A long-term disability benefits lawsuit has been filed against Unum Life Insurance Company by a former North Carolina health care employee.

Plaintiff Karen K. claims that as previous employee of Charlotte Gastroenterology & Hepatology, she was covered by a disability benefits insurance plan administered by Unum.

According to the Unum lawsuit, plaintiff Karen claims she had to stop working in July 2012 due to disabilities not specified in her insurance claim denial lawsuit. She then filed a claim with Unum for long-term disability benefits and life insurance waiver of premium benefits. Unum denied her claim, then affirmed that denial upon further review.

Plaintiff Karen argues that in denying her claim, Unum ignored relevant evidence and instead relied on “biased information and flawed expert opinions.” She states that these factors constitute a conflict of interest that Unum improperly allowed to make a material difference in its decision.

The disability insurance lawsuit is seeking action by the court that would compel Unum to pay the plaintiff past benefits withheld and to begin making regular ongoing payments.

Claims Under ERISA

The plaintiff’s claims are typical of those that fall under the federal Employee Retirement Income Security Act, or ERISA. ERISA provides beneficiaries of many types of employment benefits with certain protections, including the right to sue in case of a bad faith insurance denial.

While a claimant may have the right to sue, the procedure for making an ERISA claim is complicated enough that some say the law does more to serve insurance companies than to serve claimants. Before plaintiffs can appeal an insurance denial in court, they must first seek an administrative appeal through the same insurance carrier. Each step in that process has legally-imposed deadlines, compliance with which could affect the claimant’s future right to appeal.

Once a claimant gets into court, the standard of review applied is very deferential to the insurance company. ERISA grants insurance companies discretion to make their own decisions on claims. So rather than allow the court to completely second-guess the insurance company, ERISA provides that the court can only determine if the company abused its discretion in denying the claim.

The court will also typically review only the information that the insurance company had before it when it made the denial. Typically no new documents or testimony get into the record.

Some states have laws that impose even more consumer-friendly protections on disability insurance policies. However, those laws are preempted by ERISA where the policy is administered as part of an employment benefits plan.

For example, while a state’s insurance laws would have entitled a successful plaintiff to awards of punitive damages or attorneys’ fees, those awards may not be as readily available under ERISA, or they may not be available at all.

State-law plaintiffs may also get the benefits of having a trial before a jury, which ERISA claimants cannot get. They may also get the benefit of de novo review by the court, instead of under the “abuse of discretion” standard of review under ERISA.

The Unum Claim Denial Lawsuit is Case No. 6:15-CV-03451 in the U.S. District Court for the District of South Carolina.