Article 2: I. Background (Continuted): The Limited rights of Claimants As Another Reason for the Need for Even Stronger Regulations.

In the Supplementary Information to the revision of the claims procedure regulations under the ERISA statute for employee benefit plans providing disability benefits, The Department of Labor noted the extremely limited rights of claimants to litigate denied claims.  The DOL pointed out that, under the ERISA statutes, as interpreted by the courts, “claims are often reviewed by a court under an abuse of discretion standard based on the administrative record.” 

Let’s break down this statement.  The first part of the statement is that when you get to federal court your claim will be ‘reviewed by a court.’  That’s curious.  Aren’t courts supposed to be where you get to prove your case at a trial?  Not so under ERISA law. You don’t get to have a trial.  You don’t get a jury.  You don’t get to depose witnesses or request that the insurer or self-insurer produce all relevant documents.  You don’t get to file motions, bring in experts and do all the things that have come to represent a full and fair trial.  You just get a review by a judge.

The second part of the statement is that the court will review the case ‘under an abuse of discretion standard.’  What that means in lay terms is that the judge can only overturn the insurer’s decision if it was ‘irrational,’ or is not supported by substantial evidence.  The judge must defer to the insurer’s decision unless you can show that it doesn’t have reasonable support based on the administrative record.  The judge does not get to determine whether the claimant is disabled or not.  She only gets to decide whether the adverse determination was reasonable.  Exactly why the system leaves so much power in the hands of insurers to review and decide the claims when they are the ones who must pay benefits on approved claims is hard to understand without taking a very pro-business view of the economy. 

The last part of the statement is that what the court is reviewing is ‘the administrative record.’  Generally, the documents provided by you during the appeal process, if any, along with the documents obtained or generated by the insurer or self-insurer, constitute the administrative record for your claim.  That record can only be supplemented under very narrow circumstances.  If you are not savvy enough to submit medical records, neuropsychological exams, FCE exams, sworn statements or anything else that a sophisticated lawyer might obtain and submit on your behalf, you are very unlikely to have enough evidence in the record to show that the insurer or self-insurer abused its discretion in denying your benefits. 

As you can imagine, with this system firmly in place the Department of Labor has limited power to add protections for claimants.  But in the next article we will review what they have done, or tried to do, with these new Regulations.

 

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