• 13
  • December
    2011

In Part 1 of this blog, I explained some of the reasons insurance companies love ERISA - the Employment Retirement Income Security Act.  Part 2 is about what insureds can do about ERISA? The short answer is, not much. But there are a few things that can help.

First, make sure ERISA governs. Often, insurance companies claim ERISA governs when it doesn't. The insurance company bears the burden of proving ERISA governs. Make the company prove it. Maybe the employer didn't really sponsor the life, health or disability benefit as part of its employee benefit plan. Maybe you're dealing with an individual policy, which is less likely than a group policy to be considered part of an ERISA plan. If you ask for proof and the insurance company responds with a settlement offer, then that might be a sign that ERISA doesn't really govern.

Second, get involved as early as possible. This might mean getting an attorney to help file the initial claim. Or, if the initial claim has been denied, having the attorney help with the claim appeal process. (ERISA mandates an appeal process.) The claim file will eventually become the closed "administrative record" and you want to make sure it includes everything you need to support your claim. You will have hard time supplementing that record once litigation is started.

Third, use ERISA. Its statutes and regulations provide numerous opportunities for the insurance company to mess up. And insurance companies do mess up. They miss mandatory notice deadlines. They fail to follow administrative appeal procedures. They draft denial letters that are boilerplate rather than being tailored to the claim at issue.

Fourth, look for "conflicts of interest." The assumption underlying the "abuse of discretion" standard is that the insurance company is acting as a claim "fiduciary" and looking out for the employee's best interest. If you can show that the insurance company had a conflict of interest that impacted how the claim was handled, you can argue the abuse of discretion standard shouldn't apply so that the judge can review the claim "de novo." For similar reasons, you can argue that some limited discovery should be allowed to explore that conflict of interest. (Sometimes the "mess ups" mentioned above are the tell-tale signs of a conflict of interest.)

Finally, if a lawsuit is filed, demand attorneys' fees. ERISA allows the prevailing party to seek attorneys' fees. ERISA is a complicated area of the law and, in my experience, many fee applications by counsel for insureds are granted. That means the insurance company doesn't have to worry just about paying it own fees but yours also.

Brenden J. Griffin is a shareholder at Gabroy, Rollman & Bossé, P.C., and has been litigating disability, life, health and ERISA insurance claims for over 10 years. He can be reached at 520.320.1300.