What is ERISA?
ERISA is short for Employee Retirement Income Security Act of 1974. In a nutshell, ERISA is an extremely complex federal law that was established to regulate and set minimum standards for voluntary group employee benefits plans. Generally speaking, ERISA governs any “plan, fund or program which was. . . established or maintained by an employer or by an employee organization, or by both, to the extent that such plan, fund, or program was established or is maintained for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise. . . medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death or unemployment. . .” See 29 U.S.C. § 1002(1). There are exceptions such as, but not limited to, group disability plans established or maintained for the benefit of church and government or plans that fall under ERISA’s “safe harbor” regulations. See 29 C.F.R. § 1003(b) and § 2510.3-1(j).
The vast majority of group disability benefit plans are governed by ERISA. If you received your disability insurance coverage through a relationship with your employer, it is probably governed by ERISA. If you purchased an individual disability insurance policy on your own or through a group that has no connection with your employment, it is likely governed by traditional insurance and contract principles, not ERISA.
Why does it matter whether your disability plan is governed by ERISA?
Simply put, disability insurance plans governed by ERISA operate under vastly different rules than traditional insurance contracts. A few examples:
- Damages/Available Remedies. Because ERISA is a federal law, it pre-empts (or displaces) any state law claims that would be available under traditional contract and insurance laws. See 29 C.F.R. § 2560.503-1(k). This means that claims for extra-contractual or punitive damages, which are based on state law, are unavailable in ERISA governed disability claims. ERISA claimants are required to go through a mandatory administrative appeal process prior to pursing litigation.
- Time Limits. ERISA governed disability claims have very strict and often confusing time limits that must be followed. If your disability claim is denied and you fail to file a timely appeal, your right to pursue the action may be forever extinguished. If you attempt litigation without first completing the the internal appeals process, your claim will likely be dismissed for failure to exhaust administrative remedies. The Supreme Court has also held that ERISA benefits plans may create enforceable contractual limitations that limit the amount of time a participant has to pursue litigation. Contractual limitations periods can vary greatly among policies. The limitations period we see most often requires a claimant to bring suit within three years after proof of loss is required to be submitted. This means the statute of limitations can start running on your claim before it is ever denied. See Heimeshoff v. Hartford Life & Accident Ins. Co. et al., 134 S.Ct. 604, 187 L. Ed. 2d 529 (2013).
- Litigation. ERISA significantly limits a claimant’s rights during the litigation process. In a typical ERISA claim, jury trials are not permitted and there is no right to discovery. If discovery is permitted at all, it is often preceded by extensive litigation and is extremely limited in scope (i.e. discovery into alleged bias by the administrator). Most ERISA claims are decided by a judge based upon cross motions for summary judgment. Claimants are rarely permitted to submit additional evidence of disability during litigation. The judge will usually only consider evidence that was submitted during the administrative review process.
- Standard of Review. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989), is easily one of the Supreme Court’s most significant ERISA rulings. With this ruling, the Supreme Court permitted plan administrators to write discretionary language into the plan or policy document that would change the standard of review for ERISA governed claims from de novo to the more deferential arbitrary and capricious. De novo is a Latin term meaning “from the new.” When a court reviews a claim under the de novo standard, both parties are on a level playing field, with no deference provided to either side. In this instance, the court is trying to determine who is right or wrong. In other words, based on the evidence, is the claimant entitled to disability benefits under the policy or not. Claims reviewed under aUnsurprisingly, in the many years since Firestone was decided, it has become an increasing rarity to find an ERISA governed insurance plan that does not grant deference to the claim administrator. With that said, a deferential standard of review is not guaranteed. The default standard of review for an ERISA claim for benefits remains de novo and the burden lies with the plan administrator to establish the more deferential arbitrary and capricious standard applies. Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 111 (2008) (citing Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). In the right circumstances, there are a few tools in the savvy ERISA disability lawyer’s toolkit to challenge the administrators right to a deferential standard of review. This determination can be extremely complicated and hinge on factors such as where the claimant resides and/or the state in which the insurance policy was issued; how a particular circuit interprets what language is considered sufficient to properly confer discretion to an administrator; and the type of document that contains the discretionary language.
Why do I need an ERISA disability lawyer?
Founding attorneys Joe Capitan and Erik Abell are laser focused on ERISA claims, which is why Abell & Capitan was built from the ground up to handle these claims. There are plenty of attorney’s out there that handle disability claims. Most of these attorneys primarily handle Social Security Disability Insurance cases. Some of these attorneys may also handle other claims, including the occasional ERISA governed disability claim, but they aren’t focused on them. Because of the complicated and unique nature of ERISA claims, it is important to make sure your attorney is intimately familiar with how these claims operate. At Abell & Capitan Law, we are ERISA disability lawyers. When an ERISA governed disability claim is denied, proper handling of the internal administrative appeal process is crucial. The importance of this process is often overlooked or marginalized by representatives that do not regularly handle these claims. Any competent ERISA disability lawyer would tell you it is rarely enough to simply submit updated medical records and a short letter of appeal. An ERISA disability lawyer will be able to quickly identify when an insurance company is playing fast and loose with the evidence or has committed a significant error in the administration of your claim. A competent ERISA disability attorney will also have the tools and resources necessary to make sure your claim is taken seriously by the insurance company.