Long Term Disability and Other Benefits
Long Term Disability and Other Benefits Your Injured Client May Be Entitled to From
Work: What Trial Lawyers Should Know to Help Their Clients Get All the Benefits They
Might Be Eligible For
By: Eric Buchanan, Eric Buchanan & Assoc., PLLC, Chattanooga, TN
When you represent a client who has been injured by another’s negligence, in a car wreck, through medical negligence, by a defective product, or some other injury, you know how to pursue the claim against the party who caused the injury. But, do you know what other benefits your client can pursue because of the injury? Would it help your client to have income while the injury/negligence claim is pending? This paper discusses what other benefits your client may pursue, and how to find out about them.
In cases where the injuries are serious enough that the person cannot return to work, one commonly available benefit is long term disability (LTD) insurance. About 28% of employees are covered by long-term disability insurance at work; this is a common employee benefit, in addition to health insurance, dental insurance, life insurance, accidental death and disability insurance, and others offered at work. Long-term disability (LTD) benefits can provide the disabled person an income while the personal injury case proceeds. 1
There is no law that such benefits have to be offered, but if an employer offers them, the employee has a right to pursue such benefits, and if they are denied, the employee has a claim under the Employee Retirement Income Security Act of 1974 (ERISA). ERISA refers to these types of benefits as “welfare benefits.” 2
When a potential client comes in with a disability matter, the attorney should ask if the person has long-term disability insurance at work and should encourage the person to file a claim for LTD benefits.
As the guy on late-night television says: “but wait, there’s more!” If a person is disabled, there may be other benefits the person is eligible for at work. Not all employers do this, but in some cases employers allow a person receiving LTD benefits to also continue to receive other employee benefits. For example, some employers set up their benefits so that if a person is receiving LTD benefits, the person automatically can continue to be covered under the company health insurance plan.
On the other hand, employers may offer other benefits that provide continued coverage to people who are disabled, but the person has to apply for that coverage separately. One common example of this is a life insurance “life-waiver of premium” or (“LWOP”) claim. If an employer offers life insurance with an LWOP provision, then an employee who becomes disabled can file an application with the life insurance company, and, if the employee proves he or she is disabled, then the employee can keep the life insurance coverage in place without paying premiums while the employee is disabled.
So, how do you determine what benefits your client is entitled to? The simple starting place is to ask the plan administrator, who is usually the employer, in writing. Under most ERISA plans, the employer is designated as the Plan Administrator, but some other person may be named. 3 So, the first question an attorney should ask is, “Dear employer, please provide me with copies of all plan documents or other documents describing what benefits an employee may be entitled to if he or she becomes disabled. If you are not the plan administrator for any such plans, please tell me who the plan administrator is and provide me their address so I can request the documents from them.” The second question to ask is, “because my client is disabled, please tell me what actions my client needs to take to file a claim for any benefits he or she may be entitled to under any of those plans on account of his or her disability.”
The employer should answer your questions; in fact, if they are the ERISA plan administrator, they have an affirmative fiduciary duty to communicate with a plan participant, and to fully inform a plan participant of the material facts necessary to assist with a claim. Plan Administrators are fiduciaries under ERISA, and courts have held that an ERISA fiduciary is specifically charged with the obligations of a trustee, who “is under a duty to communicate to the beneficiary material facts affecting the interest of the beneficiary which he knows the beneficiary does not know and which the beneficiary needs to know for his protection.” Krohn v. Huron Memorial Hospital, 173 F.3d 542, 548 (6th Cir. 1999) (citing Restatement (Second) of Trusts).
A fiduciary must give complete and accurate information in response to participant’s questions. Drennan v. General Motors, 977 F.2d 246, 251 (6th Cir. 1992). “Misleading communications to plan participants regarding plan administration (for example, eligibility under a plan, the extent of benefits under a plan) will support a claim for breach of fiduciary duty.” Id., citing Berlin v. Michigan Bell Telephone Co., 858 F.2d 1154, 1163 (6th Cir. 1988). A fiduciary breaches its duties by materially misleading plan participants, regardless of whether the fiduciary’s statements or omissions were made negligently or intentionally. Berlin, 858 F.2d at 1163-64. The Sixth Circuit has explained:
The duty to inform is a constant thread in the relationship between beneficiary and trustee; it entails not only a negative duty not to misinform, but also an affirmative duty to inform when the trustee knows that silence might be harmful.
Krohn v. Huron Memorial Hospital, 173 F.3d 542, 548 (6th Cir. 1999), citing Bixler v.
Central Pa. Teamsters Health and Welfare Fund, 12 F.3d 1292, 1300 (3rd Cir. 1993).
In addition to having an affirmative fiduciary duty to explain to your client about any benefits your client may be entitled to, a Plan Administrator who fails to provide requested documents within 30 days of a written request may be liable to your client for a penalty of up to $110 per day. See, ERISA § 502(c), 29 U.S.C. § 1132(c).
If you request plan documents from a plan administrator, and the administrator fails to provide the documents in 30 days, be aware that the statute of limitations for bringing a claim for penalties under ERISA § 502(c) may be very short. ERISA does not have a statute of limitations built into the statute, so it suggests that courts adopt the analogous state statue of limitations. Because a participant or beneficiary seeking a penalty for failure to provide plan documents, defense attorneys can argue that the analogous statute of limitations is one for punitive damages, which are often very short statutes. In Tennessee, that is probably one year.
What documents should you be able to obtain? Basically, it is generally accepted that the Plan Administrator must provide the controlling plan documents. ERISA § 104(b)(4), 29 U.S.C. § 1024(b)(4) states, “The administrator shall, upon written request of any participant or beneficiary, furnish a copy of the latest updated summary  plan description, and the latest annual report, any terminal report, the bargaining agreement, trust agreement, contract, or other instruments under which the plan is established or operated.”
In addition to the specific documents described in the ERISA statute itself, at ERISA § 104(b)(4), 29 U.S.C. § 1024(b)(4), such as the summary plan descriptions and other documents under which the plan is operated, the ERISA statute, at § 109(c), 29 U.S.C. § 1029(c) provides that the Secretary of Labor may also prescribe what other documents should be furnished. The Secretary of Labor’s ERISA claim procedures regulations, set out in 29 C.F.R. § 2560.503-1 (h)(2)(iii) describe what documents an administrator must provide. The additional documents described in the regulations include all the documents “relative” to the claim, including the insurance company’s claim file and any policy statements describing how a decision on a claim is made.
Beware that in many cases, the employer, who is nominally the “Plan Administrator” may not have all the “relevant documents.” Many times, the benefit provided is actually provided by an insurance company, and that insurance company acts as a “claims fiduciary.” Therefore, under the ERISA regulations, the insurance company has an obligation to provide all the “relevant documents” in its possession. Also, as an ERISA fiduciary, the insurance company has a fiduciary duty to fully answer any questions and to affirmatively give information that your client needs to pursue a claim. However, In most circuits, including the Sixth Circuit, only the designated Plan Administrator is liable for a penalty under ERISA § 502(c). ERISA § 502(c)(1) provides
that “any administrator” who “fails or refuses to comply with a request for any information which such administrator is required by this title to furnish to a participant or
beneficiary” shall be, in the court’s discretion, liable to the participant or beneficiary in the amount up to $110 a day from the date of such failure or refusal.
Unfortunately, most circuits, including the Sixth, have read into ERISA an additional implied term that the language “any administrator” actually means only the Plan Administrator. See, e.g. Caffey v. UNUM Life Ins. Co., 302 F.3d 576, 584 (6th Cir.1989); Hiney Printing Co. v. Brantner, 243 F.3d 956, 960 (6th Cir.2001); VanderKlok v. Provident Life & Accident Ins. Co., 956 F.2d 610, 618 (6th Cir.1992); and, Addison v. Hartford Life and Accident Insurance, 32 Emp. Ben. Cas. 1640, 2003 WL 23413737 (E.D.Tenn. 2003) (unpublished).
In sum, attorneys should get in the habit of writing to the employer (attention “Plan Administrator”) and to the insurance company, asking for any plan documents,
including any insurance policies, summary plan descriptions or other documents describing what benefits an employee might be entitled to, and what the employee needs to do to apply for those benefits. If necessary, the attorney should follow up, in writing, to ensure the information is provided.
About the author:
Eric Buchanan represents disabled people and other policyholders across the United States in both ERISA and non-ERISA disputes, focusing primarily in the areas of disability, life and health insurance. He also represents disabled people before the Social Security Administration, having represented approximately 1200 people in Social Security hearings. In 2007 Eric Buchanan was certified as a specialist in Social Security Disability Law by the Tennessee Commission on Continuing Legal Education and Specialization. Eric Buchanan regularly chairs conferences and speaks to both national and local audiences on disability insurance, ERISA, insurance law, and Social Security disability. He may be contacted at email@example.com.
1 Individuals who are disabled enough to qualify for LTD benefits often are disabled enough to qualify for social security disability benefits. Because it often takes a long time for the social security administration to make a favorable decision, LTD benefits may be the only income replacement available for some clients for some time; however, most LTD benefits are offset for social security benefits, so once the social security benefits are awarded, the LTD benefits are typically reduced.
2 Employers may also offer pension plans to employees, which are treated differently under ERISA as “pension benefits claims.”
3 Under ERISA, the plan “administrator” is the person who is named in writing in the plan as the administrator; if no administrator is named, the administrator is deemed to be the plan sponsor (i.e. the employer, or, in the case of a union plan, the union). ERISA § 3(16)(A)(i) and (ii).