Q. Why have my benefits been denied?
A. Usually, your benefits have been denied because the insurance company has taken the position that you are not disabled under the policies definition of "disability." Generally, this occurs after you have submitted your medical records to the insurance company, and the insurer has had their in-house medical personnel review the information. If your condition is not one that can be detected by an x-ray or through a blood test, the insurance company might deny you based on a lack of "objective medical evidence."
In other circumstances a denial of benefits can happen years after you were initially approved. This may be because the own occupation period has expired, and the insurer believes that you can perform some occupation for which you are reasonably qualified through your training, education, and experience.
Benefits may also be denied due to coverage issues, including problems that may arise during enrollment, or an insurers claim that you had a pre-existing condition which you failed to disclose prior to enrollment.
Q. I just received a letter denying my benefits. Do I have to appeal before I can file a lawsuit?
A. If your policy is through your employer, you usually have to exhaust your administrative remedies. This means that you have to follow the insurance companys internal appeals process prior to filing a lawsuit. Usually you will have 180 days to file an "appeal" for benefits, which entails submitting updated medical records and a letter explaining why you are entitled to benefits. This should be explained in your denial letter. If you have an individual policy, you may file a lawsuit after your first denial. If you have an appeal pending, we can assist you in this process.
Q. What is the difference between a disability insurance policy provision insuring one's "own occupation" versus "any occupation"?
A. An "own occupation" provision means that your policy will provide benefits in the event that you are no longer able to perform the material and substantial duties of your own occupation. Most employee-benefit related policies will only provide "own occupation" coverage for a limited period of time, meaning that after that period expires, you must be disabled from performing the material and substantial duties of "any occupation" for which you are reasonably qualified by your training, education and experience, in order to continue to be entitled to benefits.
Q. What is ERISA?
A. E.R.I.S.A. is an acronym that stands for a federal law called the Employee Retirement Income Security Act of 1974. ERISA was implemented in order to standardize the laws governing employee benefits. This law regulates the administration of most employee benefits offered through an employer. This includes pension, life, disability, and health insurance benefits.
Helpful ERISA Terminology.
When Congress passed ERISA in 1974, it defined several terms which apply to ERISA plans. Because you will see these terms used repeatedly in ERISA plans, we are providing you with a short glossary to assist in reading your plan. The complete, technical definitions of these and other words can be found in the statute at 29 U.S.C. 1002.
Plan Participant
Usually the employee who is enrolled in the plan.
Beneficiary
Usually the spouse or child of the employee who may be actively enrolled in a plan (for example, health insurance) or who may be entitled to receive benefits under the plan if something happens to the employee/participant (for example, if the employee dies and a life insurance or a 401K death benefit has to be paid out).
Plan Sponsor
Usually the employer or a union.
Plan Administrator
Most courts have defined the administrator as the company or person that actually makes the decision to deny or pay benefits. If the plan is insured, this is often the insurance company. If the plan is self funded (i.e. not insured), there is often a committee of employees or a third party administrator (a TPA) that make the decisions.
Summary Plan Description
Exactly what it sounds like. This is a summary (often a booklet or certificate of coverage) which explains what the benefits are under the particular plan, how you apply, when benefits are paid, and how you appeal if benefits are denied. The summary is supposed to be accurate and not mis-state the plan document (see below):
Plan Document
Very often, a plan will have a more complete document than the summary plan description, which spells out in detail all of the plan's rules and terms.
Pension Benefits
Benefits that are paid under a pension plan are usually case payments made to retirees based in part on their years of service, as distinguished from welfare benefits (see below).
Welfare Benefits
Any benefit that is not a pension benefit, such as disability, health, or life insurance and pre-paid legal services, or any non-monetary benefit like day care services.
Q. What is the "Standard of Review", and how does it affect my claim?
A. The method a court uses to decide a case is called the standard of review. In ERISA cases, there are 3 different types of review that a court may use, depending on key language which may be found in your plan document (that is, your benefit booklet or group insurance policy). They are: 1) de novo, 2) abuse of discretion (also called arbitrary and capricious), and 3) heightened abuse of discretion. The key to which standard may be applied in particular case is whether the administrator has been granted discretionary authority to interpret the plan or decide claims. In a case decided in 1989 called Firestone v. Bruch, the U.S. Supreme Court stated that ERISA claims will be reviewed using a de novo standard unless the plan documents state that the administrator has this type of discretion. So, what are these different types of review? De Novo: When a court takes a fresh look at a case, and pays no attention to what has occurred before the lawsuit was filed, it is called de novo or plenary review. This is what you might see on television in a trial, where witnesses are brought into court and the Judge or Jury makes a decision based on the evidence that is introduced at trial. Abuse of Discretion and Heightened Abuse of Discretion: If the language of the plan gives the administrator discretion, then a court must use a form of abuse of discretion review, and the administrator's decision will only be reversed if they were both wrong and that there is no reasonable basis for their decision. This gives the administrator's decision a lot of deference, and it can make it very difficult (but not impossible if handled properly) for a person whose benefits have been denied to win. If the plan is insured, the court may apply the so called heightened abuse of discretion, which gives the administrator less deference because it has a conflict of interest (i.e. it benefits financially if it denies claims). A key aspect of abuse of discretion review relates to what evidence the court considers. In these cases, the judge will usually not allow any witnesses. Instead, the judge will only review the claim file which was created before the lawsuit was filed, and will make a decision based solely on those documents. In these types of cases, it is very important to have an attorney that is familiar with ERISA law to handle the pre-suit claim and appeal, as the contents of the claim file can make or break your case. This is a very complex area of ERISA law, and it often takes lawyers a very long time to learn it. We understand if this is not clear, and more importantly, we understand that it is not necessarily fair. We would be happy to answer any questions you may have about the standard of review.
