Indiana Long Term Disability Lawyer Blog

Multiple Sclerosis is an autoimmune disease that affects the brain and spinal cord. The symptoms and severity of Multiple Sclerosis (MS) can vary among those afflicted with the disease, but it is not uncommon for the condition to prevent a person from working. Symptoms can include fatigue, loss of balance, muscle spasms, numbness, weakness, tremors, problems with coordination, difficulty walking, vision problems, bowel/bladder difficulties, inability to concentrate, memory problems, and speech impairments.

When MS prevents a person from working and they file a disability claim with their insurance company or the Social Security Administration, there are a few things that can help prove that MS is disabling. The first step is to make sure that the patient has been diagnosed properly. That includes undergoing exams like MRIs of the brain and spine, nerve function studies, and lumbar punctures. These objective test results are essential to ruling out other conditions and determining whether a patient has MS. Moreover, these test results can also indicate the severity level of a patient's MS.

Continue reading "Multiple Sclerosis Disability Claims" »

The Northern District of Illinois recently ruled in favor of the Plaintiff's summary judgment motion in a long term disability lawsuit. In Krupp v. Liberty Life Assurance Company of Boston, the court found that Liberty Life's termination of Ms. Krupp's long term disability benefits was arbitrary and capricious. Krupp's long term disability benefits were provided through her employee benefit plan and accordingly, the case was examined under the rules and regulations of the Employee Retirement Income Security Act ("ERISA"). To read the full opinion, see the link here.

Continue reading "Northern District of Illinois Finds that Liberty Life's Termination of Disability Benefits was Arbitrary and Capricious" »

Over the years, we have represented numerous employees of Indiana colleges and universities who have become disabled because of serious illnesses such as diabetic neuropathy, lyme disease, degenerative disk disease, multiple sclerosis and lymphoma. A large number of those clients were disabled Purdue employees who had worked for Purdue University for many years, some even decades, before reaching the point where they were no longer able to work because of their medical conditions. Purdue has a very generous employee benefit package so our clients were very surprised and extremely disappointed when their disability claims were either denied outright or prematurely terminated by the insurance company.

Prudential Insurance Company previously insured Purdue's long term disability program and now Cigna is the insurance carrier for the Purdue long term disability program, or more specifically Cigna's subsidiary Life Insurance Company of North America. Many Purdue employees have contacted our office after Cigna denied their claim upon their initial application or when Cigna terminated the benefits before the individual was truly able to return to work.

Cigna typically hires consulting physicians, who never examine our clients, to review the person's medical records and conclude, contrary to the treating physicians, that the client does not have any restrictions or functional impairments. Cigna then relies upon the conclusions of the consulting physicians to deny legitimate disability claims.

The consequences of Cigna denying a Purdue employee's claim for disability benefits are severe. Under the Purdue employee benefit program, disabled Purdue employees continue to receive medical coverage, life insurance coverage, tuition reimbursement for their kids that attend Purdue and retirement annuity deposits. When Cigna wrongfully denies a Purdue employee's disability claim, all of those benefits immediately disappear. The disabled Purdue employee will no longer have the medical coverage they need for treatment, they will lose their life insurance coverage, be required to pay full tuition for their kids and lose retirement contributions. As a result, Cigna's denial can have a dramatic impact on the life of a disabled Purdue employee.

The O'Ryan Law Firm has successfully handled the appeals and lawsuits of Purdue employees against Cigna when Cigna has wrongfully denied their disability benefits. If you have received a denial letter from Cigna, or Life Insurance Company of North America, please contact us so that we may discuss your best strategy for moving forward with your disability claim.

The application process is generally quite simple. First, you must notify your insurance company or your Human Resources department of your claim. You will then be asked to complete a claim form and to sign a medical authorization form so that the insurance carrier may request copies of your medical records directly from any doctors who have treated you for your conditions. Your doctor will also need to fill out a form certifying that you are unable to return to work because of your medical conditions. Lastly, your employer must complete a form providing the insurance company with your position and salary information so that they may properly calculate your monthly benefit payment.

As part of their investigation, the insurance company may also send you to one of their doctors to examine you in order to determine if you are able to return to work or send you to a functional capacity evaluation to assess your physical capabilities.

If your claim is approved, your long term disability policy typically will pay you 60% of your wages while you are disabled, depending on the specific terms of your policy. Your insurance company will require periodic updates on your condition, from both you and your physicians, to verify that your disabling condition is ongoing. In some instances, the insurance company may hire an investigator to conduct surveillance of your activities while you are away from your job and possibly conduct an internet search to uncover your volunteer or social activities.

If your claim for benefits is denied, there are options available to you if you do not agree with the insurance company's decision. This will depend on your policy, but typically you will have the opportunity to file an appeal, usually within 180 days of the denial. During the appeal process, you will be able to submit further medical evidence of your disability. This is one reason why it is important to continue treating with your doctor while you are off of work.

In a perfect world, your long term disability insurance carrier will pay your claim until you are well enough to return to work or until your maximum coverage age of 65 if you are deemed totally disabled and cannot return to work. However, if your claim is denied, please contact the O'Ryan Law Firm to see if we can assist you in convincing the insurance company to properly pay your disability benefits.

Fibromyalgia is a condition that may prevent someone from working. In these situations, the person may be able to apply for short term disability benefits, long term disability benefits, or Social Security disability benefits. When it comes to filing a claim for disability benefits, it can be challenging for claimants to prove that their fibromyalgia is disabling. These challenges appear in claims to both insurance companies and the Social Security Administration ("SSA").

Those who suffer from fibromyalgia experience chronic, widespread pain and fatigue, but the objective test results may not show this. Unlike conditions such as Multiple Sclerosis or degenerative disc disease, fibromyalgia does not appear in MRIs or x-rays. Because fibromyalgia is a disorder which does not appear in medical imaging or blood tests, it can be a difficult condition to diagnose. If a fibromyalgia patient is applying for disability benefits, they should follow these steps to document proof of their disability:

Continue reading "Fibromyalgia Disability Claims" »

The most basic answer is that the insurance company or claims administrator contends that you do not meet the definition of "disabled" or "disability" under the disability policy or plan. There are numerous technical reasons why claims are denied such as you are ineligible for benefits or you have not provided the information requested by the insurance company. As far as being ineligible, many disability policies require that you work so many months for your employer before you become eligible for the short or long term disability coverage. Also, you may no longer be eligible if your employment has been terminated and you have not already applied for the benefits. We encourage our clients to contact the Human Resources department immediately to obtain an application for short term and long term disability benefits when they know that they are no longer able to function at their job. Additionally, make sure that you send the insurance company all of the information and documents that they are requesting so that your claim is not tossed out because they didn't receive a specific form or medical record. We know that at times it is frustrating dealing with their seemingly endless requests, but you don't want to be denied because you "weren't cooperating" with them, which is a requirement in the policy.

Once you have made it over the eligibility hurdle, the insurance companies find all sorts of reasons to deny disability claims: your medical records don't support impairment, your doctor's statement of disability doesn't comport with the medical records, you worked for a long time after you were diagnosed, surveillance shows that you remain active, if you can work on a computer at home then you aren't disabled, if you can shop at Wal-Mart then you can go back to work, you quit because you didn't like your boss and their absolute favorite: our doctors (who never speak to you or examine you) say you can work. All of the insurance companies, including Cigna, Prudential, Hartford, MetLife, and Lincoln Financial, like to use their doctors to review and deny claims.

This is why the appeal process is so important and why an experienced lawyer can make all of the difference. This is no game to the insurance companies. They know that if they successfully deny your claim, they keep every penny of your disability payments. As a result, they are very aggressive at denying claims and making sure the denial sticks. We take the appeals process very seriously because this most likely is your last chance to respond to and rebut all of the bad information that the insurance company has stuffed into your file, some of which you may have never seen.

Continue reading "Why was my claim denied?" »

The Seventh Circuit issued its decision in Roddy v. Astrue on January 18, 2013. 2013 WL 197924 (7th Cir. 2013). In Roddy, the claimant appealed the Administrative Law Judge's denial of her Social Security Disability Insurance ("SSDI") claim. After the district court upheld the ALJ's decision, Ms. Roddy appealed to the Seventh Circuit. The Seventh Circuit held that the ALJ did not adequately explain why the treating physician's views should be set aside and that the ALJ wrongly based his credibility finding on 1) the claimant's failure to seek professional treatment for her back after 2006 and 2) her ability to perform household tasks.

Ms. Roddy suffers from severe lower back pain and was forced to stop working as a shift manager at Taco Bell. When she became unable to work, she applied for SSDI benefits, but her claim was denied both initially and at the ALJ hearing level. After her claim was denied by the ALJ, the Appeals Council declined review and the Southern District of Indiana affirmed the ALJ's denial. The Seventh Circuit, however, found numerous errors in the ALJ's decision and remanded her case back to the Social Security Administration.

Continue reading "Seventh Circuit Decision: Administrative Law Judge Must Properly Consider Treating Physician's Opinion" »

Attending your child's recital or having dinner with friends, taking a trip, even picking flowers from your garden may seem like innocent activities, and it may be all you feel like doing when you're disabled; however to an insurance company, this sometimes translates into "if they feel well enough to do that, they can go back to work." When you're disabled and unable to work, it's understandable that you might spend more time on the computer updating your status and posting pictures on various social networks like Twitter, Instagram, and Facebook to stay in touch with family and keep them up to date on your condition. However, posting about your activities, volunteer work, social events or travel can cause serious harm to your disability claim.

Recently we have seen a dramatic increase in insurance companies' interest in our clients' Facebook pages. We are receiving requests for access to our clients' Facebook accounts and copies of all postings, pictures, events and even personal messages on Facebook, dating back to the date the account was established. This can add up to hundreds of images and multiple pages of information, much of which may not be revealing, but is personal to you and is information that you would not want shared with everyone. Insurance companies will try to use this information against you to argue that you are not disabled or no longer disabled, and either deny or terminate your disability benefits. Therefore, when you file a disability claim, it's prudent to stop all postings on social networks immediately in the event that the insurance company has plans to conduct a background check or surveillance. This will minimize the insurer's access to your private life and information that could lead to your disability claim being denied.

Many of our clients suffer from psychiatric impairments that keep them from being able to work on a regular basis. As we see in most all of our disability cases, at some point in time the insurance company hires a psychologist or psychiatrist to review the medical records of our clients to manufacture a report finding that our client is not impaired or disabled. Significant authority provides that when dealing with psychiatric claims, the opinions of psychiatrists or psychologists who merely review written records are inherently unreliable as compared to the opinions of physicians and other health care providers who examine and treat the patient at issue. The American Psychiatric Association has instructed that the primary assessment tool for a psychiatrist evaluating an individual's medical condition and treating those conditions is the face-to-face interview with the patient and "evaluations based solely on review of records ... are inherently limited." Westphal v. Eastman Kodak Co., 2006 WL 1720380, *5 (W.D.N.Y., June 21, 2006). The American Psychiatric Association further stated that it is "unethical for a psychiatrist to offer a professional opinion unless he or she has conducted an examination..." Id., citing "The Principals of Medical Ethics" Section 7, Paragraph 3, 2006 Edition. In Zoller v. INA Life Ins. Co. of New York and Lucent Technologies, Inc. Long Term Disability Plan for Mgmt. Employees, 2008 WL 3927462 (S.D.N.Y. 2008), the court held that "the practice [of relying on second-hand opinions of psychiatrists] seriously undermines a reviewing court's confidence in such opinions where they appear to be, as in the instant case, unsupported and arbitrary rejections of the opinions of treating physicians." Id. at * 14; see also Winkler v. Metropolitan Life Ins. Co., 170 Fed. Appx. 167, 168-69 (2nd Cir. 2006) (First-hand observation is especially important in the context of assessing psychiatric disabilities).

It has been noted that in disability cases involving mental illness, these cases "may be uniquely suited for diagnosis by personal examination." Scotti v. The Prudential Welfare Benefits Plan, 2009 U.S. Dist. LEXIS 64559, at *16 (D.N.J. July 23, 2009). Courts discount the opinions of psychiatrists who have never seen the patient because unlike other medical doctors who can formulate medical opinions based upon objective clinical tests, the psychiatrist typically treats the patient's subjective symptoms. Schwarzwaelder v. Merrill Lynch & Co., Inc., 606 F. Supp. 2d 546 (W.D. Pa. 2009), rev'd on other grounds, Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Schwarzwaelder, 2012 U.S. App. LEXIS 16845 (3d Cir. Pa. Aug. 13, 2012). When a psychiatrist evaluates a patient's mental condition, "a lot of this depends on interviewing the patient and spending time with the patient, . . . a methodology essential to understanding and treating the fears, anxieties, depression, and other subjective symptoms the patient describes." Sheehan v. Metropolitan Life Ins. Co., 368 F. Supp. 2d 228, 254-55 (S.D.N.Y. 2005). A subjective evaluation is a requisite when a doctor is diagnosing the psychiatric state of a patient. Glunt v. Life Ins. Co. of N. Amer., 2012 U.S. Dist. LEXIS 8027 (E.D. Pa. January 24, 2012). As held by the court in Morse v. The Corning Inc. Pension Plan for Hourly Employees, U.S. Dist. LEXIS 12645 *26 (W.D.N.Y., Feb. 23, 2007):

Subtleties in the patient's mannerisms, the nuances that are derived from her speech and gestures cannot be observed and evaluated by the non-examining physician. This is all necessary in the evaluation process and cannot be done in absentia nor by merely evaluating the treating physicians' notes and opinions. Accordingly, it was error for MCMC to rely upon the opinions of two non-treating, non-examining doctors to the exclusion of the remaining substantial evidence in the record in finding that Morse was not disabled.

Oftentimes, disability claims are denied based on the opinion of a psychologist, psychiatrist or therapist who never examined or interviewed the person applying for disability benefits. Without the opportunity to observe an individual's mannerisms, or the nuances derived from speech patterns or gestures, we believe the opinions of these record reviewing psychiatrists are unreliable and should not be used by the insurance companies to deny claims.

The O'Ryan Law firm has successfully represented numerous clients who suffer from psychiatric disabilities such as bipolar disorder, severe depression, and schizophrenia in proving to the insurance companies that these conditions are truly disabling. Please contact the O'Ryan Law firm if you believe that you are unable to return to work based on a psychiatric impairment.

The process of applying for disability insurance benefits is not easy. After becoming injured or sick, the claimant must then complete stacks of paperwork in order to file a claim for disability insurance benefits. Among the forms that the claimant must complete is an authorization form that allows the insurer to contact medical sources. But what some claimants do not realize is that the insurer may look beyond the claimant's medical records when making a determination of disability.

The insurance company may utilize a private investigator to surveillance the claimant. This usually means that an investigator will observe the claimant's house or apartment for hours at a time and wait for the claimant to leave the house. The investigator will then follow the claimant to wherever it is they travel and document the activity. Insurance companies may take this evidence and present it to a peer reviewing physician for comment. If a claimant is observed walking in a store for 45 minutes, a doctor can review the surveillance video and opine that the claimant is capable of returning to work.

Continue reading "Non-Medical Evidence that Disability Insurers Can Use to Deny Benefits" »

Unfortunately, there is a common surprise for claimants who have been approved for long term disability ("LTD") benefits through an employee group benefit plan. LTD benefits are usually subject to a list of offsets that will reduce the amount that a claimant receives in disability insurance benefits.

One of the most frequent offsets is when a claimant is approved for Social Security Disability Insurance ("SSDI") benefits. When a claimant receives both LTD insurance benefits and SSDI benefits, the claimant's LTD benefits will be reduced by the amount that they receive from the Social Security Administration.

For example: assume a claimant has been approved for LTD benefits and receives $2000 per month. If that claimant has also been approved for SSDI benefits at $1500 per month, then the claimant's LTD benefits will be reduced to $500 per month. The net effect is that the claimant still receives $2000 per month - the amount they were owed under the long term disability policy - however, the monthly long term disability benefit is now much lower.

The most significant result of this offset occurs when a claimant has been approved long term disability benefits soon after they stop working, but then has to wait for a hearing with the Social Security Administration to determine whether or not they will receive SSDI benefits. In some cases, a claimant can wait two years or longer for a hearing with the Social Security Administration. If a claimant is approved for SSDI benefits at the hearing level, they will likely owe the long term disability insurer for "overpayment" due to the offset provision in their long term disability policy.

Continue reading "Overpayment in Long Term Disability Insurance Cases " »

If you have been denied short term or long term disability benefits, you may have noticed information in your denial letter about The Employee Retirement Income Security Act of 1974, or "ERISA." ERISA includes regulations for all employee benefits that are offered by private employers, including your group health and disability insurance.

Which Employee Benefit Plans are Covered by ERISA?
ERISA governs most private employee benefit plans, including disability and health insurance plans.

Which Employee Benefit Plans are Exempt from ERISA?
ERISA usually does not cover employee benefit plans offered through public or church employers. If you're an employee of a public school or a church owned hospital, your employee benefit plan may be exempt from ERISA. Additionally, "salary continuation plans" may also be exempt from ERISA.

My ERISA Claim Has Been Denied. Now What?
If your ERISA claim has been denied, you must first file an appeal. ERISA allows the claimant to seek legal representation during the appeals process and O'Ryan Law Firm may be able to help you.

Appeal
ERISA describes the number of days allowed to appeal and also the number of days in which the insurer has to make a decision. During the appeal process, the claimant has the right to request the administrative claim file that the insurance company has created. ERISA law specifies that the employee's claim file must be sent within 30 days of a request.

ERISA law states that a claimant must appeal a denial within 180 days. If a claimant fails to appeal by this deadline, they could forfeit their claim for disability benefits. The appeals process is very important and must contain relevant medical and vocational evidence.

Once the claimant has appealed, the insurance company has a maximum of 90 days to make a determination. If the insurance company's review will take longer than 45 days, then the insurer is to notify the claimant in writing that more time is needed.

Lawsuit
In most situations, the claimant must exhaust the appeals process before they are permitted to file a law suit in court. Because ERISA claims are governed by a federal act, the claimant must file a lawsuit in federal court. The deadline to file a lawsuit is usually included in the employee benefit plan.

Unfortunately, the judge's review of the ERISA claim is generally limited to the evidence that was supplied during the claim review process and appeal. That means that the claimant does not have the chance to submit supportive medical information after their last appeal has been denied. Therefore, the appeal phase is extremely important to a claimant's chances of success.

Additionally, ERISA cases are not entitled to a jury trial. Rather, the judge is the sole determiner of the lawsuit. The judge usually makes his or her determination by reviewing extensive legal briefs by both the Plaintiff and Defendant.

Contact O'Ryan Law Firm
Because the rules of ERISA are complicated and O'Ryan Law Firm has a wealth of experience handling every step of the ERISA claims process, we may be able to help you if you have been denied disability insurance benefits.

The Employee Retirement Income Security Act of 1974, otherwise known as ERISA, regulates employee welfare benefit plans, which include plans that provide employees with benefits in the event of sickness, accident or disability. 29 U.S.C. § 1002(1). The primary purpose behind the enactment of ERISA was to protect workers from the mismanagement by the plan administrator of funds accumulated to finance employee benefits. Stern v. International Business Machines Corporation (IBM), 326 F.3d 1367, 1372 (11th Cir. 2003). However, when an employer pays occasional, temporary benefits from its general assets, there is no benefits fund to abuse or mismanage, and therefore no special risk of loss or nonpayment of benefits. McMahon v. Digital Equipment Corp., 162 F.3d 28, 36 (1st Cir. 1998). To that end, the Secretary of Labor has promulgated a regulation that excludes certain "payroll practices" from ERISA's oversight. That regulation provides that an employee benefit welfare plan shall not include payment of an employee's normal compensation, out of the employer's general assets, on account of periods of time during which the employee is physically or mentally unable to perform the duties of his or her occupation or is otherwise absent for medical reasons. 29 C.F.R. § 2510.3-1(b)(2). Accordingly, many short term disability plans offered by employers are considered payroll practices, which are governed by state law. So long as the disability benefits are paid from the employer's general assets, paid when the employee is absent for medical reasons, and paid as normal compensation, the plan is a payroll practice rather than an ERISA plan.

When an employer fails to pay short term disability benefits as a payroll practice to an employee who meets the plan's terms for eligibility, the employer may be violating one of Indiana's wage statutes. Indiana has enacted two separate wage statutes: (1) the Indiana Wage Claims Statute at I.C. § 22-2-9, and (2) the Indiana Wage Payment Statute at I.C. § 22-2-5-2. The statutes set forth two different procedural frameworks for wage disputes, and each statute applies to different categories of claimants. The Wage Claims Statute references employees who have been separated from work by their employer or whose work has been suspended as a result of an industrial dispute, and such employees must pursue their claims through the Department of Labor. I.C. § 22-2-9. By contrast, the Indiana Wage Payment Statute references current employees and employees who have voluntarily left employment either permanently or temporarily. I.C. § 22-2-5-1(b); St. Vincent Hospital and Health Care Center, Inc. v. Steele, 766 N.E.2d 699, 705 (Ind. 2002).

Violations of short term disability benefits plans (also sometimes known as salary continuation plans) that are payroll practices are subject to the Indiana Wage Payment Act. In addition to payment of the wages, the Act allows for liquidated damages in the amount of two times the unpaid wages and attorneys' fees and costs when an employer fails to make payment of wages. Questions often arise as to whether a particular disability plan is governed by ERISA or is a payroll practice, and employers have the burden of establishing that their short term disability plan or salary continuation plan is subject to ERISA and not, in fact, a payroll practice. An employer's representation that the short term disability plan offered to their employees is an ERISA plan does not necessarily mean that the plan falls within the scope of ERISA. The determination of a plan as an ERISA plan does not rest on the employer's conduct, but rather whether the plan is exempt from ERISA by the payroll practices regulations.

The O'Ryan Law Firm has successfully litigated both ERISA disability claims and payroll practices violations. If you have had salary continuation benefits or short term disability benefits denied or terminated by your employer, contact O'Ryan Law Firm.

Indiana law has long recognized that there is a legal duty implied in all insurance contracts that an insurance company must deal in good faith with its insured. Vernon Fire & Cas. Co. v. Sharp, 349 N.E.2d 173 (1976). The Indiana Supreme Court in Erie Ins. Co. v. Hickman, 622 N.E.2d 515 (Ind. 1993) expressly acknowledged the breach of this duty as an independent cause of action under Indiana law. The Court in Erie recognized that a special relationship exists between an insurance company and its insured because of the unique character of an insurance contract, specifically, the insurance company acts as a fiduciary to the insured. "Easily foreseeable is the harm that proximately results to an insured, who has a valid claim and is in need of insurance proceeds after a loss, if good faith is not exercised in determining whether to honor that claim." The Court in Erie held that "[A]n insured who believes that an insurance claim has been wrongly denied may have available two distinct legal theories, one in contract and one in tort, each with separate although often overlapping, elements, defenses and recoveries." The Court in Erie explained that a cause of action for the tortious breach of an insurer's duty to deal with its insured in good faith arises when the insurer:

1. makes an unfounded refusal to pay policy proceeds;
2. causes an unfounded delay in making policy payments;
3. deceives the insured;
4. exercises an unfair advantage to pressure the insured into settling a claim.

Since the Indiana Supreme Court's decision in Erie, bad faith has been recognized in Indiana as an independent cause of action. Besides the Erie factors, Indiana Code Section 27-4-1-4.5 provides a list of unfair claims settlement practices any one of which may be considered as evidence of the duty of good faith and fair dealing:

1. Misrepresenting pertinent facts or insurance policy provisions relating to coverage at issue;
2. Failing to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies;
3. Failing to adopt and implement reasonable standards for the prompt investigation of claims arising under insurance policies;
4. Refusing to pay claim without conducting a reasonable investigation based upon all available information;
5. Failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed.
6. Not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear;
7. Compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by such insureds;
8. Attempting to settle a claim for less than the amount to which a reasonable person would have believed they were entitled to by reference to written or printed advertising material accompanying or made part of an application.

Ansert v. Adams, 678 N.E.2d 839, 842 (Ind.Ct.App. 1997); transf. denied. 678 N.E.2d 839 (Ind. 1997).

In order to prove bad faith, the plaintiff must show by a preponderance of the evidence that the insurance company breached the covenant of good faith and fair dealing. Lummis v. State Farm Fire and Cas. Co., 2005 WL 1875771 at *1 (S.D. Ind. Aug. 8, 2005). Some confusion has arisen regarding the standard for proving bad faith due to the fact that oftentimes plaintiffs asserting a claim of bad faith also seek punitive damages. The burden of proof for damages arising from bad faith is separate and distinct from the burden of proof to recover punitive damages, as explained by Chief Judge Hamilton: "In Erie, the Supreme Court of Indiana explained that "in most instances, tort damages for the breach of the duty to exercise good faith will likely be coterminous with those recoverable in a breach of contract action." 622 N.E.2d at 519.

Oftentimes, however, plaintiffs will seek punitive damages on the bad faith claim in addition to tort damages. In Indiana, "the mere finding by a preponderance of the evidence that the insurer committed the tort will not, standing alone, justify the imposition of punitive damages." Erie, 622 N.D.2d at 520. Punitive damages on a bad faith claim require "clear and convincing evidence that the insurer knew there was no legitimate basis for the denial." Freidline v. Shelby Ins. Co., 774 N.E.2d 37, 40 (Ind. 2002); see also Erie, 622 N.D.2d at 520 (stating that proof of bad faith by "clear and convincing evidence" is needed to support punitive damages); McLaughlin v. State Farm Mut. Auto Ins. Co., 30 F.3d 861, 870 (7th Cir. 1994) (reversing jury award of punitive damages where evidence of bad faith was insufficient to meet clear and convincing standard of proof, but noting that "[t]he jury could, on the other hand, have found that the denial of coverage was unreasonable and therefore tortious"). Lummis v. State Farm Fire and Cas. Co., 2005 WL 1417053, *6 (S.D.Ind June 16, 2005).

Following Judge Hamilton's entry in Lummis I, the plaintiff moved to reconsider and the defendant moved for clarification, both of which were denied by Judge Hamilton in Lummis v. State Farm Fire and Cas. Co., 2005 WL 1875771 (S.D.Ind.) ("Lummis II"). In Lummis II, Judge Hamilton affirmed: "[T]he court concluded that different standards of proof applied to whether an insurer acted in bad faith (a preponderance of the evidence is sufficient), and whether an insured can win punitive damages for bad faith (clear and convincing evidence is required). This distinction is clear in Erie..."

In Lummis II, the defendant suggested that language from Friedline raised the standard of proof for the bad faith tort (apart from the issue of punitive damages) to "clear and convincing evidence." The court rejected this argument and unequivocally held "This court did not and does not read Freidline as having silently modified Erie in this respect. First, Freidline did not directly address any contested issue concerning the standard of proof. Second, Freidline cited Plummer Power Mower to support the key sentence. The cited discussion from Plummer Power Mower was a discussion of punitive damages (and the case was decided before the Supreme Court decided Erie). See 590 N.E.2d at 1093. Third, when the Indiana Supreme Court intends to modify its prior holdings, it ordinarily does so explicitly. Erie addressed the question of burden of proof directly and separately for the bad faith tort and the additional relief of punitive damages."

Accordingly, a plaintiff need not meet the "clear and convincing" standard required for the imposition of punitive damages in order to recover damages on a bad faith claim. The jury in a bad faith case need only find by a preponderance of the evidence that the insurance company's denial of coverage was unfounded in order for an insured to recover damages for bad faith. McLaughlin v v. State Farm Mut. Auto Ins. Co., 30 F.3d 861, 870 (7th Cir. 1994); Lummis II, 2005 WL 1875771 at *1; see also Sieveking v. Reliastar Life Ins. Co., 2009 WL 1795090, *1 (S.D.Ind.) (Following the standard in Erie for bad faith, Judge Hamilton found that "an insured may recover for the tort of bad faith upon a showing that the insurer engaged in practices such as '(1) making an unfounded refusal to pay policy proceeds; (2) causing an unfounded delay in making payment; (3) deceiving the insured; and (4) exercising any unfair advantage to pressure an insured into a settlement of [her] claim. ") .

The O'Ryan Law firm has successfully represented numerous plaintiffs in bad faith actions against insurance companies for wrongfully denying disability benefits including the case of Combs v. Lumbermans where the jury awarded $1,500,000 in bad faith damages against Lumbermens for wrongfully terminating Combs' disability benefits.

Plan and claims administrators processing employee benefit claims under ERISA are subject to statutory and regulatory requirements designed to ensure that claimants receive a full and fair review of their benefit claims. When an employee's benefits are denied, ERISA mandates that specific reasons for the denial of benefits be communicated to the claimant. Militello v. Cent. States, Se. And Sw. Areas Pension Fund, 360 F.3d 681, 688 (7th Cir.), cert. denied, 543 U.S. 869, 125 S.Ct. 106, 160 L.Ed.2d 115 (2004). The relevant section of ERISA provides that every employee benefit plan must afford a reasonable opportunity to any participant whose claim for benefits has been denied for a full and fair review by the plan administrator or the named fiduciary denying the claim. 29 U.S.C. § 1133.

Furthermore, federal regulations promulgated pursuant to ERISA by the Secretary of the Department of Labor set certain minimum requirements for procedures and notification when a plan administrator denies a claim for benefits. The notification must set forth certain information in a manner calculated to be understood by the claimant, including the specific reason for the adverse determination, reference to the specific plan provision on which the determination is based, and a description of the plan's review procedures. In cases of denied medical claims and disability claims, if an internal guideline or protocol was relied upon to deny the claim, it must be provided free of charge to the claimant upon request. Additionally, if the denial of benefits is based on a medical necessity or experimental treatment (or similar exclusion or limit) an explanation of the scientific or clinical judgment must be provided free of charge upon request. 29 C.F.R. § 2560.503-1(g).

With regard to the appeal of adverse benefit determinations, employee benefit plans "shall establish and maintain a procedure by which a claimant shall have a reasonable opportunity to appeal an adverse benefit determination to an appropriate named fiduciary of the plan, and under which there will be a full and fair review of the claim and the adverse benefit determination." 29 C.F.R. § 2560.503-1(h)(1). The claims procedures of a group health plan, for example, will not be deemed to provide a claimant with a reasonable opportunity for a full and fair review of a claim and adverse benefit determination unless the claims procedures:

• Provide claimants with at least 180 days following receipt of a notification of an adverse benefit determination within which to appeal the determination;
• Provide for a review that does not afford deference to the initial adverse benefit determination and that is conducted by someone other than the individual who made the initial adverse benefit determination that is the subject of the appeal;
• Provide that the plan administrator or appropriate named fiduciary deciding an appeal of an adverse benefit determination that is based in whole or part on a medical judgment consult with a health care professional who has the appropriate training and experience in the field of medicine involved in the medical judgment;
• Identify the medical or vocational experts whose advice was obtained on behalf of the plan; and
• Provide that the health care professionals who are consulted by the plan or the plan's fiduciary were not involved in the initial investigation of the claim.

In addition to the federal statutory and regulatory requirements for ERISA health care plans, Indiana has implemented procedural guidelines for the handling or payment of claims for health care services and for the timely resolution of grievances. I.C. 27-8-28. Indiana Code section 27-8-28 provides that an insurer shall prominently display on all notices to covered individuals the toll free telephone number and the address at which a grievance or request for external grievance review may be filed, as well as the department, address, and telephone number through which a covered individual may contact a qualified representative to obtain information about the decision or the right to appeal. IC. 27-8-28-13(b) and 16(d)(4). Additionally, in the case of an appeal of a denial of a claim for benefits, an insurer shall appoint a panel of one or more qualified individuals to resolve the appeal. The panel must include one or more individuals who has knowledge of the medical condition, procedure or treatment at issue, is licensed in the same profession or has a similar specialty as the provider who proposed or delivered the health care service, and who was not involved in the initial investigation of the claim. I.C. 28-8-28-17(b).

Employee benefit plans, including plans providing long term disability benefits and healthcare benefits, must substantially comply with ERISA's regulations in processing claims for benefits. If the employee benefit plan administrator fails to substantially comply with these regulations in the initial investigation and determination of a claim or during the appeal process, the plan administrator may be found to have acted in an arbitrary and capricious manner, and the adverse determination may be deemed to be procedurally unreasonable by a court of law.