Exclusions to Coverage - Burden of Proof is on the Insurer

While it's the claimant who bears the burden of proving disability, the insurer carries the burden to prove an exclusion to coverage applies under the terms of the Policy, such as a pre-existing condition exclusion or a limitation on benefits pursuant to a diagnosis of a mental disorder.

It is well-settled that under ERISA law, claimants must prove their entitlement to benefits. Gallagher v. Reliance Std. Life Ins. Co., 305 F.3d 264, 270, 275 (4th Cir. 2002) - “Generally, the burden of proving a disability is on the employee.”

However, the insurer bears the burden of proving facts that support an exclusion of coverage, because “federal courts treat insurer claims of policy exclusions as affirmative defenses.” Fought v. UNUM Life Ins. Co., 379 F.3d 997, 1007 (10th Cir.2004); Dowdy v. Metropolitan Life Ins. Co., 890 F.3d 802 (9^th Cir. 2018); Mario v. P& C Food Mkts, Inc., 313 F.3d 758, 765 (2^nd Cir. 2002). [See also: Jewell v. Life Ins. Co. of North America, 508 F.3d 1303 (10^th Cir. 2007) – an insurance company “has the burden of proving by a preponderance of the evidence that [a policy's] mental illness exclusion applies…”; Caffey v. Unum Life Ins. Co., 302 F.3d 576, 580 (6th Cir. 2002) - “ERISA places the burden of proving an exclusion from coverage in an ERISA-regulated welfare plan on the plan administrator”;  Farley v. Benefit Trust Life Ins. Co., 979 F.2d 653, 658 (8th Cir.1992) - “According to common law trust principles, the administrator of an ERISA-regulated plan has the burden to prove exclusions from coverage”.]

This reversal of the normal burden of proof rules is particularly relevant in cases where an insured claims to be disabled from a physical condition, such as fibromyalgia or chronic fatigue disorder, but the insurance company treats it as a mental condition to limit benefits.

Or, when an insurer declines to decide an LTD claim on its merits and instead excludes coverage based on a pre-existing condition.