Frequently Asked Questions

Any time you feel an insurer acted in bad faith, we recommend that you review your insurance policy, gather the denial letter and any other documents from the insurer, and request a free claim review at our Birmingham law office. We can determine if you have a viable bad faith claim and begin the process of holding the insurer accountable.

No, your existing insurance coverage should not be impacted by filing a lawsuit as long as you continue to meet the terms in your policy. However, some insurers may retaliate against you because of the bad faith claim. Let Sinclair Law Firm know if you notice that your premiums have gone up or if your insurance policy is not renewed.

Yes. Just because you were paid does not mean the insurer acted in good faith. Any delays or misconduct that causes you to wait for payments or experience a financial loss are grounds for a bad faith claim. In fact, the insurance company may have been lowballed you with their initial offer, and that can also be grounds for a bad faith claim.

Not necessarily. Many insurance bad faith claims settle outside of court rather than going all the way to a jury trial. As we work on your case, we’ll keep you updated about settlement negotiations and whether it’s worth going to court to maximize compensation. If we do go to trial, we’ll be a fierce advocate for you every step of the way.

If your benefits are provided through a state governmental agency or through a church, ERISA will not apply.

“LWOP” stands for Life Waiver of Premium. This is a provision that may be included in a life insurance policy that allows the beneficiary to stop paying premiums but continue receiving benefits if they become disabled. We can determine if this applies to your situation and help you understand this separate claims process.

For employer-provided disability coverage, your policy ends when your employment ends. In some cases, you may be given the option to convert your group policy to an individual policy, though this must be done within a specified timeframe after you’ve left your job. The terms of this individual policy may not be the same as your group policy with your former employer.

Yes. This is also known as an elimination period. You must be continuously disabled and unable to work for a certain amount of time before you can receive long-term disability payments from the insurer. This elimination period can be as short as 30 days from the date of diagnosis or as long as a year. Be sure to check your policy for details on your elimination period.

Potentially, yes, but it must be in a limited capacity, meaning only part-time and in a less-demanding field. Keep in mind that your insurer will offset your long-term disability benefits based on earnings from your other line of work.

Before filing a lawsuit, a claimant must exhaust the available remedies under the plan, so long as the plan’s procedures are reasonable. This typically means a claimant must apply for benefits in accordance with the plan’s application procedures. If the claim is denied, the claimant must appeal under the plan’s appeal procedures. A claimant is required to “exhaust” his or her administrative remedies before filing an action in court.

It is crucial to understand that the record closes when the insurance company or ERISA administrator issues its final decision.  Claimants must submit all the evidence they want to be considered during the administrative appeal process, and may not submit new evidence regarding the merits of their claim once the case is in court.

In other words, the basic rule is that the record closes when the administrator or insurance company makes its final denial, and it is often impossible to submit new evidence in litigation that was not sent to the insurance company before it denied the claim. This typically leads to extremely curtailed records requests and reviews by insurers. Willful blindness helps them later on in court.

From December 1, 2012, to December 8, 2017, there were 380 cases coded in Pacer as 791 (ERISA) in Alabama’s three federal districts. Excluding government actions, actions brought by the insurer, and class action cases which were not individual ERISA benefits cases, only 20 cases (5.26%) out of 380 cases coded as 791 (ERISA) in CM/ECF went the distance to a final decision in all three of Alabama’s districts. Remember, there are no jury trials under ERISA, so this typically meant it was decided via dispositive briefing.

Of the 20 cases that went to a final decision, only four resulted favorably for the plaintiff. Out of 380 ERISA cases, the individual won 4 times.  Improving your client’s odds of winning requires an understanding of the importance of ERISA’s administrative remedies.

ERISA divides employee benefits into two broad categories: pension benefits and welfare benefits. Long-term disability benefits, health insurance, life insurance, dental insurance, and similar benefits fall under “ERISA welfare benefits.” If an ERISA plan participant or beneficiary is denied those benefits, the person must go through the ERISA plan’s required appeal procedures. If the claim is still denied, the person can then bring an action under ERISA § 502(a)(1)(B) (29 U.S.C. § 1132(a)(1)(B)).

Because ERISA preempts any state law remedies, a plaintiff may only obtain those remedies available under the ERISA statute and case law. Usually, this is a remedy to obtain the benefits that should have been paid under the plan, plus possibly attorneys’ fees, and interest. Other remedies, such as punitive damages, make-whole damages, bad faith damages, or similar remedies are preempted.

Additionally, when reviewing the limited record, courts usually review the decision under an arbitrary and capricious (abuse of discretion) standard of review that is deferential to the decision made by the plan administrator. According to the Supreme Court in Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989), the rule is that courts should review denials of ERISA benefits de novo, but that same decision held that if the parties agree to a deferential standard of review, then courts should apply that standard.  Id. at 115. As a result, most ERISA plans and group insurance policies contain language conferring the deferential standard of review, and that exception has virtually swallowed the default rule.