Sean M. Anderson, a University of Illinois researcher, studied employee-benefits litigation that occurred from 2006 to 2010 and found that more than 60 percent of federal cases involving five kinds of benefits were based on long-term disability insurance claims. This finding is all the more interesting because private employees participated in long-term disability plans far less often than they did in the other kinds of benefit offerings.
According to a news release on the university’s website citing federal statistics from 2009, only 31 percent of private employees joined long-term disability plans, as compared to short-term disability (38 percent), qualified pension plans (51 percent), medical benefit plans (52 percent) and life insurance (57 percent).
Disability insurance generates more litigation
Anderson, who studies “employee benefit plan policy and regulation,” mused that “as a society, we’re spending a disproportionate amount of judicial resources on resolving disputes about this one type of plan, even though it’s not the most common one out there.”
He reportedly looked at “hundreds” of federal ERISA lawsuits in this research.
The conflict-of-interest issue
We have written in this space often about the problem of the inherent conflict of interest that disability insurers have in these claims. As Anderson described it, “It’s an insurance company that administers the plan, that decides on the claim, and ultimately has to foot the bill if the benefit is granted … a conflict of interest that everyone can easily see …”
Perhaps not surprisingly then, the study found that plaintiffs raised the issue of the insurance company’s conflict of interest more often in disability suits than in those based on other types of plans.
To settle or not to settle
Anderson also found that lawsuits involving disability insurance settle at a higher rate than those involving other benefit plans.
At our law firm, we represent disability claimants in their quests for benefits after their insurance companies denied or terminated benefits. It is true that while a claimant may decide to settle his or her case, each case is unique, and many factors go into such a decision. In appropriate cases, we do not hesitate to advocate for the claimant’s disability benefits in court.