Alameda County
Bar Association

Mediation and a Long Term Disability Insurance Benefits Lawsuit 

The Critical Role of Mediation in a Long Term Disability Insurance Benefits Lawsuit

long-term-disability-insurance-settlement-lawsuit Mediation (a form of settlement conference) is now used in nearly every long-term disability (LTD) insurance case I litigate.  Mediation is most similar to a settlement conference in that it is confidential, not subject to the rules of evidence or rules of court, not recorded or transcribed, and requires voluntary cooperation by the parties to reach a resolution.  Mediation is conducted by a “mediator” who is a neutral attorney (or retired judge) with experience in civil litigation, the subject matter of the dispute (e.g. ERISA disability law), and training and experience in assisting disputing parties to reach a settlement of a disputed claim. 

The mediator does not have any authority to order the parties to settle the claim or to decide any question of law or fact in the case.  The mediator’s role is simply to help the parties reach an agreement to settle the case, and settlement is nearly always in the best interest of both sides to a lawsuit.

Mediation may be a free service provided by the court, or a private service selected and paid for by the parties.  However, the cost of privately retained mediators is often beyond the financial means of an individual party.  The full cost of a private mediation must be understood before agreeing to private mediation, since the cost of a private mediation often exceeds $3,000 to $5,000.

Voluntary submission to mediation is not quite as voluntary as it once was, since an increasing number of courts are ordering cases to mediation prior to reaching a trial or final hearing. Settling a LTD benefits claim remains entirely up to the parties.  If the claim does not settle, it goes back to the judge for a final decision. The judge’s decision is not a settlement.  One party wins and one loses.

Most typically mediation takes place anywhere from three to six months after a federal LTD lawsuit is filed.  For unknown reasons to me, mediation is rarely used until a lawsuit is filed.  Maybe it should be used earlier.  I believe up to fifty percent of LTD insurance lawsuits could be avoided through pre-lawsuit mediation, resulting in far greater efficiency for the parties as well as the legal system.  At the moment, the insurance industry is resistant to mediations in employer provided (ERISA) LTD  insurance claims until after a lawsuit is filed.

At the mediation a mediator acts as a neutral advisor to work with the parties to try to reach an acceptable buyout (lump sum payment) of the LTD insurance policy.  There is no formula for how this number is reached, rather, it involves lengthy discussions of the strengths and weaknesses of each side, the risks of winning or losing at trial and the value of finality to the claim.  Having represented a very large number of individuals in mediations for 28 years I can report that nearly every single person was 100% satisfied to have the lawsuit over and out of their life.

Given that approximately 95% of all cases, including LTD insurance cases, either ERISA cases or private individual cases, are going to reach a settlement prior to trial, working with an experienced mediator and having an attorney representing you who has a great deal of experience with mediations can be a highly effective and efficient method to reach a resolution of a case.

Please feel free to ask any questions you may have about the role of mediation in your long-term disability insurance claims.

Randy Noah, a lawyer specializing in the representation of individuals denied long-term disability insurance benefits.  For more information please visit prandallnoah.com.