Most people have never heard of ERISA, or the Employee Retirement Income Security Act until they experience a personally and financially devastating situation that requires them to seek insurance benefits from their policy. ERISA controls the majority of employer-provided benefits throughout the country including life insurance, accidental death and dismemberment insurance, and short and long-term disability insurance. Although ERISA was enacted to protect claimants’ rights, in reality, and in practice, it can give insurance companies the upper hand over victims pursuing a claim for insurance benefits. If you were negatively affected by one of the flaws of ERISA law, do not hesitate to speak with a seasoned ERISA lawyer in Louisiana who could help.
Manipulating ERISA begins with the initial claims process – one that is wracked with conflicts of interest. When a victim files a claim, the initial decision to pay or deny it is almost always made by the insurance company itself. The insurance company loses money when they have to pay claims and profits when they can deny them. So, if an insurance company’s entire business model is to maximize the money they make from their customers who think they’re buying protection, then they will naturally work to minimize what they have to pay in claims.
If the insurance company initially denies the claim, which is the norm, ERISA prohibits the claimant from filing a lawsuit until the insurance company completes an independent administrative appeal. However, the same insurance company decides whether to uphold or overturn the original denial at the administrative appeal level. By independent, they simply mean different staff members of the same insurer that initially denied the claim. So, what’s the incentive for them to draw a different conclusion than the result their colleagues want? The typical result is the denial of the claim on administrative appeal. One of the major flaws of ERISA law regards the appealing process.
After the insurance company denies the administrative appeal, ERISA allows the victim to file suit in federal district court. A federal district court judge ultimately conducts a trial, but one which is different than what most people would picture. Unlike most lawsuits, ERISA suits are not tried before a jury. Nor do any live witnesses testify. Instead, the trial evidence is limited to the administrative record. That is, the judge is only permitted to consider the same evidence the insurance company reviewed in the process of denying the claim.
The actual administrative claim file is filed into the court record, and attorneys representing the victim and the insurance company file trial briefs arguing the merits of the victim’s cases in light of ERISA law and the evidence in the administrative record. The district court judge reviews all of this and then may or may not allow the attorneys to give oral arguments before issuing an opinion and judgment for either the insurance company or the claimant.
What this means for the claimant, is that the initial claim and administrative appeal process is critical to success. If they do not present important evidence to the insurance company during the initial claim or administrative appeal, the court is generally prohibited from considering it at trial. ERISA law can require that the judge completely disregard even evidence it considers critical or outcome determinative if presented at trial if not made part of the administrative record before the claimant files suit. For that reason, handling the initial claim and administrative appeal process properly before filing suit is crucial. The claimant’s ERISA attorney’s job is to navigate these flaws ERISA of law and assure that all evidence conceivably helpful to the claimant is gathered and made part of the administrative record before filing suit. Otherwise, the judge cannot consider it when the case inevitably lands in court after the insurance company denies the claim.
In addition to ERISA’s constraints on the courts’ consideration of the evidence, ERISA law in most cases requires that the court give a deferential review to the insurance company’s decision to deny a claim. This often means that a judge must uphold a denial even if they think the insurance company was wrong, and even if they would have ruled the other way. It’s not uncommon for a judge to expressly state in a written opinion that they believe the insurance company was wrong for denying a claim, and that the judge would have ruled differently, but must rule in the insurance company’s favor because of ERISA’s deferential standard of review.
These flaws of ERISA law are just some of many and they should serve as a call to action for all of us to repair the injustices in the legal system. If you or a loved one was denied your rightful benefits under an ERISA plan, contact an experienced Louisiana ERISA lawyer right away.
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