pay your claim in the first place. To bad the ERISA law rewards the insurer’s bad behavior.
As a simple business decision, ERISA encourages the insurer to deny all but the most clear cut claims in order to increase its profits. Think about how many sick and injured people simply accept the Insurer’s decision and give up. Just like the angel getting his wings every time a bell rings in “It’s a Wonderful Life” the Insurance Company inflates its profits every time a LTD claimant gives up. I wonder if a bell rings in the CEO’s office??