ERISA and Long Term Disability Lawyer- David P. Martin
 Focusing on ERISA to better serve Alabama and the Southeast!   
Contact David Martin today so we can fight for the benefits you deserve!!!
Ph: 205-343-1771 or Toll Free at 1-800-284-9309

 

 

Frequently Asked Questions

What is ERISA?

ERISA is the Employee Retirement Income Security Act which was passed by Congress in 1974.  It was made law in order “to protect … the interests of participants in employee benefit plan … by establishing standards of conduct, responsibility, and obligation for fiduciaries of employee benefits plans, and by providing for appropriate remedies … and ready access to the Federal courts.” ERISA § 2(b). Congress was motivated by a desire to protect against private sector mismanagement of employee benefit plans which placed participants’ potential benefits at risk.
 
Many employers offer important benefits to employees, such as short term disability, long term disability, medical or health insurance coverage, life insurance, and pension or retirement benefits. Usually such benefits are governed by ERISA.   You can read ERISA in the United States Code beginning at 29 U.S.C. § 1001. ERISA claims involve this very lengthy and complicated statute with its regulations and case law. For the most part, the statute,  preempts or nullifies state law. There are a few exceptions, such as when state law regulates insurance.

What Damages are recoverable under ERISA?

Under state law, a breach of duty owed to an individual may involve damages that will include not only the benefits that should have been paid, but perhaps also mental anguish, pain and suffering, or punitive damages. Also under state law, the claimant or person seeking the benefits, may be entitled to a jury trial. The jury trial guarantees that individuals from the community will decide the case rather than one judge. Since ERISA preempts state law, this means that there may only be a recovery as allowed by ERISA.  ERISA does not presently allow a recovery for mental anguish, pain and suffering, punitive damages or any other extra-contractual damages, other than interest. There is presently no right to a jury trial. ERISA only allows a recovery of the benefits that should have been received, and interest. Equitable relief such as restitution is also allowed.
 
If a lawsuit is filed, then a judge may also order payment of attorney’s fees and costs of the litigation. If judges award these fees and costs it allows the claimant to come closer to being made whole.  If they do not, then the claimant will typically pay her attorney out of the recovery.  Sometimes other violations occur and may give rise to a claim for penalties.

What if I ask for my plan or other documents and no one will give it to me?

A key component to the enforcement of ERISA is its civil penalty provision. Certain violations, such as failure to provide a summary plan description in a timely manner, or failure to provide a notice of COBRA rights for continued health insurance or medical benefit coverage, can each incur penalties under ERISA up to $110.00 per day. However, these penalties are only awarded under certain circumstances and may be only awarded by a federal judge.  Although not always required, it is good to make any request for plan documents in writing.  The request should be directed to the plan administrator.  If you do not know who that is, look in you summary plan description if you have it.  The plan administrator should be listed.  If the plan administrator is not listed or if you can't find the name of the plan administrator, send your requests to the employer and to the insurance company.  The United States code at 29 U.S.C. Section 1132(c) allows for penalties for certain violations.  Tell your attorney if you are having or have had such difficulties, since you may have a penalty claim to assert. 

Why is it hard to find an ERISA attorney where I live?

 Because ERISA recoveries are limited, and because ERISA law is complicated, an attorney who does not regularly practice in ERISA litigation may find that it is not a desirable area of law. Attorneys who regularly practice ERISA usually cover a broad area. This is not a problem due to modern conveniences. Federal Courts use electronic filing, so being close to a federal court house is no longer a necessity.  

The ERISA decision maker, called the plan administrator (this is usually the insurance company or the employer) knows that this is a difficult area of law and that there are fewer attorneys practicing in this area. Therefore, they may make decisions that are not fair or even handed. Many disabled people don’t have the strength or resolve to fight the unfairness and many don’t believe they can afford to hire an attorney. Insurance companies know that many people, who deserve benefits, do not further pursue the claims they have denied.  Insurance companies save money when claims are denied, and since they are not liable for mental anguish or punitive damages, they can treat claim denials as a cost effective way to limit payment on disability claims. Don't let distance concern you. Hire an attorney that regularly practices ERISA litigation.

When should I get an attorney?

As a result of these difficulties and the limited basis for a court to review the decision, it is best to hire an attorney very early in the claims process under ERISA. An ERISA case is usually tried on “facts known” to the plan administrator or the decision maker. Many plan administrators refuse to consider further information after a lawsuit is filed unless a court orders them to consider the information. Therefore, it is usually necessary for an attorney to present to the plan administrator as much favorable information as possible before filing a lawsuit. If the individual comes to the attorney too late, the plan administrator may reject further information and the attorney may not be able to work the claim into the best position possible. No one can guarantee you results, but diligence at the claims review stage is critical!

Not every case involving employee benefits is governed by ERISA as there are some exceptions. Sometimes a plan administrator will give the impression that the case is governed by ERISA, when in fact it is not. An attorney who regularly practices in this area will know which cases fall under ERISA and which may meet the few exceptions. An attorney should also be able to make certain that the legal requirements are met in requesting information from a plan administrator so that penalties may be sought from a judge if the plan administrator has refused to provide information required. I have been handling ERISA cases since I began practicing law in 1992.

How do I pay my attorney?

I usually handle ERISA cases on a contingency fee basis. This means that the attorney’s fee is paid as a percentage out of a recovery obtained. If there is no recovery, then no attorney’s fee is due to be paid. We also handle ERISA claims on an hourly fee basis for those individuals who prefer this arrangement. There will also be some expenses in a case that vary from client to client. These may be paid out of the recovery on some cases. Case expenses usually include medical records, doctor’s fees, expert fees, court filing fees and other expenses related to the handling of the case. I am acutely aware of the unfair position disabled individuals find themselves in and the adversarial nature of the companies deciding their claims. You need an advocate. I am glad to be of service to you. Contact me at your convenience.
 


                  QUESTIONS ABOUT YOUR PLAN

What is the Standard of Review for Your Plan?

ERISA defines a number of terms as used in the statute. First of all, the long term disability plan usually refers to the document that governs the provision of disability benefits. 29 U.S.C. § 1003(1). It may also be called a policy by the insurance company. The summary plan description is usually the booklet, pamphlet or document given to participants of the plan. This document contains a summary of statutorily required information found in the actual plan document. 29 U.S.C. §§ 1021 and 1022. These two documents may set out the discretionary authority that is reserved by the plan administrator or fiduciary for deciding claims for disability benefits. This will govern the role the court will play in reviewing the disability decision. There may be a full court review of a decision or a limited review. Cases may be won or lost on the type of review allowed.
 
According to Firestone Tire and Rubber Company v. Bruch, 489 U.S. 101 (1989) there are several factors to be utilized by courts examining an ERISA claim decision. These review standards have been interpreted by the 11th Circuit court of Appeals to be (1) arbitrary and capricious, (2) heightened arbitrary and capricious and (3) de novo. Since this opinion was published, there has been much litigation over the proper standard of review. Obviously, when a more limited review is required by a plan, this will naturally lead to a more aggressive denial of a disability claim. For example, under the arbitrary and capricious standard, an insurance company may be wrong in its decision but if its decision had some reasonable basis it must be upheld.  HCA Health Svcs. of Ga. v. Employers Health, 240 F.3d 982 (11th Cir. 2001); Levinson v. Reliance Standard Ins. Co., 245 F.3d 1321 (11th Cir. 2001) and Jett v. Blue Cross & Blue Shield of Alabama, 890 F.2d 1137 (11th Cir. 1989). On the other hand, if a full or de novo review of a claim is required under the plan, the claim administrator may conduct a less aggressive review of the claim since a decision may be overturned by a court if it is wrong alone.  Accordingly, it is important to review every plan as to the applicable standard of review. 
  
1.   The Arbitrary and Capricious Standard
While it is not impossible to prevail in litigation with a plan under the arbitrary and capricious standard (see, Levinson v. Reliance Standard Ins. Co., 245 F.3d at 1321), it remains true that a truly disabled person may not obtain benefits if there is some reasonable basis for the insurance company’s wrong decision. HCA Health Svcs. of Ga., 240 F.3d at 994.  A plan requiring a court to utilize this standard, will contain direct and succinct language which gives the plan discretionary authority to 1) interpret policy or plan provisions, 2) make decisions regarding eligibility for coverage and benefits, and 3) resolve actual questions relating to coverage of benefits. See, Kirwan v. Marriott Corp., 10 F.3d 784 (11th Cir. 1994) and HCA Health Svcs. of Ga., 240 F.3d at 985. Because the cases do not require precise “magic language”, there has been much litigation over whether a plan reserves discretion. At a minimum, the plan language must properly reserve discretionary authority to the appropriate fiduciary deciding the claim as to the issue involved in denying the disability claim. See, Kirwan, 10 F.3d at 788-89.
 
For example, suppose your employer is listed as the plan administrator in the summary plan description, however, all the decisions regarding the disability claim are actually made by the XYZ Insurance Company. If the plan only reserves discretion as to the plan administrator (your employer) then could your employer overturn the decision of the XYZ Insurance Company? If not, was there some type of delegation of authority from your firm to XYZ Insurance Company allowing that company to exercise the discretion for your employer? Your employer may be a defendant as a result of a decision it never made and did not delegate. Examine the plan to determine who actually reserves discretion.
 
The insurance commissioners of at least four states have applied state law statutory prohibitions against discretionary clauses. At least for the time being in Illinois, Hawaii, Utah and California, long term disability insurance policies with discretionary clauses, which would necessarily invoke the arbitrary and capricious standard of review, arguably may not lawfully be sold. See, Utah Code Ann. § 31A-21-201(3); Haw. Rev. Stat. § 431:13-102; Ill. Ins. Code § 143 ; and Cal. Ins. Code. §§ 12921.5 and 12921.9.  I have written to the Insurance Commissioner of Alabama to make it clear such policy provisions are unfair and wrong.  I urge you to do the same.

According to Kentucky Association of Health Plans, Inc. v. Miller, 538 U.S. 329 (2003), state laws specifically regulating insurance are not preempted by ERISA (29 U.S.C. § 1144) if the law is directed toward entities engaged in insurance and the law substantially affects the risk pooling arrangement between the insurer and the insured. It appears that states may be able to regulate discretionary clauses. So far in the State of Alabama, such discretionary clauses remain legal.
 
2.   The Heightened Arbitrary and Capricious Standard
The second standard of review is called the heightened arbitrary and capricious standard in the 11th Circuit. See, HCA Health Svcs. of Ga., 240 F.3d at 985 and Lee v. Blue Cross/Blue Shield of Alabama, 10 F.3d 1547 (11th Cir. 1994). The plan may actually grant the fiduciary or administrator all discretion, but if the court finds a conflict of interest for the fiduciary or administrator, then the heightened arbitrary and capricious standard will apply. Under this standard of review, the court’s role is to examine the claim decision in light of the conflict shown. HCA Health Svcs. of Ga.,240 F.3d at 994-95 and Yochum v. Barnett Banks, 234 F.3d 541 (11th Cir. 2000). A conflict of interest has often been found where funding for a disability plan comes directly from the coffers of the company rather than through a trust. For example, if your claim is denied and the claim would otherwise be paid out of the insurance company’s assets, a conflict of interest may be found. See, Lee, 10 F.3d at 1552 and Yochum, 234 F.3d at 546-47.
 
The court’s analysis in applying this standard of review commences with ascertaining whether the plan document has granted discretion. Secondly, a review is conducted to determine whether or not the decision was wrong. If the court determines that the decision was wrong then the court proceeds to determine whether the claimant has proposed a reasonable interpretation of the plan and if so, the court will look at whether the plan administrator’s decision was reasonable. Even if the decision was wrong but based on a reasonable interpretation, the administrator is entitled to deference. The participant may yet be successful if it can be shown that the means of arriving at the decision was arbitrary and capricious.

Next, if there is a conflict of interest, the court is required to gauge the self interest of the claims administrator. If conflict is found, the burden shifts to the claims administrator to prove that its interpretation of the plan was not tainted by self interest. The claims administrator must show that its wrong but reasonable interpretation of the plan benefits the class of participants and beneficiaries. If the claims administrator fails to show that its interpretation benefits the plan then it is not entitled to deference. HCA Health Svcs. of Ga., 240 F.3d at 994-95. 
  
3.   The de novo standard of review 
A de novo review applies when there is no reservation of discretion. Firestone, 489 U.S. at 115. The court will look over the claim decision and decide for itself whether the participant is disabled or not. A plan that falls under this standard of review, of course, is most favorable to a disability claimant under ERISA. The insurance company will not prevail if it is wrong but reasonable.

Under both the arbitrary and capricious and heightened arbitrary and capricious standards, the evidence before the court will largely be limited to the facts known to the administrator before suit was filed, the means of deciding the claim and any conflict of interest. See, Jett, 890 F.2d at 1140; Lee, 10 F.3d at 1547 and Shipp v. Provident Life and Accident Ins. Co., 214 F. Supp. 2d 1241, 1246 (M.D. Ala. 2002). Under these standards of review in the 11th Circuit, it may be possible to submit additional evidence, however, that may lead the court to remand the case to the plan administrator to reconsider and take action. Jett, 890 F.2d at 1140 and Shannon v. Jack Eckerd Corp, 113 F.3d 208, 210 (11th Cir. 1997). However, under a de novo review in the 11th Circuit, the court may consider facts that were not before the administrator at the time the benefit determination was made. Kirwin,10 F.3d at 789-90 and Moon v. American Home Assur. Co., 888 F.2d 86, 89 (11th Cir. 1989).
 

 
What Is The Definition Of Disability in Your Plan?

The definition of disability in a plan will involve the inability to perform work for compensation. However there is no standard or statutory definition. A plan providing for an individual that is disabled when he is no longer able to perform the material duties of his own occupation has a much greater opportunity of meeting the definition of disability as opposed to a plan that defines disability as being unable to perform any occupation. 
  
1.  Full time or part time?
 Plans also vary in their definition of disability as to the amount of work one is able to work in a week. One would naturally assume that an occupation would require an individual to work at least 8 hours a day and 40 hours per week. However, some plans specify that you are not disabled if you are able to work part time or able to produce a certain low percentage of your income. Obviously this matters a great deal especially if the standard of review is arbitrary and capricious. In fact, some plans have been interpreted by plan administrators or insurers such that one would have to be virtually on a deathbed or in a coma before you would meet the definition of disability. The 11th Circuit, however, has frowned on interpreting a disability plan so narrowly. Helms v. Monsanto Co., Inc., 728 F.2d 1416 (11th Cir. 1984). Nonetheless, a plan that relates to an inability to work 40 hours per week with reasonable continuity is preferred. 

2.  Own occupation, any occupation or both?
 Obviously the best plan to have is an “own occupation” plan, but this may cost more. However, when weighed against the downside of a pure “any occupation” plan or a plan that changes from an “own occupation” to an “any occupation” definition, it may be worth the cost. For example, if you become disabled from practicing law but could work as a desk security guard watching video monitors and making phone calls at night, you should receive disability under the own occupation definition. However, if the plan switches to “any occupation” after a certain time period of disability then the ability to work as a desk security guard would preclude further disability benefits. While this may be reasonable under the plan, you may not think so if no jobs exist in your area given your limitations. From the insurance company’s perspective, they are not going to get in the business of finding a job for the claimant. While a number of issues may be litigated in this situation, in the meantime you have no income.
  
3.  Elimination Periods
Disability definitions may also have certain time limitations before benefits commence. Most long term disability policies do not commence paying benefits until an elimination period is satisfied. For example, a plan may provide that one must be continuously disabled for 180 days before disability benefits commence. Do you, or do your employees, have other means of support for six months, in the event of disability? There are no regulations setting how long the elimination period may be, so again, that is a contractual matter which should be taken into account in selecting a disability policy. 
  
4.  Limitations on Benefit for Self Reported Conditions and Mental/Nervous Conditions 
Usually a plan will pay benefits until retirement age. However, many plans impose a limitation of benefits if the disability arises out of a mental or nervous condition or if the disabling condition arises from self reported conditions. The time periods may be unusually short such as for a 12 or 24 month time period. For example, an individual who suffers from migraine headaches, chronic fatigue syndrome or fibromyalgia may not have a test such as an MRI or X-ray to confirm their condition or level of pain. A claim administrator may use the self-reporting condition clause to deny payment of the claim past the shortened benefit period.

This self reporting condition limitation may also appear in the disability definition in the form of an objective proof requirement. If this appears, the actual definition of “objective” should be closely examined. It may be used to deny the claim completely. Some plan administrators, without express “objective” language, have been known to interpret plans to mean that there must be a X-ray, MRI or some form of diagnostic test to supporting a treating physician’s opinion on disability. In other words, a personal examination by a treating physician may not be considered objective evidence.
 
In the 11th Circuit, if the objective evidence requirement is not set forth in the plan, then a plan administrator may not be justified in interpreting the plan so as to require such proof. See, Nightingale, 41 F.3d at 1484 citing Helms, 728 F.2d at 1420. In fact, a plan administrator’s decision has been found to be arbitrary and capricious when new requirements for coverage are added to those enumerated in the plan.
 
As one can imagine, disabling pain can exist without an x-ray supporting it. Courts have recognized that pain, in and of itself, can be disabling even when its existence is unsupported by objective evidence. See, Walden v. Schweiker, 672 F.2d 835 (11th Cir. 1982). While the Social Security cases lead the way on this issue, the 11th Circuit has indicated that the body of law developed in connection with Social Security disability should be instructive in examining disability under ERISA. Helms, 728 F.2d at 1420-21, n6.

Every possible definition of disability in a plan cannot be examined here, as neither time nor space will allow. The importance of closely examining the definition of disability, however, cannot be overemphasized. 
 

What Claims Review Process Is Required?

Every plan governed by ERISA is required to meet minimum requirements to provide a full and fair review of a claim within certain time frames. 29 U.S.C. § 1133 and 29 C.F.R. § 2560.503-1. However, there are variations in the plans on the market as to the number of appeals or reviews permitted during the administrative process. This is important because prior to litigation commencing, the administrative process must be exhausted, or it must be shown to be futile to exhaust the process. Perrino v. Southern Bell Tel.& Tel. Co., 209 F.3d 1309 (11th Cir. 2000).

There is actually no administrative agency involved in deciding the claim, but rather the administrative process refers to the insurance company’s claim determination and appeal  within the company to review its own determination. While this may sound futile or unfair, what happens during the administrative review, or claims process, may lay the groundwork for court review of the claim. This is especially true if the standard of review is arbitrary and capricious. The claim’s process or administrative review is one of the most important aspects of the case and should not be dismissed as a nuisance. A plan with more than one appeal should be selected so that there is opportunity to present all needed information. Information provided after exhaustion may be rejected from consideration, even though there is authority for it to be considered. See, Shannon, 113 F.3d at 210.
Under 29 U.S.C. § 1133 and 29 C.F.R. § 2560.503-1, the law requires the plan to clearly explain specific reasons for denying a claim and it must give the participant a right to appeal that decision. It also must provide for a full and fair review of the claim. While a plan must provide at least one appeal, a plan would still be within the regulations if it required two appeals. A disability claimant may prefer to have only one appeal so that the exhaustion requirements may be met more quickly, and so that suit may be filed sooner, if necessary.

Due to the fact that it is often difficult to assemble and provide medical evidence in short time periods, I prefer a plan with more than one appeal so that sufficient time may be allowed to present all documentation necessary for an appropriate record in the event that litigation must be filed. The regulations require appeals to be determined within 45 days, and even with an extension, an appeal must be decided within 90 days. 29 C.F.R. § 2560.503-1. This is not a substantial delay worthy of losing an opportunity to resolve the claim or to provide a good basis for litigation. After litigation is filed, many plans oppose any discovery and want to limit the evidence to the documents it has placed in its claims file. See, Sheppard & Enoch Pratt Hospital, Inc. v. Travelers Ins. Co., 32 F.3d 120 (4th Cir. 1994). Even though discovery may not be so limited (see, Shipp, 214 F. Supp. 2d at 1246), it is worthwhile to have ample time to submit all necessary supportive information.


Is There A Setoff Against The Disability Benefits?

Many disability plans provide a setoff for worker’s compensation benefits, Social Security benefits, pension benefits and various other forms of benefits. It is important to understand the setoffs applicable before purchasing a disability plan because benefits may very well be reduced to a minimum benefit.
For example, lawyer Jane Doe became disabled from back injuries suffered as she was lugging 50 pounds of files to court. After waiting six months to satisfy the elimination period, and another 90 days for decision making, she obtained disability benefit of $4,000 per month. She later obtained worker’s compensation benefits that was approximately $2,600 per month. These benefits were reduced because she received disability from her employer, as allowed under the state law set off provisions. Ala. Code § 25-5-57(c) (1975). She later applied for Social Security benefits as well, and after 12 months received back benefits of $1,800 per month, starting five months after her disability commenced.
 
Jane’s disability carrier learned that she obtained worker’s compensation benefits and, of course, wanted its money back under the setoff and reimbursement provisions of the plan. In the future, the plan will only pay a greatly reduced amount after recovering all prior overpayments. The worker’s compensation carrier refused to reevaluate its payment in light of the now lower disability payment.
 
The carrier then inquired as to whether Jane Doe had Social Security benefits and learned that a year and a half after Jane Doe had been receiving long term disability benefits, she obtained a lump sum of past Social Security benefits. These benefits, too, are offset against the disability benefit, as will future benefits. Jane Doe’s son also received dependent’s Social Security disability benefits of $900 per month, which are also setoff. The total amount of Social Security benefit received, with her son’s payment, and the worker’s compensation offset now exceeds Jane’s disability benefit. As a result, the minimum benefit provisions in the plan are activated and Jane Doe is now entitled to $100 per month for her long term disability benefit.
Now the argument for increasing the worker’s compensation benefit is very strong, but there is no clear case law yet to allow this. Jane has paid disability premiums for years only to have it hurt her worker’s compensation benefits and to eventually only receive $100 per month, after the Social Security benefits are setoff and after receiving no benefits for many months to repay overpayment. Jane is not happy, to say the least.
 
Again, there is much diversity in plans as to what setoffs are permitted against the long term disability benefit. This should be examined very carefully in order to avoid purchasing illusory coverage. Setoffs are contractual not statutory, and not all plans have the same set offs. For example, dependent Social Security benefit setoffs are absent in many plans. However, many policies and plans do require a claimant to file for Social Security disability or benefits will be reduced by the estimated amount of Social Security.


Is There A Contractual Limitation As To When Suit May Be Filed?

ERISA does not provide a statute of limitations for benefit claims so it borrows the Alabama six year limitations for breach of contract claim if the plan is provided in the State of Alabama. Ala. Code § 6-2-34 and Harrison v. Digital Health Plan, 183 F.3d 1235 (11th Cir. 1999). However, the plan may set a much shorter limitation of action time period. In the 11th Circuit a limitation of action provision of 90 days was upheld in connection with a health benefit plan. Northlake Regional Medical Center v. Waffle House Systems Employee Benefit Plan, 160 F.3d 1301 (11th Cir. 1998).

While it may not take that long to prepare a lawsuit in ERISA litigation, counsel will want to obtain a complete copy of the administrative record before filing suit. The final copy of the administrative record, of course, will not exist until there is final denial and all administrative remedies have been exhausted. While the plan administrator ordinarily should produce such documentation promptly, as required by regulations and the statute, 29 U.S.C. § 1132 and 29 C.F.R. § 2560.503-1(h)(2), such may not always be the case. An unreasonably short limitation of action period may be a detriment to conducting a complete review of the file before suit is filed.


How Often Is The Provider Of Disability Benefits In Litigation?

Using the federal court website Pacer you can easily determine the number of cases pending against an insurance company.  Also using findlaw.com you may be able to discover the reported cases involving an insurance company. Additionally, a call to the State Department of Insurance and the Department of Labor may yield further information. In purchasing disability insurance, the frequency of litigation certainly should be taken into account. A simple check is prudent for employers who have fiduciary obligations in selecting a provider, as well as for your own benefit.

Copyright . David P. Martin, Attorney at Law. All rights reserved. No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers. Alabama Rules of Professional Conduct Rule 7.2(e) (2002).