The first thing to understand about the topsy-turvy world of ERISA disability benefits litigation is that the plaintiff has no right to take ordinary discovery after filing a complaint in federal district court.
Plan administrators have the authority under the ERISA statute to review initial ERISA long term disability claims and to deny claims.
If the administrator denies an initial claim, what follows is an ERISA appeal process. The administrator’s notice of denial must provide information to assist the applicant in appealing the denial, including the reasons for its decision and the steps that can be taken to address these deficiencies.
The ERISA claims process is about as forgiving as a cement floor.
Once the administrator makes a final determination and the claimant has ‘exhausted’ all remedies available under the policy, the claimant can bring an action in federal court to challenge the administrator’s decision.
There is an elaborate scheme set out in § 1132 of the ERISA statute for enforcing rights under the statute through civil actions.
Early in the case, the plaintiff requested a complete copy of his plan and its related amendments from both his company and from Aetna. Aetna and Biogen failed to provide a copy of the plan to the plaintiff until well after it was requested, a violation of law that subjects a plan administrator to a penalty of $110 a day.
ERISA is a federal statute regulating employer sponsored benefits, including pensions, health care and disability plans. With respect to the protection of employee benefit rights, the statute grants exclusive jurisdiction to the federal district courts for civil actions brought by a participant or beneficiary, but provides an exception for actions brought by a participant or beneficiary to recover benefits due to him under the terms of the plan, to enforce his rights under the plan or to clarify his right to future benefits. See 29 U.S.C.
Employers can offer reasonably priced long term disability insurance to their employees as an employee benefit, which is how the vast majority of us obtain LTD insurance. Congress enacted the Employee Retirement Income Security Act (ERISA) in 1974 to regulate and protect employee benefits offered by employers.
An ERISA disability plan is not simply a contract that a person enters into with an insurer or other entity. Rather, it is a plan established by an employer or other entity and offered to a group of employees who may choose to join the plan or not.
The reporting and disclosure provisions of the ERISA statute appear at §§ 1021 – 1031. These sections –
Create the reporting and disclosure duties of administrators ( 1021);
Describe the summary plan description ( 1022) and annual report (§ 1023) that are the two most important parts of the reporting and disclosure scheme; and
Set forth the timing and details of furnishings and filings (§ 1025 and 1026).
Unlike wages, which employees receive directly, employee benefits are established and maintained by other entities, which maintain funds from which to provide benefits to employees in forms other than direct compensation. The entities in question may be tempted to act in ways that benefit themselves rather than the employees who are or may become entitled the benefits, which is precisely what happened all too often in the history preceding the enactment of the ERISA statute.
The ERISA statute excepts five types of plans from coverage under the statute in the “Coverage” section found at 29 U.S.C. § 1003(b): (1) government plans; (2) church plans; (3) plans maintained solely for the purpose of complying with applicable workmen’s compensation laws or unemployment compensation or disability insurance laws; (4) plans maintained outside of the United States primarily for the benefit of persons substantially all of whom are nonresident aliens; and (5) excess benefit plans.
Private disability insurance differs from employer sponsored ERISA group plans in several important ways
Disability Plans Not Subject to ERISA. The ERISA statute excepts five types of plans from coverage under the statute in the “Coverage” section found at 29 U.S.C. § 1003(b): (1) government plans; (2) church plans; (3) plans maintained solely for the purpose of complying with applicable workmen’s compensation laws or unemployment compensation or disability insurance laws; (4) plans maintained outside of the United States primarily for the benefit of persons substantially all of whom are nonresident aliens; and (5) excess benefit plans.
The ERISA statute provides an exemption for certain categories of employers, including church plans and government plans. Employers that are exempt from ERISA generally provide disability plans through insurers in the same way that nonexempt employers do.
Preexisting condition exclusion provisions in group short and long term disability plans are quite different from preexisting conditions as we typically understand them.
Individuals who become disabled and then run into insurance company resistance to paying benefits under their group plans often feel shock and disbelief. They may ask: Why have I been paying premiums all this time only to have my valid claim denied?
Most group long term disability plans require claimants to apply for social security disability benefits. In fact, administrators often offer to assist claimants by referring them to a company that will represent them.
There is a scenario under which you can become disabled, gain a settlement from the third party that caused your disability, and actually end up having to pay more than you netted to the payer of your ERISA disability benefits. Really.