ERISA Lawsuits & Trials
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Attorneys Dell & Schaefer have extensive experience in litigating ERISA long-term disability claim denials.
In a disability claim governed by ERISA a lawsuit can not be filed until all administrative remedies have been exhausted. Most long-term disability policies governed by ERISA require at least one appeal to be submitted before a lawsuit can be filed.
Unlike an individual disability policy, the federal court has jurisdiction over all ERISA long-term disability cases.
One of the most challenging aspects in an ERISA disability lawsuit is the standard of review that a Federal Court will apply when reviewing a long-term disability denial.
The most favorable standard of review for a claimant is a de-novo review. A de-novo review essentially means that the judge will conduct an independent review of the entire administrative record and make a determination as to whether the claimant is entitled to disability benefits. The least favorable standard is the abuse of discretion standard which means that the judge can only reverse the insurance company’s denial of benefits if he believes that the denial of benefits was wrong and the insurance company acted arbitrary and capricious. Essentially, the Judge must find that the insurance company acted unreasonably in order to reverse a disability denial. The Judge will determine which standard of review to apply depending on whether or not the subject long-term disability policy contains a “discretionary clause” that grants discretion to the insurance company to interpret the terms of the disability policy and determine eligibility for benefits.
There are currently multiple states that have sought to ban the use of discretionary clauses in disability policies. Unfortunately, most employer provided long-term disability ERISA policies contain discretionary clauses, which means that the abuse of discretion standard is commonly applied by federal courts throughout the country. Attorneys Dell & Schaefer has successfully utilized multiple legal strategies to defeat discretionary clauses and obtain a de-novo review of our client’s case.
There are significant differences between a lawsuit filed pursuant to an ERISA long-term disability plan versus an individual disability income policy. Unlike a lawsuit filed for failure to pay disability benefits pursuant to the terms of an individual disability policy, an ERISA claimant is not entitled to a jury trial. An ERISA disability lawsuit will be resolved by a Judge and in most cases the decision is made via the filing of a summary judgment motion. Another ERISA disadvantage is that it is difficult in most federal circuits to receive an award of attorney fees for the prevailing party in an ERISA disability case.
Furthermore, unlike most individual disability policies, ERISA regulations do not allow any claims for bad faith or punitive damages for an insurance company’s wrongful denial of long-term disability benefits. Essentially, if a disability insurance company looses at an ERISA trial their only exposure is payment of past due benefits and possibly interest and attorney fees. It is a misfortune of justice and pro-insurance company law that there are no legal tools such as bad faith or punitive damages available to punish insurance companies for their denial of ERISA governed long-term disability insurance claims. There are certain ERISA regulations that provide for civil fines or penalties due to an employer or insurers failure to provide plan documents or comply with certain ERISA reporting requirements; however these penalties are inconsequential for most large disability insurance companies.
Attorneys Dell & Schaefer have litigated numerous ERISA long-term disability denials throughout the country and we are available to provide you with a free consultation to discuss your options.