In answering your question, I’m assuming that your employer’s STD plan is one that is covered by ERISA, the federal law that regulates employee benefit plans. If your ERISA internal appeal of STD benefits is denied, you can bring a lawsuit, generally in federal court, since ERISA “pre-empts” state law causes of action. If you do file suit, the court will review the record of your administrative claim with the employer’s plan. The court will not allow you to present new evidence, so it is important to bring out all relevant facts during the internal claims and appeals process.
Bringing a lawsuit under ERISA, however, can be an expensive and time-consuming process. I would recommend that you consult with an experiences ERISA/disability claims lawyer before deciding whether to proceed (assuming, that is, your appeal is denied—you cannot go to court under an ERISA plan until you have fully exhausted the internal claims and appeal process of the plan). Different federal courts use different standards in deciding whether to overturn a plan’s denial of an ERISA claim on appeal. Most federal courts hold that you have to prove that the plan’s decision to deny your appeal was “arbitrary and capricious.” This means that, if the court can see how the plan could come to its conclusion based on the law and the plan language, even if it disagrees with the plan’s interpretation, the court would uphold the company’s/plan’s decision. Therefore, if your case is within a federal jurisdiction that uses the “arbitrary and capricious” standard, this is a very tough burden for a plaintiff to overcome, even though there may be merit to his or her case. A few courts, instead of applying the “arbitrary and capricious” standard, apply a “de novo” standard, i.e., they review the claim as if it was being tried for the first time and do not defer to the decision of the plan administrator. Typically, however, federal courts use the “arbitrary and capricious” standard or something similar, which makes it difficult for a plaintiff to prevail in a case where disability benefits have been denied unless the plan administrator clearly ignored the law, the facts, or the terms of the plan document in making its decision.
You can file a lawsuit to recover the benefits due under ERISA (the Employee Retirement Income Security Act). However, because the damages for wrongful denial of coverage under a Short Term Disability policy are so limited, it can be difficult to find an attorney willing to take such cases.
This is extremely complex litigation, generally conducted in Federal District Court. Do not try to litigate this matter yourself. Try to find a lawyer in your area experienced in ERISA and disability claims. In the meantime, you can apply for Social Security Disability to help cover your lost income while you work through your dispute with the STD carrier.
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