Get the Answers You Need From a Chicago ERISA Lawyer
In Illinois and throughout the United States, employers are referred to as policyholders and the insureds are referred to as the plan participants in an ERISA-covered insurance plan. Plan participants are entitled to challenge the denial of benefits and various other adverse determinations. Unfortunately, many would-be disability claimants are unaware of their rights and entitlements under their plan. In fact — particularly in scenarios where an ERISA-covered plan is involved — policyholders may not realize that their disability insurance coverage is subject to a substantially different set of rules than both private, individual disability plans and public disability programs.
If your policyholder or the insurance company have wrongfully denied your claim for benefits or have otherwise acted in an adverse manner towards your interests (i.e., undervaluing your claim or significantly delaying payments), you may have the right to challenge the decisions made by the insurer and obtain compensation for your losses. Contact a skilled Chicago ERISA lawyer to discuss your options. Your attorney will evaluate your claim and develop a strategic plan for securing the benefits to which you are entitled.
ERISA insurance coverage can be somewhat bewildering to first-time claimants, as it draws on specialized regulations. As such, let’s briefly consider some of the most frequently asked questions that claimants are likely to have when they learn that their dispute may involve ERISA issues.
What Is ERISA and What Is Its Purpose?
The Employee Retirement Income Security Act (ERISA) was enacted in 1974 with the intention of protecting the assets and rights of plan participants in employer-sponsored benefit plans. It is a federal law and therefore applies to covered plans in Illinois and throughout the country at-large.
Essentially, the enactment of ERISA established a set of minimum standards for benefit plans in the private employer-employee context. New rules were imposed with regard to information on plan policies and funding, as well as the vesting of participant benefits. Requirements relating to formal grievance and appeals processes were also imposed, and plan fiduciaries were held to stricter duties — those who violate such duties are potentially exposed to significant liability.
Since its enactment, ERISA protections have been expanded.
Which Plans Are ERISA-Governed?
Your benefit plan is governed by ERISA if it can be reasonably defined as an “employee welfare benefit plan,” which means that the plan is employer-sponsored and provides employee benefits that may include health, disability, retirement or life insurance benefits. If your employer purchased group disability insurance through an insurer, for example, and you are provided coverage through that plan, then in all likelihood, ERISA governs those benefits.
Two prominent exceptions exist: 1) religious employment (i.e., benefits provided through a church) and 2) public employment. If you work for a government agency, for example, your benefits claim will not be subject to ERISA regulation.
What Are the Applicable Deadlines for Pursuing My ERISA-Based Benefits Claim?
ERISA does not contain a specific time limit for the filing of a claim under your ERISA-based benefits plan. However, the plan itself will include a specific time limit to notify the insurer or claims administrator of your intention to file a claim. For short term disability benefits, we have seen periods as short as 7 days from the start of disability and, for long term disability benefits, we frequently see time limits of 30 days.
After your claim has been denied, ERISA regulation gives you 180 days to file an appeal. If the appeal is denied in whole or in part, you have a right to bring an action against the insurer and pursue the claim in a court of law. There are deadlines for this, too, however.
ERISA statute of limitations rules are somewhat complicated. As a general rule, most ERISA-covered plans simply use the applicable state jurisdiction’s statute of limitations for written contracts — for example, in Illinois, most ERISA-covered plans will give you a 10-year deadline that runs from the date of formal denial (of benefits).
Importantly, however, alternative deadlines may be set by each plan, and as such, the deadlines can vary substantially. ERISA only requires that the deadline be reasonable, given the circumstances. For example, a 90-day deadline for bringing an action against the insurer would likely be considered unreasonable, whereas a two-year deadline would likely be considered reasonable.
Given the variable nature of such deadlines under ERISA and the fact that your claim may be abandoned if you do not bring an action in a timely manner, it’s critical that you consult with an attorney at an experienced Chicago ERISA law firm for guidance — your attorney will ensure that your claims are brought in a timely manner.
If My Benefits Are Denied, Can I Sue the Plan Administrator or Insurer?
You are entitled to litigate your ERISA disability benefits claim, but you must first exhaust all the administrative remedies that are available to you. In the context of ERISA, this generally requires that you challenge the adverse decision of your insurer through the administrative appeals process. The administrative appeals process — and its mechanisms — can vary quite significantly from plan-to-plan, but if you do not go through the applicable administrative appeals process, you will not have the right to sue for benefits/compensation pursuant to litigation.
Will My Employer Be Involved in the Dispute and Will I Be Jeopardizing My Employment If I Pursue an ERISA Claim?
Generally speaking, no. Although ERISA benefits claims can be brought in many courts against both the insurer and the plan administrator (your employer)
By pursuing an ERISA benefits claim, you are not jeopardizing your employment. In fact, ERISA regulations prohibit employers from retaliating against their employees for attempting to pursue a claim under ERISA, or for otherwise exercising their ERISA-based rights. For example, if you appeal the denial of your disability benefits and then later bring an action against the insurer for damages, your employer cannot take an adverse employment action against you (i.e., termination, refusing to give a promotion or a raise, etc.) on that basis.
What Is the Administrative Appeal Process?
The administrative appeal process is a pre-litigation, internal (directly with the insurance company) review procedure that is imposed on benefits claimants under ERISA. It is not necessarily a simple, efficient or quick process — in fact, in some cases the administrative appeal can take from six months to a year to complete.
You have just 180 days to submit a request for review pursuant to the administrative appeal process. If you are dealing with a denied ERISA disability claim, contact a qualified Chicago attorney for help with the administrative appeal process. Attorney guidance is critical, even at this stage, as a favorable resolution to the dispute may be possible.
Every plan is different and may impose different procedures. For example, some plans may extend or contract the typical deadlines. Others may have different factors for determining the person who will be reviewing the claim denial.
During the administrative appeal process, you will send comments and evidence that supports your argument that the claim should have been accepted and benefits awarded. In doing so, you will have to evaluate the plan documents, as well as other relevant documentation — such as medical records, file physician review reports, and vocational opinions. Once a decision has been made (regarding your appeal), you will receive a written decision that describes the specific reasoning on which the denial (or acceptance) is based.
At this point, if the administrative appeal process has led to a denial (in whole or in part), you will have exhausted all available remedies and will be entitled to bring a civil action against the defendants.
I Believe That the Insurer Engaged in Willful, Wanton, or Malicious Behavior. Can I Bring a Bad Faith Claim Under ERISA?
Unfortunately, bad faith claims are not actionable under ERISA. ERISA is a federal law that pre-empts state bad faith laws, including those of Illinois. If your disability benefits claim has been mishandled by the insurer, and ERISA applies, then you will not be entitled to bring a claim for bad faith. This can undercut your ability to obtain maximum damages in extreme cases, as bad faith claims often lead to significant damages (and sometimes, courts award punitive damages, which can further multiply the amount received).
In some limited cases, however, you may be able to bring a separate fraud claim against certain defendants. You’ll want to consult a qualified ERISA disability attorney in Chicago for an evaluation of your bad faith claims and how you might be able to strategize around the pre-emption issue. Many common law fraud claims are pre-empted by ERISA as well — such a claim might only avoid pre-emption if you can show that the defendant owed you (and violated) a duty independent of the ERISA-covered plan.
Can I Sue and Recover Damages If Plan Fiduciaries Have Mishandled the Funds?
Yes, absolutely — in fact, concern over plan mismanagement by fiduciaries is what led to the enactment of ERISA in the first place. ERISA fiduciaries have strict duties to act in the best interest of plan participants. Failure to do so could expose them to substantial civil liability under ERISA.
When such a situation occurs, the plan participants have a right to sue and recover damages for their losses. Typically, this is accomplished through a class action, as there are many others in the “class” of plaintiffs who are similarly affected by the fiduciary violation. For example, suppose that the administrator of your ERISA-covered retirement fund mismanages the funds through extremely risky investments. The losses are so substantial that the plan can no longer pay out the benefits to which you’re entitled. You would almost certainly have a claim against the fiduciary.
My Plan Gives Full Discretion to the Plan Administrator to Determine Whether Participants Are Entitled to Benefits. If I Challenge the Denial of Benefits, Will the Court Defer to the Decision Made by the Plan Administrator?
Though in the past, federal circuit courts — when reviewing denial of benefits cases governed by ERISA — used to defer to the decisions made by the plan administrator (pursuant to the “abuse of discretion” standard), the law in many states has since changed significantly. Many states have prohibited the use of discretionary provisions (transferring responsibility for claims handling and determinations from plan administrators to insurers). In these states, ERISA jurisprudence now requires that the court review the denial of benefits decision in accordance with the “de novo” standard, which requires that the court review the denial of benefits as if no prior decision had been made (pertaining to the facts at-issue). By reviewing denial of benefits claims de novo, the court empowers ERISA beneficiaries to a significant degree — you must present the facts that support your claim, and the court will evaluate whether you should have received benefits in accordance with the language/terms of the applicable plan.
Contact an Experienced Chicago ERISA Lawyer for Assistance With Your Claims
Bryant Legal Group, P.C. is an insurance litigation firm located in Chicago. Our attorneys have decades of experience representing policyholders in disputes with their plan administrators and insurance companies, including situations that involve an ERISA-covered plan. We have a proven track record in securing benefits on behalf of our clients, and — if the dispute proceeds to trial — obtaining favorable verdicts in court.
We are committed to providing comprehensive legal advocacy, and to that end, we approach disputes as though we will eventually proceed to trial litigation. This extra level of preparedness gives us a significant advantage during the early stages of the dispute, from negotiations to the administrative appeal process. Further, we retain staff medical experts who are capable of fully evaluating your injury/condition (in the context of your plan), which gives us a more complete understanding of how to approach the dispute on your behalf.
If you’re interested in learning more about your insurance dispute and whether you may have an actionable claim for benefits, we encourage you to get in touch with a qualified ERISA disability attorney in Chicago. Contact us today at (312) 561-3010 or online to schedule a consultation with an experienced Chicago ERISA lawyer at Bryant Legal Group, P.C.