ERISA stands for “The Employee Retirement Income Security Act of 1974.” That act covers many employee benefits, one of which is private employer disability insurance policies.
There are two types of disability insurance policies, only one of which is governed by ERISA. One type is given to public employees (school teachers, police officers, firefighters, etc.). These are not ERISA governed. The other type is given to private employees (General Electric, Verizon, Comcast, etc.). These are governed by ERISA. The distinction is important.
So what does ERISA coverage do? Well, it does many things. Let’s talk about what happens in NON-ERISA cases to illustrate what ERISA does.
In a NON-ERISA covered claim, the claimant has no rights. The insurance policy specifies everything involved in the claim. There are no “outside rules.” Most likely this means the following:
- You get 45 (or 90) days to appeal
- There are no standard review timelines
- Your appeal has no rules governing how it is reviewed (expect unfairness)
- If you lose your appeal, you file suit in local circuit court and get a trial by jury
- Your court case is analyzed under standard “contract law” rules. Did the insurer breach the contract by not paying you benefits?
ERISA gets you rules, and it gives those rules some teeth (if an insurer breaks them). In general, ERISA is considered to be a very weak law that largely favors insurers.
This is the process with an ERISA covered claim:
- You get very detailed correspondence (or you should) detailing all the reasons why you have been denied
- You get 180 days (by law) to appeal the decision (you probably will want to hire an attorney who understands long-term disability cases)
- The insurer gets 45 days to review the appeal, with an optional additional 45-day extension for “good cause shown.”
- If you lose your appeal, you can file suit in a federal district court where a judge (by himself) will determine your case
- Your case is determined by briefs from both sides and a box of records from the insurer (you do NOT get a day in court, there is no jury, and the judge does this all by himself)
- Your case is analyzed on the question of, basically, “was the insurer’s decision reasonable in light of all the information it had before it at the time.”
Tons of case law exists which expands the rules governing ERISA covered claims. This case law may, or may not, be held to apply to NON-ERISA covered claims. This case law can be very important. For example, some case law says “Fibromyalgia is a legitimate disabling condition,” or “failure to consider reviewing an expert’s bias makes a decision unreasonable.”
What does all this mean: There are benefits to both types of claims. With NON-ERISA cases, you lose some rules, but you get a trial by jury. The distinction, however, is hugely important and determines everything. Furthermore, not all attorneys will know how to handle both types of cases. Be prepared ahead of time, know what type of claim you have.
Being covered by ERISA is supposed to be a benefit. Unfortunately, It’s more of a double-edged sword.
If you have questions about ERISA long-term disability cases, you can order our free report on long-term disability claims. If your claim has been denied and you would like to have your denial letter reviewed for free, call us and we will connect you with the expert ERISA team.