The federal ERISA statute is filled with technicalities, hidden pitfalls and land mines — so much so, the unrepresented claimant has little chance of successfully fighting a wrongful denial of benefits.
Group disability insurance claims can be successfully handled when an experienced ERISA lawyer is in your corner fighting for you. Our law firm is entirely familiar with claim denials involving ERISA-based disability policies, and are able to help you in any stage of the process.
Eight ERISA Traps (just waiting to bedevil your LTD benefits)
ERISA Trap #1: The insurance company (not you) is highly favored.
Under ERISA law, the plan administrator is an employee of the insurance company or is closely affiliated with the company. The plan administrator often (1) runs the disability insurance plan, (2) pays out the disability insurance benefits, (3) often controls the plan’s assets, and (3) decides which claimants do or do not receive an award of disability insurance benefits under the plan.
ERISA Trap #2: Before you can sue the insurance company, you must appeal.
To dispute a denied claim under an ERISA-based disability plan, you must observe ERISA regulations and procedures. That means you must appeal — you will follow the company’s administrative appeal procedure stated in the plan. So basically ERISA forces the claimant to appeal the denial to the same insurance company that denied the claim.
Failure to follow the appeals process, and exhaust all administrative appeals as described in your plan, means you lose any right to sue the insurer as a means to secure your disability benefits.
ERISA Trap #3: If you do bring a lawsuit, you can’t add any new evidence to support your case.
If all appeals are “used up” and the denial still stands, the claim record is closed. To bring a lawsuit against the insurance company, generally the only evidence the court allows will be the same files and records that were sent to the insurance company during appeal.
That is why it is so important to stack the record during the administrative appeal. An experienced disability attorney will know this, and take extra measures to ensure that valuable information is made part of the “record.” Our law firm will always load the administrative appeal with detailed information including:
- medical records
- vocational expert testimony
- medical expert testimony
- medical literature and articles
- physicians’ opinions
- letters from colleagues, employers and friends
- photographs, diagrams, charts
- evidence specifically disproving the insurer’s distortions or misuse of evidence
- evidence to refute in-house medical and vocational exams
- and all other forms of evidence that substantiate your impairments
ERISA Trap #4: Claimant must prove the insurance company “abused its discretion”
In most ERISA claims, to overturn an insurer’s decision to deny disability benefits, you have to do more than just prove you are disabled. You must demonstrate to the court that the insurer abused its discretion or acted arbitrarily in denying your claim. The court will only investigate whether the insurer had a “reasonable basis” for denying the claim.
This is why insurers resort to requiring “independent” medical exams and vocational exams — to produce forms of evidence or “reasonable basis” to help prove the claimant is not disabled. The burden of proof that the insurer did act unreasonably and did abuse its discretion is completely on the disabled claimant.
ERISA Trap #5: Your Case is Not Heard by a Jury
In group disability claims that are in litigation, a judge will decide your claim, not a jury. Insurers know they don’t have to worry that a jury of your peers will hold them accountable.
ERISA Trap #6: “Treating Physician Rule” does not apply.
Under ERISA, the disability plan administrators are not held by law to impart any special consideration to your treating physician’s opinions. The insurance company is free to rely on their in-house medical doctors’ opinions and findings.
The idea of giving little or no weight to the treating physician’s findings by the plan administrator, in order to reach a fair decision of disability, is one of the most heated litigation issues in ERISA cases nationwide.
ERISA Trap #7: Because ERISA is federal law, you get no state protections.
You cannot sue for:
- Bad faith
- Punitive damages
- Emotional distress
- Consequential (special) damages
- Loss of credit claims
- Prejudgment interest for breach of contract
- Tortious interference with contract
- Statutory insurance violation claims
- Deceptive trade acts or unfair practices
- Mandatory attorney fee reimbursement
ERISA Trap #8: Limited remedies for a claimant mean limited incentive for an insurer to approve claims.
As you can see, there is not much in place to keep the insurance company from taking steps to avoid paying costly disability benefits to disabled medical professionals. If the insurance carrier wrongly denies a claim, all they can be sued for is what they should have paid at the outset.
With no penalty to dissuade an insurer from denying legitimate claims, many claims under group plans are denied. In cases where the denial is overturned, the insurance company gets away with having to pay the original claim amount and not much else.
Clearly, ERISA Traps Protect the Disability Insurance Company.
Most lawyers are not familiar with the subtleties and legal ERISA traps. It is important to seek representation from an ERISA lawyer early in your claim.
Marc Whitehead & Associates represents individuals across the United States who are suffering disabling medical conditions. We have built our legal practice on helping clients in their fight to obtain the long term disability benefits they deserve.
Note, ERISA law does not apply to private disability insurance policies you personally purchased directly from an insurance agent.