The Employee Retirement Income Security Act of 1975, or “ERISA,” is the federal statute that governs certain employee benefit plans.
Generally, ERISA applies to all long-term disability insurance policies you receive through your employer. However, it is ultimately a matter for a court to decide. The federal courts have exclusive jurisdiction over ERISA cases. If it is clear that ERISA applies to your claim for benefits, you must file your lawsuit in a federal court with proper jurisdiction. Typically, this can only be done once all administrative remedies have been exhausted, including any mandatory appeal(s).
The rules of ERISA litigation differ from general civil litigation in some key areas. For instance, jury trials are disallowed in ERISA cases, and extra-contractual damages and punitive damages are not available. ERISA is very specific as to any damages allowable in these cases. Furthermore, ERISA does not allow for bad faith causes of action, which are available under most individual disability policies. For these reasons, group LTD insurers do not face the same potential financial repercussions in dealing with the ERISA-governed lawsuits against them.
Unfortunately, most ERISA plaintiffs must also overcome a heightened burden of proof known as abuse of discretion. This means the claimant must demonstrate that the insurer’s denial or termination of benefits was “arbitrary and capricious.” A court will only order an insurer to reverse its denial or termination when the claimant has met his or her burden of proof. The abuse of discretion review applied in most ERISA cases makes meeting the burden of proof requirement significantly more difficult for claimants. In many ERISA matters, the burden of proof alone may determine the outcome of the case.
Claimants with group LTD coverage should always be mindful of the numerous disadvantages inherent to litigating ERISA-governed claims. It is extremely important to have legal counsel in these cases because of the additional complications created by ERISA, the difficult standard of review, and the volumes of court decisions that exist in long-term disability insurance companies favor.
Let Seltzer & Associates assist you in this process in order to protect your rights under your policy. Contact our firm before it is too late.