At Dell & Schaefer, we’ve seen our share of disability insurance claim denial letters from Guardian Disability Insurance Company. Read on or watch the video to learn more about what’s involved in filing a lawsuit against Guardian and what claimants should be able to expect from the process. Elsewhere, we’ve talked about Guardian Disability generally and about the ERISA appeals process against this agency, but this transcript will exclusively discuss what it’s like to litigate a claim against Guardian Disability in court.

Hi, I’m Greg Dell with Attorneys Dell & Schaefer, and today I’m here with attorney Rachel Alters. And we’re going to talk about Guardian Disability Insurance Company and what’s involved in filing a lawsuit against Guardian. Now, we have other videos that you can review where we talk about Guardian generally and we talk about ERISA appeals against Guardian. And in this case, we’re going to talk about the lawsuits against Guardian.

Now Rachel, you know there is Guardian, which is mostly their group disability insurance policies, and then they also have policies through what was known as Berkshire. But they’ve now rebranded everything into Guardian. So there’s a lot of people out there who have Berkshire policies, which were the individual disability policies, which were sold mostly to the doctors and the lawyers and the business professionals who bought it independent from agents. And then there’s the Guardian policies. Although not to be confused, you can also have an individual disability policy that’s Guardian and not governed by ERISA.

So let’s jump in first and talk about the differences between if someone has an individual disability policy versus an ERISA-governed policy and what that’s going to mean in terms of a lawsuit.

RACHEL ALTERS: OK, there are many differences and different rules that apply to disability policies that are bought on your own, which are individual policies, versus one that you get from an employer, which is considered a group policy. When you have an individual policy, you have more rights. For example, when you go to trial, you can file that in a state court, if you want, or a federal court. You have a right to a jury, which when you have a group policy, there is no jury trial. It is just a judge doing a bench trial, reviewing the administrative record.

You may also have more rights in the damages as far as what you’re allowed to collect. When you file an individual lawsuit versus a group policy lawsuit, you sometimes, depending on the state you live in, the state that governs the policy, you can get bad faith or punitive damages for a private IDI policy. A group policy doesn’t allow that. The damages for a group policy are only the back benefits and possible attorneys fees and costs and then remanding the claim back to see if they’re disabled going into the future. So there are a lot of differences in the policies. Obviously, buying an individual policy, you have more rights than you do a group policy when it comes to litigation.

A Guardian Individual Disability Policy provides a claimant with more options than a Group Policy

GREG DELL: So significant differences between the two– we’ve handled both– and it’s not like something’s going to happen to make one or the other. It’s just the way it is based upon what you bought. And it’s a legal evaluation. It’s something that we can tell someone immediately, once we get a copy of your policy, we’ll know whether or not you have an ERISA or non-ERISA a policy. That’s another way of saying whether you have individual or group.

So let’s talk first about the individual policy, which is a whole other animal, because basically that opens the world up into what a jury trial, and that’s a breach of contract action. And in terms of that type of right, what can a person expect to win when filing a lawsuit on an individual disability policy?

RACHEL ALTERS: Well, the damages are essentially the same when you file an individual lawsuit and a group lawsuit, meaning that a judge or a jury is only permitted to award past benefits and a breach of contract action is the same as a group policy when you file those claims. The same damages are allowed. The judge can award past benefits. So that’s no different.

And then what happens is if the past benefits are awarded and you win, then they can send the claim back to the carrier, which Guardian would review again to decide if the claimant is still disabled and entitled to future benefits. So that’s the same.

But if it’s an individual claim, they can file a claim for punitive damages or bad faith, which if a jury determines that bad faith did occur, then the damages are– they could be in excess of hundreds of thousands of dollars. I don’t know what that would be. It’s a case-by-case basis.

GREG DELL: And we’ve done videos where we discuss bad faith damages and things like that. Now bad faith, which is also somewhat known as– bad faith is a cause of action on its own. It’s also where you hear of this term punitive damages– is going to vary based upon the law of the state that applies to the individual’s claim. So it’s different in every single state.

Whereas when you have these group ERISA policies, it’s more of the federal law of ERISA. There’s clearly no bad faith. There never is. There’s basically no extracontractual damages. And that’s what the bad faith is, is what additional damage is going to get. Now, everyone that calls us says, “I don’t only want just my benefits. I want them to be punished for what they did. I suffered. I want emotional pain and suffering. I want the fact that I went into debt. I couldn’t pay my mortgage or I couldn’t pay my car or whatever it was.” You might be able to get that with the private policy, but you’re never going to get that with the group policy.

The other biggest advantage of the individual policy is the fact that you get a jury trial. And talk a little bit about your experience of presenting a case to a jury versus presenting a case to a judge with the backdrop of whether or not there is a de novo review or arbitrary and capricious. But first talk about what it is to present a case to a jury.

RACHEL ALTERS: Well, it’s a huge difference. You have a huge advantage if you’re presenting a case to a jury, because it’s a jury– supposed to be a jury of your peers. And the standard is a breach of contract. So it’s a whole different can of worms. So you’re presenting a case to a jury of your peers and you have to show that there was a contract with Guardian– which, if you have the policy, there is a contract. And then you have to prove that Guardian breached it, which is a easier hurdle than if you’re in federal court and it’s a jury– I’m sorry, it’s a judge bench trial, you have to show that Guardian was arbitrary and capricious in denying your disability claim. And it’s a much harder definition and standard to hurdle.

So when you have a private policy in a jury trial, you are in a much better advantage than if you have a group policy that was provided by your employer. They’re both valuable, but the individual policy, you have much more rights and your claim’s probably worth more.

GREG DELL: Another significant difference between the two that I wanted to mention was in the individual claim, you have a jury trial. And the evidence comes out through the testimony of the witnesses– the testimony through the client, the testimony of their doctors, the testimony of the insurance claims people hired by Guardian. Whereas when you have these ERISA-governed policies that are in the federal court, it’s basically just emotion and you have what’s called the administrative record. And the administrative record is sealed in stone, meaning nothing else comes into evidence.

Now that is good and bad. The only good of that– and us being trial lawyers, that we understand– is that when we go before the judge and we make our presentation– and maybe we get an oral argument with the judge– there’s no surprises as to what the evidence is going to be. When you have a jury trial on an individual claim, it’s like open season. You have no idea what’s coming into evidence, what’s not getting into evidence. You don’t know how the doctor is going to testify when they come in. You don’t know what the claimant’s going to do. You know, basically the claim reps, how they’re going to testify, even though we have depositions to be able to impeach them.

So it’s a whole like Wild West in the individual jury trial, whereas it’s much more structured and finite in the group claims. So some people are very anti-ERISA. But that is I think a positive, maybe, to know what you’re getting, unless, of course, you’re a claimant who has new additional medical evidence that you can never get in to the record.

Most Guardian disability insurance lawsuits will result in a lump-sum buyout of your policy

The last thing I want you to touch on is we’re filing a lawsuit. And of course you want to win and you said you can get back benefits. But what other types of resolutions are the common thing besides going to a final verdict with a jury or getting a final judgment? How do you usually see these cases resolve?

RACHEL ALTERS: A majority of the time, the cases actually don’t go to trial. And the reasons for that are many. But usually it’s too risky on both sides. The insurance carrier doesn’t want to take the risk of losing and the claimant doesn’t want to take that risk as well. So normally, I would say a high percentage of these cases settle.

So before we actually get to the court steps or before we start a trial, we’ll send a demand for a settlement. And a lot of times either before mediation or during a mediation negotiation, the case settles. And everybody goes on their way and the trial’s not necessary.

GREG DELL: And what does a settlement mean?

RACHEL ALTERS: A settlement means that you are– the claimant and the insurance carrier are settling for a lump sum of money, whatever that agreed upon amount is. And after that’s agreed upon, the claimant will sign a release, no longer has the coverage anymore. The policy is basically null and void. And even if they remain disabled, they’re not going to be followed or the insurance carrier is not going to ask them for claim forms anymore. They’re basically done.

GREG DELL: It’s a divorce. They’re over. They never have to talk to each other. They’re done.

RACHEL ALTERS: And a lot of claimants really do prefer that, if that’s an option for them.

GREG DELL: And how is evaluation usually determined for those types of settlements?

RACHEL ALTERS: Usually the settlements, we look at the past benefits that are owed. And you have to look at– when you look at a settlement, if the insurance carrier wins in court, they don’t pay anything. If the claimant wins, then they really only get the past benefits.

So you have to look at it, the big picture, as if you’re a young and you’re in your 30s or 40s and you have a past benefit of let’s say, $50,000, but you’ve got $800,000 in benefits coming to you at age 65, the focus is really mainly on the past and some of the future. But you’re not going to look at the benefits to age 65 and expect that the insurance carrier is going to pay that full amount. Usually they take it all into consideration.

They look at what their odds are of them winning, what they think. If it’s strong case for the insurance carrier, they tend to pay less. If it’s a strong case for the claimant, they tend to pay more. But usually it’s around 25 to around 40% of the value of the claim. I see settlements– it depends on how good the case is.

GREG DELL: I think it’s more, in the ERISA range, it’s 25, 50, 60, it depends.

RACHEL ALTERS: For ERISA cases, yeah.

GREG DELL: But the reason people should know when you throw that number is is that even in an undisputed claim, like if someone had no arms and legs and they were definitely going to get bought out, the carriers never pay more than 75% of the value of the claim.

RACHEL ALTERS: Well, that’s on a claim that’s not disputed.

GREG DELL: Correct.

RACHEL ALTERS: Right, exactly.

GREG DELL: So when you say like 25% to 50% in a disputed claim, that’s because if they feel like their exposure is 8, $900,000 or something in a case, and they have a 50-50 chance of winning the case, then they’re probably going to roll the dice, because they only have to pay their lawyer maybe 50 to 100,000 to defend a case. So they figure, “Well, if I can get out of paying 900 and I can pay my lawyer 50 to 100, then I’m just going to roll the dice.” And so that’s part of the scenario, but definitely a discussion we love to have with all the potentials when they call us and our clients to say, “Here’s what’s at stake.”

Often, Guardian’s decision to roll the dice by taking a claim to court depends on the amount of money at stake. Because not every claimant will litigate their appeal, by refusing payment of even claims that otherwise seem meritorious, Guardian Disability can improve the odds that their refusal to pay won’t be challenged in any particular case.

If Guardian has denied your claim and you’ve reached the point where you’re considering filing a lawsuit, let Dell & Schaefer help. Our team includes dedicated attorneys and support staff who have personally handled hundreds of similar cases. We only need two things to get started: (1) a copy of the denial letter; and (2) a copy of your policy. Visit our website today to see how we can help.