What to Do When Long-Term Disability Insurers Change Reasons for Denial After Your Appeal

Employees in Chicago covered under an employer’s long-term disability insurance policy often do not realizes how many hoops there are to jump through in pursuing a claim, both for the claimant and the insurer. Sometimes during review of a claim, the insurer changes its reason for denying the claim. I see this happen when the insurer realizes its first reason was not strong enough, or when the appeal opens the door to another argument the insurer did not raise initially. In either instance, insurers usually cannot raise new bases for denying a claim after the initial denial letter. Because group long-term disability insurance policies are mostly governed by ERISA, the claim review process must comply with ERISA’s claims procedure regulations, found at 29 C.F.R. 2560.503-1. These regulations require the insurer to provide all the reasons for the denial at the time of the denial. What happens when insurers do not comply and raise new reasons after the appeal is a bit of a mixed bag, and at least one court recently held that the insurer can raise it, but must give the claimant another opportunity to address the basis with an appeal.

In Brooks v. Hartford Life & Accident Insurance Co., No. 1:20-cv-0085, 2021 WL 930183 (E.D. Va. Mar. 11, 2021), Hartford found Brooks disabled after he had a car accident and suffered a concussion like brain injury. Years later, when the definition of disability changed from regular occupation to any occupation, Hartford asserted Brooks was disabled due to a mental condition, and not a physical one. Brooks appealed, and after he appealed, Hartford changed its reasoning and said in addition to not being disabled for a physical reason, Brooks was also not disabled from a mental condition, either. When Brooks sued to enforce his rights under ERISA 502(a), the Court held that Hartford improperly changed its reasoning. Though Brooks disputed his disability was mental health based, he never got to appeal an outright decision saying he was entitled to no benefits.

I have had this similar thing happen in a case. Insurers often frame the issue has all causes of disability were being addressed in the appeal, so the claimant got a full and fair review. But the regulation very clearly defines “adverse benefit determination,” and a claimant must have the opportunity to appeal every adverse benefit determination. Otherwise, insurers just move the goal posts.

If you have a long-term disability claim and an insurer has moved the goal posts on you, call an ERISA long-term disability lawyer today.