Unfortunately, filing a claim for ERISA long-term disability benefits is often only the beginning of your fight to receive payments under your policy. Insurance companies take a “prove it” attitude towards claims, rejecting many of them and forcing claimants to file an appeal.
The good news is that claim denial is not the end. You have three successive steps in the appeals process to challenge the denial. However, you must not overlook any of the early steps of the appeals process, especially when you contest the claim denial with the insurance company itself.
You Must Take Each of the Numerous Steps in the ERISA Appeals Process Seriously
Many people think that ERISA litigation is how they will receive benefits. In many cases, this is true, but a lawsuit is the second step in a process that builds on what you have done in the first step.
The first part of the appeals process is an administrative appeal to the insurance company. If you do not expend the necessary effort in your insurance company appeal, you will not succeed at trial.
To make this point, we will explain how the ERISA appeals process works. An ERISA appeal is unlike a workers’ compensation appeal. If the insurance carrier has denied your workers’ compensation claim, you can take your appeal directly to a state appeals board. ERISA is different because it is a federal law and not a state statute.
Congress and the Department of Labor have decided how the ERISA appeals procedure works. When they wrote the law, they gave the insurance companies even more power by allowing them to decide appeals. While this seems unfair, this is the way that the law works and the system in which you find yourself.
You Must Go Through the Insurance Company to Reach Federal Court
You cannot reach the federal district court for an ERISA trial without going through the insurance company first. They will assign a supposedly objective reviewer who is different from the adjuster who denied your initial claim. The reviewer will consider the record that both you and the insurance company will build during this first stage of appeal. It is not impossible to win at this stage of the appeal, but you must be thinking about future steps at the same time.
What Must Your Appeal Record Contain?
The evidence includes things that both you and the insurance company have put forward in support or opposition to your claim.
The appeals record at the administrative appeal can include:
- The plan document
- All of the information submitted with your claim
- Your medical records that support your claim
- Information about your job duties
- The insurance company’s notes and record of evaluation of your claim
- Your appeal letter and reasons for the appeal
For the reasons that we will explain below, it is better to err on the side of caution and introduce as much information supporting your claim as possible, even if you do not think that you will be getting an objective review from the insurance company. You will not get a second chance to do this, regardless of how objective the insurance company is or is not. Our attorneys can help you build the most effective and comprehensive record possible.
The Steps in Your Appeals Process
We often hear from clients who want to go straight to federal court with their appeals. They think that any further dealings with the insurance company are a waste of time because they will never get a fair shake from the company that would need to write them a check if the insurer grants their claim. While we cannot vouch for the insurance company’s objectivity, we can say for certain that you cannot go directly to federal court.
You must follow these three steps in order:
- Appealing at the insurance company level
- Appealing to the federal district court
- Filing the final appeal with the federal appeals court
Not only do you need to go through the insurance company first, but you must also do everything you can to build a strong record for their reviewer to consider. Even if the insurance company will not fully review your evidence and arguments, you must do this. Your real audience is the district court judge reviewing your case if you need to reach the next level of appeal.
What Happens in an ERISA Trial in Federal Court
If the insurance company rejects your appeal, the next step is to file with the federal district court. A judge will receive your case and review your file. This is what you are probably thinking of as the ERISA trial that you need to receive benefits.
However, while you will still get a full and fair hearing, the ERISA trial is not a trial in the traditional sense. The lawsuit process for a regular court case does not apply here. Your lawyer will not be up in front of the judge cross-examining insurance adjusters to prove that they wrongfully rejected your claim.
Specifically, in an ERISA court case, the following does not happen:
- The lawyers will not go in front of the judge to argue the case (except in very rare circumstances)
- You will not have the opportunity to testify
- The lawyers will not question witnesses
- There will not be a discovery process where the two sides will exchange information
- A jury will not hear your case (although that can change in the future as the law may be evolving in this area)
The Steps in a Federal Court ERISA Appeal
With that in mind, you are probably wondering what does happen in an ERISA trial.
You still end with the same result (a decision from the judge), but the process to get there is different. Here is what does happen at an ERISA trial:
- Both sides will file briefs with the court explaining and arguing each side of the case.
- The judge will receive the administrative record, which is the exact record that was in front of the insurance company at the previous stage of appeal.
- The judge will review the file from the beginning, making their own determination about whether you can receive benefits and not giving any deference to the insurance company’s prior decision.
- The judge will then issue a decision about whether to sustain your appeal.
You Cannot Add to the Administrative Record During a Trial
Notice that we said that the judge receives the appeal record from the insurance company appeal and reviews it. This means that you cannot try to supplement the record or build a new record after the insurance company denies your appeal. You generally must only use the record from the previous appeal. You cannot correct any gaps because you missed something.
Not only do judges not allow you to add to the record, but they have significant restrictions from asking for additional information. Requests for additional information usually only happen when the insurance company did not follow the ERISA rules during the appeals process. There have been district court decisions that granted benefits that higher courts later reversed because judges improperly allowed more information to come into consideration.
The Federal Judge Will Review the Insurance Company’s Denial of Your Claim
The point of the process is to get an objective review from a federal judge. You will still receive this, albeit with different rules. You can rest assured that the insurance company does not get the final word after they deny your benefits. While you cannot file a lawsuit for a bad faith denial, you might file a claim against them if they failed to follow the proper ERISA procedures. If the insurance company has unreasonably denied your claim, the judge will reverse their decision and grant you benefits.
The same rules apply to the third step of the process. If you do not win your appeal at the district court, you can go to a federal appeals court. This court will also not accept new information for the record. They will review the district court’s decision in light of the record, and they will overrule them if the judge made an error. This is the final step in the appeals process (outside of an appeal to the Supreme Court, which is exceptionally rare).
Build the Strongest Record You Can Early Because You Cannot Do it Later
What this means for you is that you need to take every step of the process seriously. You cannot count on continuing to try to get things right that you may have gotten wrong during the initial appeal to the insurance company. The record that you build here is the one that you will rely on to prove your case throughout the entire appeals process.
If you do not do the necessary work here, you may eliminate your chance for a successful appeal. You never know which one piece of information can persuade a judge to overrule the insurance company, so you need to put much thought into building the record.
The best way to avoid errors in the appeals process that you cannot fix is to hire an experienced ERISA attorney immediately after your claim results in a denial. This is a process with tight timelines, and you cannot afford to waste any time.
In addition, this is not something that you should try to handle on your own. The insurance company sees scores of claims each year, and they know exactly what they are doing. The only person qualified to take them on is one with their own extensive experience in ERISA appeals.
How an Experienced ERISA Attorneys Helps Your Case
Here’s how your ERISA attorney can help your claim:
- If you choose to hire the attorney before you even file the claim (and this is always a good idea), they prepare documentation to show the insurance company that you deserve benefits.
- They can contact the insurance company after a claim denial to clear up any misunderstandings over minor issues with your claim.
- Your lawyer will work to build a strong record for the appeal so that, even if the insurance company rejects your appeal, the strength of your claim will be apparent to the judge.
- They may negotiate a possible settlement with the insurance company during the trial phase of your appeal.
- If your case goes to the federal district court, your lawyer will draft the necessary motion that will argue your case to the judge.
As you can see, you cannot afford to be without an attorney from the earliest stages of your appeal. If you did not hire an attorney for the claim itself, you need to call one right after a claim denial.
Do Not Try to Take on the Insurance Company By Yourself
Everything that we listed above is not all the court will expect you to do on your own. At the same time, the stakes in an ERISA appeal are very high. This is the money that you will need to support yourself well into the future.
If you miss valuable time or do anything wrong early in the process, you cannot correct your mistake later. The insurance company has an entire apparatus in place, including adjusters and attorneys, and it is very difficult to go up against this on your own.
You can get a free consultation in your ERISA benefits case, so there is no risk in calling a lawyer to see what they can do for you. This is something that you will not regret. On the contrary, not getting the legal help that you need can be a hurdle that you cannot overcome, and it may keep you from getting the ERISA disability benefits that you badly need.
Following graduation from Loyola Law School in New Orleans in 1990, Price McNamara served as a Federal Judicial Law Clerk to the Honorable John M Shaw, Chief Judge, United States District Court Western District of Louisiana.
Mr. McNamara founded the Law Offices of J. Price McNamara, and began putting his past experience to work for the injured and disabled clients he now represents against the insurance companies in personal injury and long term disability and other insurance disputes in both federal and state courts