The insurance company has an incredible amount of power over your ERISA long-term disability claim. You cannot sue the company for a bad faith penalties if they deny your claim, which, unfortunately, gives them the liberty to deny claims more frequently, and this is exactly what they do.
The ERISA process (although recently strengthened by federal regulations to give claimants additional rights) goes in favor of the insurance company. Without an experienced attorney fighting for you, a denial of your claim could be the end of the road when you are seeking benefits.
The Steps in the ERISA Appeals Process
ERISA does give you the right to appeal a denial through a multi-step process. If you win at any of these steps, the denial can turn into benefits.
The three steps in the appeals process are:
- An administrative appeal, which goes directly to the insurance company, where a different person will review the previous adjuster’s denial
- An appeal to a district court, where a judge will review the insurance company’s denial
- An appeal to a federal circuit court, where a judge will review the district court judge’s denial
ERISA laws demand that you fully participate and expend all effort possible at each phase to have the best chance of success. If you do not do the work necessary to build a strong record in front of the insurance company, you will have little chance of success at trial. This is because an ERISA trial is not what you think it is.
ERISA “Trials” Are Streamlined Procedures Without an Actual Courtroom
While an ERISA appeal is known as a “trial,” it does not resemble the trials that you have come to expect after years of watching courtroom shows. This is because there really is not a courtroom involved. The trial is decided by dispositive motions, meaning that the judge will consider written briefs and evidence without calling the parties into the courtroom (unless it is the very rare case where they ask for oral argument).
Sure, there is a judge who will ultimately review the record and issue a decision in your case. Chances are, however, that you will never see this judge. While the judge presides over the case, they do not open their courtroom for a hearing.
If you have visions of your lawyer cross-examining the insurance company adjuster who denied your claim or you being on the stand, it does not happen in ERISA appeals. These cases are about reviewing the administrative record to see if the insurance company made an error in denying your claim.
You Must Thoroughly Prepare for All Stages of an ERISA Appeal
In this way, the law favors the insurance company in an ERISA appeals process. They get to escape intense scrutiny in a courtroom. Your lawyer cannot probe their motivations, nor can they expose any bad faith in the courtroom. However, this does not mean that you should not try to overturn their decision in court.
If you want the long-term disability benefits that you believe you are due under the terms of your policy, this is what you must do. It does mean thorough preparation for the appeal at all stages.
By the time that your appeal reaches court, much of the work is already complete. This is because the ERISA appeals process begins with the insurance company. Before you go to court, you must go through their appeals process. This is a legal requirement for the start of your appeal. The insurance company gets to review their own decision first to see if they made a mistake in denying your claim.
You Must Participate Fully in the Insurance Company Phase of the Appeal
Many people ask us why they should waste time asking the same insurance company that denied their claim to reconsider their decision. They do not believe that an insurance company can objectively handle an appeal. Since insurance companies cannot face lawsuits for bad faith in ERISA claims denials, they have little motivation to overturn their denial. Nonetheless, this is a legal requirement, and it is something that you must take seriously.
You will have the opportunity to build a record in support of your claim during the appeals process. This is not just an opportunity, but it is an absolute necessity for your case. The insurance company must tell you exactly why they denied your claim. Then, you can submit documentation that shows why you deserve benefits, knowing why they turned you down in the first place. This documentation can include:
You Need an Attorney Early in the Appeals Process
If you do not already have a lawyer when you receive a claim denial, you should hire one immediately. The groundwork for your ERISA trial must be laid with the insurance company appeal. This record that you build for the insurance company’s consideration will stay with you throughout the process. This may be the only opportunity that you have to introduce evidence in support of your claim.
The Judge Can Only Rely on the Administrative Record from Your Insurance Company Appeal
If the insurance company denies your appeal and your case goes to court, the judge will use the administrative record from your appeal. This is also a legal requirement. You do not have any legal right to introduce more evidence when the case goes to court.
If there are any gaps in the evidence that you presented at the insurance company appeals phase, you will not have the opportunity to fill those in during the court process.
The judge does have the right to ask for information to supplement the administrative record in limited circumstances, but those will happen when the insurance company does not properly follow the right procedure in the claims or appeals process. You certainly cannot count on the district court to allow you to supplement the record.
If the judge does allow you to submit more information at trial, the insurance company may even challenge that on appeal. The court’s general view is that if you had the chance to submit information at the insurance company appeals stage, you should have done so.
Judges Cannot Act as Plan Administrators During Your Appeal
This is consistent with how ERISA views a judge’s role during the appeals process. They are not supposed to act as the plan administrator would in performing an initial review of the claim.
Further, an appeal to a district court is not a chance for a claimant to get a “second bite at the apple” after the insurance company appeals process. This is why you need to “take your best shot” immediately and not rely on being able to add to a weaker appeal case at an ERISA trial.
What the Judge Will Review During Your Trial
If you are wondering what the judge does at an ERISA trial, they will take a very close look at the administrative record from your appeal. This is the record that was in front of your plan administrator when they reviewed your claim and considered your appeal.
This will include:
- The plan document
- All of the information that you submitted as part of your claim
- Your medical records and diagnosis
- The opinions of your physicians
- Information provided by your family members and friends who are familiar with your disability
- Information about your job and duties
- Notes from the insurance company and their record of evaluating your claim
- Your appeal letter and the denial of your appeal
To be clear, you have every right to add documents to the administrative record at the appeals stage, and you definitely should. If you just rely on what the insurance company provides, they thoroughly cover their tracks to justify your denial. The judge will then not be able to hear your side of the story.
The Judge Will Make Their Own Benefits Determination
The judge will not give deference to the insurance company’s determination. Instead, they will make their own decision about whether you deserve long-term disability based on the information in front of them.
This type of review is called de novo. It is Latin for “starting at the beginning.” However, starting from that point does not allow you to build the record from scratch.
The only way that a judge will hear from you in the appeal is through the motion that your attorney files explaining your case. However, this motion will need to cite to the record to be persuasive. If someone makes claims that have little support from the evidence, the judge may not give them much weight.
You Can’t Testify on Your Own Behalf
You will not be able to explain yourself to the judge. If they have any questions, they will look to the record. The judge can’t hear from you personally about your job duties and your disability. Everything will need to be apparent to them from the record. This is why you need to take it very seriously earlier in the case.
You may still have the ability to settle your case with the insurance company before the judge issues a decision. The defendant may make a settlement offer for less than the benefits that you seek. Your attorney would review the settlement offer and advise you whether it is in your best interests. If you have presented a strong case to the judge, the insurance company may try to settle to reduce their risk.
If there is no settlement, the district court judge will issue a decision in your case. In many cases, this may be the first time that you hear from the judge. The decision will come after they have considered the motions and the administrative record.
Taking Your Case to an Appeals Court
If you are still not successful at the district court phase of your ERISA appeal, you can take your case to a federal appeals court. However, the rules for this proceeding remain the same. You will also not get to introduce new evidence here. The appeals court will review the same record as the district court judge.
Instead of taking a fresh look at the record as the previous judge did, they are only checking to see if the district court judge made an error. They will give some deference to the judge, and they will only reverse the decision if they see that the judge did something wrong.
What this all means for you is that you need to take the claims process seriously from the very beginning. While you may not be able to control whether the insurance company denies your claim, you can present the strongest case possible in your initial documentation to the insurance company.
How an Experienced ERISA Attorney Helps You
If you receive a claim denial, you should act quickly to appeal. This is not something that you should try to do on your own. An experienced ERISA attorney can help you file the most effective appeal possible, building a strong record that you can use later in the process if you need to file a federal ERISA lawsuit. This gives you the best chance to convert a denial to granted benefits.
Your ERISA attorney can:
- Help you at the claims stage by reviewing your application and making sure that you have sufficient evidence to prove your disability claim.
- Speak with the insurance company if it denied the claim to clear up any misunderstandings that caused the denial.
- Work on your appeal to the insurance company, building an appeal record for you to counteract and address the initial reasons for the denial.
- Negotiate with the insurance company, if it is possible.
- Take your case to federal district court if your insurance company appeal is unsuccessful.
- Draft your motion in federal court arguing your case.
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