At first glance, tennis may look a little like pickleball. But the rules are totally different. The same is true of ERISA claims. If you try to file an ERISA claim against an insurance company like any other personal injury claim, you and your client will lose because the rules are different.
Special Rules for Every Step
Most disability insurance policies are created to make it very difficult for claims to be approved.
Short and long-term disability insurance policies offered by employers are likely governed by a federal law called The Employee Retirement Income Security Act (ERISA). In general, if the disability insurance policy is issued by an employer, it is governed by ERISA unless the employer is a religious entity or a government agency. ERISA was intended to protect employees; however, it gives insurance companies shocking advantages. ERISA litigation is a world unto its own and is different than any other type of case litigated in Federal court.
First, you must exhaust all administrative appeals before you can even file a lawsuit. Your appeal to the insurance company is the last chance to submit evidence that supports your case. If it is not submitted during the administrative appeal, chances are it will not be reviewed by a court. Developing a good administrative record is crucial to an ERISA disability claim. The insurance company has zero incentive to develop a record favorable to you. Therefore, it is extremely important to hire counsel before the administrative process is complete. Without representation, the deck is stacked against a claimant and mistakes can be made that will destroy the case.
No Jury Trials
ERISA disability cases are also unique in that there are no jury trials. These cases are decided on cross motions for summary judgement. The judge decides the case only on what is contained in the plan document and the paper file in the administrative record. This means the claimant does not get to testify and fully present their case before the court. The claimant cannot call any witnesses including treating doctors, employers, family, or friends. This also means a claimant is not allowed to take any depositions of the insurance company representatives or their doctors.
These cases also offer very limited remedies. You don’t have the right to sue for damages, only benefits owed under the plan. Therefore, insurance companies face no significant financial punishment for wrongfully denying claims. Even if you win in court, the judge cannot award you damages for all the inconvenience this has caused you. The only power the judge has it to award you the money the insurance company owes you in the first place. The judge also has discretion to award attorney fees.
Many disability insurance policies have clauses meant to limit your recovery. On top of limited remedies, there is usually offset language. The money the insurance company owes you is offset by other awards for disability, accident, or injury including Social Security Disability, worker’s compensation benefits, and Veteran’s Administrative benefits to name a few. These offsets dramatically affect the value of a case.
Many policies also give the insurance company discretion to determine benefits and interpret the policy. These cases have a brutal abuse of discretion standard of review.
In addition, many policies contain exclusions for mental illness and pre-existing conditions.
There are few, if any, easy ERISA disability claims. You would think that if treating doctors, employers, and the Social Security Administration all believe you are disabled, then the insurance company would agree and approve your benefits. This is NOT the case. It’s just like if you and your client play doubles in tennis. No matter how good you are, if you use pickleball rules, it’s going to be game-set and match to the insurance company.