Long Term Disability cases may sound simple and straight forward. But they aren’t.
When claimants think of what a Court can award them in a long term disability lawsuit, their expectations don’t meet the reality of what the law can do.
For example, claimants believe that a Judge can award them any amount for damages under the sun in the event that their long term disability benefits have been wrongly denied, or terminated. Claimants may pick a number out of their head which sounds large and reasonable in their eyes to compensate them for their losses. But this is simply not how long term disability cases; nor is it how Courts quantify losses for long term disability cases.
There is a lot of math which goes behind the loss quantification in long term disability cases. This means that a Judge will not pick a number out of his/her pocket to compensate a Plaintiff. This is different than a car accident case where a Court has to quantify a Plaintiff’s general damages claim (a claim for pain and suffering). In those tort cases, there is often a range of damages which is presented by the Plaintiff personal injury lawyer; along with a range of damages presented by the lawyer for the insurance company defending the claim. You will find that the range of damages presented by the Plaintiff personal injury lawyer will be higher than the range of damages presented by the lawyer for the defendant insurance company. The Judge will then make an assessment of those damages based on the law presented and the facts of the case, and decide on a figure which s/he believes best fits the case they are deciding.
This sort of exercise does not really happen in a long term disability case.
Why is that?
Long Term Disability cases are contractual. They are based on contract and not in common law (tort law). The damages (losses) are based upon the wording of the contract. They are not based on the pain, suffering or aggravation which was caused by an insurer against a long term disability claimant. This is not to say that damages for mental anguish and bad faith cannot be awarded. They certainly can but they aren’t the main part of the case. The main part of any long term disability case are the long term disability benefits themselves. Any damages awarded for bad faith, or mental anguish flow directly from the denial of the long term disability benefits themselves. That means that if the long term disability benefits aren’t denied (or aren’t awarded at trial), you won’t see bad faith or mental distress damages awarded because the Court would have decided that the denial of the long term disability benefits was justified in the first place.
An insurer doesn’t need to be “nice“. They don’t have to agree with you and you certainly don’t need to agree with them. But the insurer does have an obligation to treat you and your claim with the utmost good faith.
There was recently an expose on 60 Minutes regarding whistleblowers who called out insurance companies for doctoring the reports of claims adjusters following Hurricane Ian. If you haven’t watched it, you should as it’s quite an eye opener on what can go on behind the scenes in the insurance industry. Here is a link to the show. What was happening was that independant field adjusters would go out to inspect the damage to a home or property. They would prepare a report with the assessment of the damage along with their estimate in terms of how much it would cost to repair the damage. They would submit their reports to an office adjuster who worked at the insurance company. The office adjuster would then unilaterally, without consultation, change the content of the report to reflect a much lower appraised value of the loss. The losses were written down significantly to save the insurance company money at first instance. The field adjuster would sometimes not even know that their estimates were written down, or that their reports (which still contained their names), were altered to better suit the needs of the insurance company and reduce their potential exposure.
A lawyer who worked in the insurance industry said that the insurers were forcing the hands of the claimants. They would either accept what the insurer was offering them (which was often a fraction less than what the actual damage was); or they could fight it in Court. Their business model was predicated on those not consulting and retaining a lawyer. The business model was built on litigation, or having these wins where people didn’t have the time, energy, or knowledge to dispute the claim. If half of the people with the reduced claims assessments didn’t challenge the estimates and accepted what the insurer offered, then the insurer won by sheer volume.
The same sort of thinking applies to long term disability claims. Insurers bank on people no fighting, and not knowing their rights. If half of the claims aren’t disputed, then the insurer “wins” given that they don’t have to pay out on as many claims as it would normally have to do so. There is a reason why long term disability insurers have their own in house legal departments. Litigation over long term disability disputes is built in to their business model. If they approved each and every claim which crossed their desk, they would have a hard time reporting as much in profit as they do. Put yourselves in their shoes for a moment. Would it make any business sense to approve each claim? Or, would you make more money denying claims, and then hoping that claimants either don’t act, or settle those cases outside of Court so that the claim is no longer on the books? The later strategy has worked for decades, and I believe will continue to work from a business standpoint for the insurers.
It’s important for claimants to keep in mind that their claims are part of the insurer’s business. Yet, for the claimant, the claim is very personal. This distinction is important to keep in mind when pursuing a long term disability case.