Mr. Ward did not follow the prescribed procedures when signing up for his disability insurance. Can that be fatal to a claim?

Mr. Ward worked for Pacific Architects, which had a long-term disability plan insured by Aetna. Under the plan, if a new employee signed up within 31 days of eligibility, then there was no requirement that a health insurance questionnaire be completed. Mr. Ward did not sign up for this benefit right away. However, within his first year, he learned that he had a nodule on this right lung which concerned him. He signed up for the long-term disability insurance coverage. His employer deducted premiums from his check and sent the premiums to Aetna. Aetna sent him a benefit booklet and a letter confirming his coverage. Within the next year, Mr. Ward learned that the nodule was actually metastatic renal cell carcinoma. He filed a claim for long-term disability.

Aetna discovered that Mr. Ward did not sign up for long-term disability insurance coverage within 31 days of his first date of eligibility. It did not have a completed insurability form from Mr. Ward, and it never performed a health check on him. Therefore, it denied the claim and retroactively canceled all coverage.

Mr. Ward filed suit, claiming that the benefit booklet was ambiguous and that a benefit summary provided to him assured him that he had coverage. The court noted that the benefit summary was not provided by Aetna but was furnished by Ward's employer. And, it contained a disclaimer. The court found for Aetna. So, just in time for the holidays, Mr. Ward learned he would have no Christmas.

Unfortunately, this happens all the time. The human resources department will assure an employee that signing up late is no problem. The premiums may be paid for years. The problem is that most courts will say that an employee cannot rely on what they are told. While not every case turns out like Mr. Ward's, they certainly can. This underscores the importance of reading the plan documents.

Resolution for the new year: Obtain the plan documents for my benefits – and read them.

Development of strong facts during the claim process is critical in these situations. Having the plan documents handy can also ensure that all the required conditions are met when pursuing a claim. At the first hint of a problem on an ERISA case call us. We can help!