What is ERISA and how does it apply to my long term disability insurance claim? ERISA stands for the Employee Retirement Income Security Act of 1974. ERISA is a federal law that regulates the handling of Employee Benefit Plans and the remedies of the beneficiaries of these Plans. ERISA applies to all employees benefit plans established or maintained by an employer engaged in commerce or by an employee organization representing employees engaged in commerce. Practically all long term disability plans offered by a private employer are governed by ERISA. A claimant challenging a disability denial under an ERISA governed plan or policy must bring the claim pursuant to ERISA regulations and procedures. All state law remedies are preempted, meaning they do not apply to an ERISA claim.
However, ERISA does not apply to privately purchased insurance. If you purchase your own private individual or family disability policy, then ERISA does not apply. To be clear, it must not be a policy obtained through your employer sponsored group benefits plan. If you do purchase your own private policy, you are entitled to all procedural rights and remedies available to you in your state just like you would under your privately purchased homeowners or life policies. Good for you if you have a private disability plan. You will be treated much better by your insurance company.
If you did obtain your disability insurance policy through your employee benefits plan there are some possible exceptions to ERISA. They include:
- Government employee Plans
- Church Plans
- Self Employed Individuals
- Some Partnerships
- Pass Through Plans
Below are listed some of the reasons why ERISA is favorable to the insurance company and not favorable for you:
- No State Law Claims
- Limited ERISA Remedies
- No Right to Jury Trial
- No Treating Physician Rule
- Little Government Regulation.
- Plaintiff Must Prove Insurance Company “Abused its Discretion”
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ERISA regulations require that all Employee Benefit Plans have an Internal Administrative Appeal or claims procedure. The courts have interpreted this to mean that it is mandatory that a claimant go through with an Administrative Appeal and “Exhaust” all administrative remedies before a claimant has a right to file a lawsuit.
The denial of a disability claim must be done in writing by the insurance company. Generally, the last paragraph or two of the denial letter will spell out the deadline for filing the administrative appeal and will also give important information for an appeal, including where to send the appeal. If the policy is governed by ERISA, the appeal deadline is 180 days. It is very important to read the denial letter carefully, so no deadlines are missed. If an appeal deadline is missed, the claimant will be unable to appeal. If the claimant does not “exhaust” or use all appeals available, the claimant will not be able to file a lawsuit.
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Finally and more importantly, get legal help filing your administrative appeal. It is a trap for the unwary. This will be the only opportunity to “load the record” with evidence favorable to your claim. For more information and free resources on the topic, visit our website at disabilitydenials.com and set up an appointment with one of our disability claims lawyers.
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