The Commonwealth Fund’s 2025 Affordability Survey found that 21% of working-age adults in the United States with private health insurance said they or a family member had coverage denied for doctor-recommended care during the previous year, despite having an active insurance policy and paying their premiums.
Usually, the denial of disability insurance claims doesn’t come with a straight-up explanation of what the insurer considered against you. It involves receiving a letter that cites policy language, like failure to undergo a necessary medical review. The letter also comes with specific appeal deadlines. What the letter doesn’t spell out is the legal framework that governs the dispute. This aspect is one that changes almost everything about what you can do next.
The difference between a group disability policy from an employer and an individual policy you purchased on your own is not merely administrative stuff. It can determine whether remedies for bad faith are available, whether a jury can hear your case, and how the court will treat the evidence that is presented.
On the surface, disability insurance denials can look pretty similar, but in practice, the legal ground for the rejection may differ.
The Threshold Question: Is it ERISA or State Law?
Most group disability insurance policies that come through an employer are usually governed by the Employee Retirement Income Security Act (ERISA), a federal law that was originally put in place to help safeguard employee benefit plans. In practice, ERISA often has the opposite effect of what you might expect. This act preempts state insurance laws, and as a result, claimants often lose remedies they might otherwise have.
For a claim that’s ERISA-governed, the process can be rigid. You have to follow the steps the statute wants. Like:
- Claimants have to finish a required administrative appeal with the same insurer before they can bring any lawsuit
- If you sue, the case has to be filed in federal court, not state court
- There is no actual right to a jury trial
- In federal court, what you can use as evidence is almost always confined to what was already in the administrative record when the denial happened, so evidence submitted after the appeal is typically kept out
- Bad faith damages, punitive damages, and compensation for emotional distress are normally not accounted for no matter how the insurer acted
By contrast, individual disability policies that you buy directly, not through an employer, are typically governed by state insurance law. Those cases can go forward in state court, can involve jury trials, allow more complete discovery, and may expose the insurer to bad faith damages and punitive damages if the conduct justifies it. Also, the ERISA-style administrative appeal that ERISA requires before filing a lawsuit is usually not a prerequisite for state law claims.
So whether your disability policy is ERISA or non-ERISA is usually the first thing a disability insurance attorney will figure out. The legal strategy that a lawyer will employ depends on the nature of your insurance policy.
How Policy Language Is Used Against Claimants: The Definition of Disability
According to Riverside insurance bad-faith lawyer Matthew Clark, interpreting policy language in a manner that is both fair and reasonable to the claimant is one of the indicators that an insurance company is operating in good faith and engages in fair dealing. Unfortunately, this is not always the case for most insurance companies.
The definition of disability in your policy is not fixed for the whole life of the claim in most group plans. In most long-term disability policies, the standard of disability starts with an “own occupation” definition for usually 24 months. Afterwards, the definition shifts to an “any occupation” standard.
Under the “own occupation” standard, disability refers to the condition that stops you from performing the material duties of your specific occupation. With the “any occupation” standard, the insurer looks to see whether you can do any job you’re reasonably suited for through education, training, or experience anywhere in the national economy.
The change in the definition of disability after 24 months is one of the reasons insurance companies mostly refuse to pay long-term disability benefits. For instance, somebody may have been getting paid for the past two years under the same illness, and yet, insurance may decline further payment, arguing that this person can do a certain job of work that is available in the national economy. Since the outline indicates the parameters of the position, one must consider that the insurer’s decision is based on the individual’s ability to undertake that work rather than the overall cost of losing the benefit.
It helps to read the disability definition in your policy before you file anything and before you hit that 24-month threshold for existing claims. Doing so will help you know what proof you need to gather and document to meet the applicable standard.
Specific Tactics Insurers Use to Generate Denials
Disability insurers use strategies that show up again and again across claims, and they’re pretty well documented in litigation. Spotting those tactics doesn’t, by itself, mean they can’t be used, but it does give claimants a chance to respond ahead of time before the administrative record basically closes.
Independent Medical Examinations (IMEs)
An IME is a medical exam the insurer has the contractual right to ask for. Despite the name, the insurance company actually keeps the examining physician on retainer and pays them, not you. IME doctors who generate favorable-to-insurer outcomes get repeat business, while those who don’t typically don’t get called back. IME reports often shrink functional limitations down, chalk up symptoms to psychological drivers rather than organic causes, or point to certain occupations in the national economy that the claimant could theoretically do.
In ERISA cases, the IME report becomes part of the administrative record. If the appeal gets denied and later federal litigation happens, a court doing an arbitrary and erratic review will usually lean toward the insurer’s reading of mixed medical evidence, including any conflict between the IME and the claimant’s treating physicians. Once the appeal is done, the administrative record is mostly closed. A claimant is entitled to an appeal to submit pushback evidence from treating providers.
Surveillance and social media monitoring
Insurers routinely engage private investigators for video surveillance, which they often loosely coordinate around IME appointments. Insurers excerpt short clips of a claimant carrying groceries, walking to a car, or showing up at a family event and frame them as inconsistent with the claimed limitations. But this kind of footage can’t actually show pain levels, fatigue that hits hours after the effort, or the days of recovery that happen after what looks like a short burst of exertion. Those functional realities can be documented by treating physicians, but surveillance by design doesn’t really show that part.
Similarly, they review social media for pretty much the same reason. Photos that family members post, location check-ins, and activity descriptions are searchable and can be reused or leveraged. The practical advice is pretty simple: assume you are being watched, filmed, and photographed whenever you are outside, and then review the social media settings for both your own accounts and the accounts of people who regularly post about you.
Paper reviews without examination
Some denial decisions are based on a paper review. For example, a physician retained by the insurer can look at a patient’s medical records without ever seeing the claimant in person. Courts have noted that treating physicians, who actually examine and care for a patient, usually have better insight into functional limitations than reviewing doctors who never did.
Still, under ERISA, the insurer is permitted to have their own interpretation of things. The mismatch between the treating physician’s view and the paper review view is one of those frequent things on appeal and it often becomes a common reason to push back on denial decisions in federal court.
The Administrative Appeal: Why It Is the Most Important Stage
In ERISA claims, the administrative appeal is not just a formality. It is the only chance to shape the evidentiary record that later decides what happens in any lawsuit. When federal courts review ERISA benefit denials under the arbitrary and capricious standard, they usually limit their review to the administrative appeal record. Evidence submitted after that record closes is often excluded. If they are not submitted before the appeal deadline, they will not be considered in litigation.
ERISA also pushes the insurer to give a written denial explanation and to run the appeal process within set timeframes. Usually, people are given 45 days for initial claims, with a single 45-day extension. Claimants are allowed to inspect the claim file, including the IME report and any internal medical reviews the insurer used to prop up the denial, before they submit the appeal.
An attorney focused on disability insurance, when hired at the appeal stage, can spot the record gaps the insurer took advantage of. The attorney can also submit counter-opinions and can keep the arguments preserved for whatever might come later if litigation becomes necessary. If you wait to retain counsel until after the appeal is already filed and the record is basically closed, you will have way fewer options left.
Denials of disability insurance claims aren’t all the same, and the fix that can be pursued depends on whether the claim is covered by ERISA or by state insurance law, which makes a big difference. That threshold issue ends up driving a lot, including whether bad-faith-type remedies really show up, what evidence a court actually sees, and if the case even gets to a jury.
IMEs, surveillance, paper reviews, and the definition change at round 24 months are systematic and often documented. If you understand that going in, a claimant can start building a record that quietly pushes back instead of just reacting after the denial is already issued and off of a less complete evidentiary base.
The administrative appeal is usually the last real moment where evidence can be added in an ERISA record. So what goes in before that deadline is what really matters when it’s in court.