This paper addresses litigation of long term disability (LTD) claims under state law. Whether a claim is governed by state law or the federal law of ERISA depends upon the how the policy was purchased and administered. The threshold issue of which law governs must be analyzed in every case, and is a topic far too complex to be covered in this paper. As a broad generalization, most cases involving state law will arise out of policies purchased by individuals, and not as part of an employer program. Cases governed by state law seem to be far fewer than those governed by ERISA – probably because so few people purchase LTD insurance on their own.
Any insurance agent will tell you that, next to health insurance, disability insurance is the most important coverage one should purchase. Statistically, one is more likely to sustain an early disability which interferes with one’s earning capacity than to suffer an early death. Moreover, the financial consequences of an early disability can be far more disastrous to a family than the premature death of the primary breadwinner. In the event of the early disability of a family breadwinner, not only does income cease, but family living expenses generally rise due to the cost of caring for the disabled family member.
Disability insurance is expensive relative to other forms of insurance. Therefore, a small percentage of the working public purchases individual disability income policies. Due to the expense of purchasing such a policy, the insured claimant is typically a high income professional (doctors, lawyers, CPA’s and insurance agents themselves are the largest markets for this type of insurance). Most of these individuals typically buy policies having a relatively high monthly benefit. Therefore, by definition, it is likely that any long term disability lawsuit which arises under Georgia law will involve a significant dollar amount, raising the stakes for both sides in the litigation.