Posted on Friday, December 28th, 2018 at 4:29 pm
This is a friendly reminder from your LTD lawyers at Abell and Capitan Law to make sure you read and fully understand your disability insurance policy. A recent case out of the Sixth Circuit reminds us just how easy it can be for an insurance company to avoid payment on a claim if the insured does not strictly adhere to the requirements contained in the policy.
Insurance companies like Cigna often tell claimants that their claims will seamlessly transition from STD to LTD benefits. If the same insurance company administers both STD and LTD benefits under the disability plan, a reasonable person could believe that putting the insurance company on notice of disability when filing the STD claim would be sufficient for both claims. Unfortunately, the claimant in Kennedy v. Life Ins. Co. of North America, 718 Fed. Appx. 409, 410 (6th Cir. 2018) discovered the hard way that it is not.
The claimant applied for short term disability benefits but had yet to file a claim for long term disability benefits when Life Insurance Company of North America (“Cigna”) denied his STD claim. The claimant later sued LINA claiming they had failed to grant his LTD benefits and argued that Cigna should have automatically treated his application for short term benefits as one for long term benefits as well. He pointed to Cigna’s internal policy of automatically transitioning STD claims to LTD after the STD claim reaches maximum duration.
The Court was not swayed by this argument. According to the Court, the first-time long term disability was never mentioned and was in a demand letter from the claimant’s attorney, not an LTD application. The Court affirmed the claim’s dismissal, finding:
“The district court was right: Kennedy never applied for long-term benefits. The first time he even mentioned long-term benefits was in his attorney’s letters—both of which came long after any such claim was due under the plan’s terms. Kennedy therefore failed to exhaust LINA’s administrative process.” Id. (citing Garst v. Wal-Mart Stores, Inc., 30 Fed. Appx. 585, 593 (6th Cir. 2002)).