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ERISA Primer

ERISA Primer - Allenstein & Allenstein

1. What is an ERISA case?

• Medical insurance claims when insurance was through employer
• Short (STD) or long term disability (LTD) benefits or when insurance was through employer

2. Statutory authority for claims - 29 USC §1132 - Preemption - Federal Court

3. The typical case:

Employee injured back and had back surgery. Employee drew STD benefits and then LTD benefits for 24 months. The insurance company terminated benefits after 24 months of LTD benefits because the definition of disability changed from "own" occupation to "any" occupation. Employee just won SSA disability benefits. The insurance company or employer demands $10,000 of LTD back benefits, claiming overpayments due to offset. Employee's attorney does not handle ERISA cases.

4. The ERISA attorney will:

• Obtain accurate statements from client.
• Determine whether the insurance company has been provided with complete medical records including an opinion regarding disability.
• Determine whether or not the insurance company was sent the SSA award.
• Review the ERISA Plan, Summary Plan Description and/or Insurance Policy.
• File an Administrative Appeal. Employee must exhaust administrative remedies.
• On appeal, will explain why benefits should be continued based on medical records.
• Request the claim file. The attorney has to have the claim file on which the case will be tried.
• Determine if more evidence of disability is required.
• Determine if an expert is needed for reviewing the claim file.
• Be familiar with deadlines and the number of administrative appeals required.
• Summarize the claim file with a Table of Contents.
• Begin to prepare a Motion for Summary Judgment, considering if the case is strong enough to convince a Federal judge that the insurance company made the wrongful decision.
• Add evidence of disability if necessary i.e., medical opinion, recent treatment, psychological evaluation, vocational evaluation.

5. After administrative appeal, file the lawsuit

• State Court or Federal Court?
• Claim: Benefits, attorney fees and interest

6. Primary issues in lawsuit

    A. Standard of Review 

•  De novo
• Abuse of Discretion

    B. Was the decision to deny or terminate wrong? Is there a conflict of interest?

7. Is discovery allowed? Sometimes - under what circumstances?

8. Take the initiative - file for Summary Judgment

• Let the Judge know you should win
• Even if you don't win Summary Judgment, try to convince the Judge your client should win

9. The Eleventh Circuit in Williams v. BellSouth Telecommunications, 373 F.3d 1132, 1138 (11 ^th Cir. 2004) explained the issues on an ERISA claim:

• "(1) Apply the de novo standard to determine whether the claim administrator's benefits denial decision is 'wrong' (i.e., the court disagrees with the administrator's decision); if it is not, then end the inquiry and affirm the decision.
• (2) If the administrator's decision in fact is 'de novo wrong' then determine whether he was vested with discretion in reviewing claims; if not, end judicial inquiry and reverse the decision.
• (3) If the administrator's decision is 'de novo wrong' and he was vested with discretion in reviewing claims, then determine whether 'reasonable' grounds supported it (hence, review his decision under the more deferential arbitrary and capricious standard).
• (4) If no reasonable grounds exist, then end the inquiry and reverse the administrator's decision; if reasonable grounds do exist, then determine if he operated under a conflict of interest.
• (5) If there is no conflict of interest, then end the inquiry and affirm the decision.
• (6) If there is a conflict of interest, then apply the heightened arbitrary and capricious review to the decision to affirm or deny it."

10. Opportunities for settlement

• Anytime the Defendant has started paying attorney fees.
• After motion for summary judgment: you have presented your case in clear, convincing terms, and it becomes clear you will probably win.
• Be reasonable-you might lose. The attitude of the Judge is important.

11. After lawsuit is filed:

• Planning meeting-usually by phone
• Initial Disclosures-usually just correspondence. Defendant already has medicals in claim file
• Cross Motions for Summary Judgment
• Cases seldom go to trial
• Appeal: if the case is not settled, appeals are frequent

12. Mediation: Waste of time and money unless a Judge or Magistrate conducts mediation

13. Most cases are winners if prepared properly

• People who lose their job because they can't work are usually disabled
• The insurance companies have abused the process and some companies have a bad reputation

14. Relationship to Social Security Disability: Win the Social Security case and submit for favorable review. The insurance company and the court have to consider the SSA award. An SSA award is persuasive evidence of disability, but it is not res judicata.

15. Are benefits taxable? Yes, if the employer paid the premiums or provided coverage, but no if purchased by employee.

16. The recent case of Metropolitan v. Glenn (S.Ct. (2008)) may change the 11^th Circuit analysis of ERISA claims. Attorneys should review 11^th Circuit opinions which interpret the MetLife case.

At the Gadsden, AL law firm of Allenstein & Allenstein, we represent clients throughout Northeast Alabama, including Gadsden, Attalla, Glencoe, Hokes Bluff, Southside, Rainbow City as well as communities in Marshall County, Cherokee County, and Calhoun County.