Frequently Asked Questions Page
What Is ERISA?
ERISA is the acronym for the Employee Retirement Income Security Act of 1974. The law which governs ERISA includes the federal statute 29 USC. 1001, et seq.; the federal regulations; and the decisions of the federal courts. ERISA originally related to issues for peoples pension fund administration. ERISA now primarily centers on employee benefits including employer-sponsored health and disability insurance plans as well as individually owned plans.
How does ERISA affect you?
If you are a participant or covered by an ERISA-governed employee welfare benefit plan provided by your employer or paid for from your wages, ERISA directly effects and governs your rights to the plan benefits. ERISA governs your rights and the insurance companies obligations regarding your benefits.
What is an Employee Welfare Benefit Plan?
An employee welfare benefit plan is any plan of benefits provided by an employer in to an employee, generally covering medical and disability insurance coverage benefits.
Does ERISA protect my right to receive benefits under my medical or disability plan?
Yes, but with limitations. ERISA claims to provide greater rights and protections than it actually does. ERISA has actually taken away many of employees rights, The biggest problem is that the federal ERISA law pre-empts, or supersedes, state laws, in regards to group medical or disability insurance, and there are no federal consumer insurance laws to give back what the ERISA statutes have taken away.
Did the insurance company even review my claim? How was I denied?
Yes. ERISA requires that a claim must undergo a full and fair review by before a denial of benefits determination is made. (See 29 USC Section 1133(2). All insurance company’s plans have the initial claim review, and second and separate appeal division which reviews the entire file and which they base their decisions upon. A person, the claimant, must exhaust all their appeals and review processes, before they can file a lawsuit. This is not as simple as it sounds, since this process is actually a set of hurdles that must be jumped over before a lawsuit can be filed. Also, it creates a hurdle because it is at these stages, and only these stages, where the administrative record is created.
What kind of duty does ERISA impose upon the administrators, or insurance company, to processing my claim for benefits fairly?
Plan administrators have what is called a fiduciary responsibility on anyone, who exercises decision-making authority on a persons claims for benefits under their plan. However, since the only damages a person can obtain is what they owed anyways, generally there is not incentive for insurance companies to act as a fiduciary should.
What is the administrative record?
The administrative record is anything and everything that the insurance company reviewed and took into consideration in making their decision to either pay or deny a person’s claim for benefits. It can and usually includes; medical records and reports, any communications (written or telephonic) between the insurance company and the insured; the insurance companies own medical review and reports; any vocational testing and reports, any surveillance of the insured, plus many other important documents. The only time that documents, of any nature, may be added to the administrative record is during the claims and appeals process. Once the final appeal has been made, whatever is in the administrative record will be the ONLY evidence a court will see when it reviews a case. No matter how important a document may be, if it is not in the claims file, and a lawsuit is filed, the judge will never see it. This is the very reasons why it is so important to have an attorney assist you in prepare the appeal of any denial of benefits. This will increase your chances of prevailing at trial.
If my insurance company wrongfully denies my claim, what can I sue for?
The only benefits a person is entitled to in an ERISA lawsuit, are 1) all back due amounts of benefits owed, 2) interest, 3) costs and 4) at the discretion of the court, an award of attorney fees. So, even if a person is forced to file a lawsuit, and they win (not always easy to do) the most that the insurance company can lose is what they would have paid initially if they didn’t improperly deny the claim, plus a discretionary amount of attorney fees. Since an insurance company generally can’t be forced to pay punitive damages there is very little incentive for them to fairly process peoples claims.
What if my claim is improperly denied? Can I sue the insurance company for punitive damages?
No. If the plan you are a part of a group policy which is governed by ERISA, one of those consumer rights taken away is suing for “Bad faith” and possibly obtaining punitive damages. Punitive damages are not available under ERISA, no matter how frivolous, or how inappropriately an insurance company has acted in denying your claim.
If you have been denied disability insurance coverage call us immediately at (818) 356-4747 for a FREE CONSULTATION.