Not All Denied Disability Claims Are Equal

Baltimore, MDWhen it comes to dealing with denied disability, not all claims are equal. Bad faith insurance lawsuits are filed alleging disability claims have been improperly denied. In some cases, the policyholder is right and the insurance company has shown poor conduct. But sometimes, insurance policies are properly denied. The key is knowing when the insurance company has overstepped its bounds or violated the law.

When policyholders file an insurance claim, insurance companies have a duty to act in good faith when investigating that claim. This means that the insurance company has to fully and diligently investigate a claim, treat the policyholder fairly and give the claim proper consideration. Unfortunately for policyholders, some insurance companies frequently violate the standard of good faith.

They do so in a variety of ways. These include delaying, denying or devaluing insurance claims without properly investigating the claims. Tactics might include losing paperwork or insisting the policyholder fill out the same paperwork repeatedly; not properly investigating a claim; not giving proper consideration to the policyholders’ medical diagnoses or other expert opinions; claiming that a condition is not covered by the policy when it is covered; claiming a patient is not sufficiently disabled despite evidence to the contrary; making a decision to deny a claim before an investigation is conducted; purposely misrepresenting facts; purposely misrepresenting policy; coercing a policyholder into settling the claim; and retroactively canceling a policy after a claim has been filed.

In some cases, insurance companies legitimately deny claims. This can happen in instances where the policyholder has misrepresented him or herself, or where the policyholder has committed fraud. Insurers might also not be guilty of bad faith if they can show they acted reasonably in denying an insurance claim.

Policyholders who have their insurance claims unreasonably delayed, denied or devalued may be able to file a bad faith insurance claim, a breach of contract claim or both. Bad faith insurance claims can result in punitive damages if a judge or jury finds the insurer acted willfully. Claims against insurance companies might also include damages for emotional distress and economic loss.

Lawsuits have been filed against insurers alleging the insurers acted unreasonably in devaluing or denying legitimate insurance claims. One such lawsuit, reported on here, resulted in an award of $873,000 to a policyholder whose insurer denied her claim because it said there were medications she could take to allow her to work. That denial was issued despite a judge with the Social Security Administration finding that the policyholder was disabled from having a job.

The lawsuit is Ellena v. Standard Insurance Co., et al, Number 3:12-cv-05401.