Denial of Long-Term and Short-Term Disability Benefits (ERISA and Non-ERISA)
We handle claims by individuals for non-payment and termination of payment for short-term
and long-term disability (STD and LTD) benefits. We represent claimants in denials of benefits
under short-term and long-term disability plans, both ERISA (group plans for private employees)
and non-ERISA (private and public employee group plans).
What is ERISA?
ERISA stands for the Employee Retirement Income Security Act of 1974.
ERISA was enacted by Congress in 1974 to address corruption in pension plans.
Although Congress did not intend ERISA to control medical or disability insurance
plans when it enacted ERISA, the bill that was signed into law contained the phrase
“employee welfare benefit plan.” As the result of federal courts’ interpretations
of that phrase, today ERISA controls almost every private employee benefit,
including health, disability, life and pension plans. ERISA includes the federal
statute, 29 U S C § 1001, et seq., regulations, which appear in Chapter 29 of the
Code of Federal Regulations, and decisional law of the Federal Courts.
When ERISA controls, most other claims are pre-empted. This means that no
punitive damages are available, no matter how abhorrent the insurance company’s
tactics have been and no matter how unfair the denial. The claimant usually can
recover only the amount of past benefits due, interest, costs and, in many cases,
his or her attorney fees. This provides little incentive for insurance companies
to treat claimants fairly. To go one step further, ERISA provides insurance
companies with total immunity from any adverse consequences for their unfair
and deceptive practices. In our experience, insurers routinely deny meritorious
claims, knowing that the vast majority of their insureds do not have the means
to fight their insurance plans. No matter how egregious an insurance company’s
conduct, ERISA provides it with a virtual license to steal.
The Administrative Appeal
If you have been denied STD or LTD benefits, you need to protect your rights.
There are important time limits that you must adhere to. For example,
the federal ERISA statute requires that the insurance company provide a
“full and fair” review of the denial. Ordinarily, you will have 60 days
after the insurance company’s denial of your claim to appeal the decision
(this is an appeal to the policy administrator). The federal courts have
required that ordinarily, the decision must be appealed internally before f
iling a lawsuit.
The administrative appeal is a critical time in the process and a
trap for the unwary. In the appeal, you may submit additional documents
and arguments to support your claim. Supportive chart notes, reports from
your doctors, written statements by co-workers and others describing their
observations of your physical condition, and medical literature describing
your condition all can be helpful. It is critical that you get documents
supporting your claim into the record BEFORE the insurance company makes
its final decision. If you intend to hire a lawyer to represent you, you
should do so as early in the process as possible.
If you lose on appeal and your policy falls under ERISA, your only
recourse will be to file a lawsuit in federal court. You will not be entitled
to a trial by jury. Instead, a federal judge will review only the administrative
record that was developed in the claims and appeal process by the insurance
company. Thus, for ERISA policies, it is often too late if you wait until
after the insurance company has made its final decision to retain a lawyer.
ST&C’s Palmer case makes things easier for claimants
In the case of Palmer v. University Medical Group and Standard Insurance
Company, [994F Supp 1221 (D Ore. 1998)], we represented a woman who became disabled due to
unrelenting back pain. We sued her employer and disability insurance company,
which had denied her claim for long-term disability benefits. On January 16,
1998, Magistrate Judge John Jelderks issued his Opinion and Order, which had
made several significant changes to claims evaluation under ERISA in the
District of Oregon.
How do you charge for legal services?
We know that one of the most difficult problems that many people face
is dealing with mounting legal and medical bills at a time when household
income has dropped due to disability. We approach each case individually
and try to work out a fee arrangement that allows us to handle these
important cases without putting insurmountable financial pressure on
our clients. Depending on the facts of your case and your ability to pay,
we handle disability cases on a contingent fee basis (where our fee is a
percentage of back (retroactive) benefits, or, in some cases, back benefits
plus some future benefits), hourly fee basis, or a mixed reduced hourly/reduced
contingent fee basis. In both ERISA and non-ERISA cases, the court ordinarily
will award attorney fees to a litigant who wins his or her STD or LTD case.
We do not charge for an initial consultation.
What if I am covered by a private plan or am a public employee?
ERISA covers employer-sponsored benefit plans, but does not
apply to individual policies purchased privately on the open market.
ERISA also excludes federal, state and local public employees from
coverage. For individuals covered under these non-ERISA plans, the
claim for denial of benefits is a claim for breach of contract and is
tried to a jury in state court. Instead of review of the administrative
records by a federal judge, the jury will be asked to determine whether
the claimant is disabled, as that term is defined under the policy. The
jury is allowed to consider evidence outside the “administrative record.”