ERISA Disability Claims are unique. They follow a different structure than most insurance claims and for that reason it is important that you understand how they work or risk losing benefits. ERISA benefit claims involve a review process by the insurance company. The administrator is the company or person that actually makes the decision to deny or pay benefits. If the plan is insured, this is often the insurance company. If the plan is self-funded (i.e. not insured), there’s often a committee of employees or a third party administrator (a “TPA”) that make the decisions.
ERISA Claims Procedures
While it is important to know if your policy provides for a second appeal, after exhausting all appeals, you must file a lawsuit in federal court in order to try and enforce your ERISA appeal rights. ERISA disability insurance claims are litigated very differently than individual long-term disability plans.
ERISA insurance claims end up in Federal Court. They are difficult cases. Part of the reason is that that your claim is heard only before a Judge…. without a jury. Moreover, the administrative record which was assembled during the appeal stage and relied upon by the claims reviewer is generally the only evidence that can be presented in an ERISA case. You should be aware at the beginning that the ERISA claims procedures dealing with benefits lawsuits favor the insurance company.
- apply an improper definition of disability;
- failure to provide any reasons for denial of benefits;
- failure to provide sufficient notice of the denial of the claim;
- the record as a whole suggests that the claims reviewer acted as an adversary looking to deny the claim and oblivious to their fiduciary obligations (as a plan administrator) to look out for your best interests;
- determination of a material fact for which zero supporting evidence is provided.
In order to give you the best chance to win your case and get ERISA benefits, you should seek the advice and services of a skilled, experienced attorney to lead you through this long-term disability insurance process and protect your interests.
ERISA Insurance Law History
ERISA history begins in 1974, when U.S. Congress passed these group of laws originally designed to protect pensions and other employee benefits. Congress intended to protect workers and their families by passing the Employee Retirement Income Security Act – known as “ERISA.” It is contained in Title 29 of the United States Code, and like many other federal statutes, provides a rather general guideline for how the law is to be implemented. Under our system of laws, general laws like these are often flushed out in the courts, where judges interpret the meaning of the vague wording of the statutes. Because of its generality, a lot of the law that guides us today in the area of ERISA has come from the courts, and a simple reading of the statutes rarely provides a complete answer to an ERISA question.
The law under ERISA is applicable to private employers (not church affiliated or government employers) IF these employers provide/sponsor benefits plans for the employees (long-term disability, life insurance, health plans). Why was ERISA enacted? ERISA was enacted to set ground rules or standards for these benefit programs set up by employers. ERISA insurance laws do not apply if the benefit plan was purchased privately. Even though ERISA was made law to protect employees it is considered to be a law that favors employers because of the review standards it applies. It does offer some protection by requiring plan fiduciaries to follow certain standards in managing the plans.
In April 2018 the U.S. Department of Labor enacted new regulations to place more stringent standards on plan administrators and fiduciaries. The new rules add several requirements to the ERISA appeals and claims process for benefits:
A) Plans must ensure that claims and appeals are decided independently to help ensure fairness in the process. Plans cannot be incentivized by the number of claims denied.
B) If a plan sends a plan participant a letter denyting benefits, the letter must state:
- That the plan participant/claimant (person making the claim for benefits) is allowed to have access to their claims file which consists of all documents (including medical records) in the claim.
- The denial letter has to say why the insurance company did not agree with the doctors, or other health care providers of the claimant.
- If a claimant has been awarded Social Security Disability benefits, the denial letter has to state why the insurance company did not agree with the SSA.
- Claimant must be given a fair opportunity to respond to any new information relied on by the insurance carrier in making their decision.
- Describe the timeline for filing a subsequent appeal or lawsuit.