Chicago ERISA Long Term Disability Lawyer Handling With Litigation
With the passage of the Employee Retirement Income Security Act (ERISA) in 1974 a set of minimum federal standards for employer-sponsored welfare benefit plans (i.e., disability, life, health, retirement, etc.) was established for the purpose of protecting policyholders from fund mismanagement. Over the years, ERISA regulation has been expanded and includes unique rules governing the right to information, the disclosure of information, fiduciary duties, the appeals process and various procedural requirements.
Oftentimes, even if you have a perfectly legitimate claim for benefits under an ERISA-covered plan, the insurer (or plan administrator) will make an adverse determination that puts you in a vulnerable position.
For example, suppose that you have suffered a disability as a result of an injury. Due to your disabling condition, you submit a claim for disability benefits under your policy, but the plan administrator denies your claim and does not award you benefits. You are entitled to challenge the denial through an administrative appeals process, and if a favorable resolution is not reached, you may be able to pursue litigation.
If your claim has been denied or otherwise handled in a manner that is harmful to your interests as an insured (i.e., undervalued, delayed, etc.), you may be able to recover the benefits that you’re owed with the aid of a qualified Chicago ERISA long term disability lawyer. We encourage you to get in touch with an experienced attorney for further guidance on how to proceed. Contact the Bryant Legal Group, P.C. to schedule a consultation today.
Understanding ERISA Coverage
Though ERISA was originally intended to protect the plan participant, it has — over the many decades of its application — led to a situation in which the plan participant actually enjoys fewer protections and fewer entitlements when their plan qualifies as ERISA-covered. In many cases involving the denial of benefits, ERISA plan participants actually do not have the right to bring certain claims (and recover certain types of damages) compared to non-ERISA policyholders.
Of course, there are some advantages to ERISA-covered plans, such as the requirement imposed on plan administrators to fully disclose the plan documents and insurers to fully disclose all documents relied on in making the claim determination (the claim file). These documents give plan participants substantial information on the benefits at issue, the procedure for properly submitting and appealing a benefits claim and how to proceed if you intend to bring a civil action against the insurer. If you are involved in a dispute with your insurer over an ERISA-covered plan, these documents will almost certainly be requested by your ERISA disability attorney in Chicago so that they can evaluate your rights (and limitations).
Determining whether your benefits plan is covered by ERISA is rather simple. ERISA coverage is broad and generally applies to all welfare benefit plans — such as health, dental, vision, disability, unemployment, severance, life and other insurance benefits — that are sponsored by a private employer, and it is irrelevant whether the plan is fully-insured or self-insured. ERISA-covered plans include those that have been sponsored by a small employer with just a few employees.
There are two primary exemptions to ERISA coverage, based on the nature of your employment. Your employer-sponsored plan will not qualify as an ERISA-covered plan (and will not be subject to ERISA rules and regulation) if:
- Your employer is a qualified religious organization, or
- Your employer is a public entity, such as a government agency.
If you receive disability benefits through your public employer — for example, if you work for the City of Chicago — those benefits will not be subject to the quirks and limitations typical of ERISA regulation.
Exhausting Your Administrative Remedies Before Bringing a Lawsuit
Under ERISA, you must exhaust all your administrative remedies before you are entitled to bring a lawsuit. This involves going through the administrative appeals process — the particular details of which are established by your benefits plan — before bringing a civil action against the plan administrator and/or insurer. Though the administrative appeals process is an internal review process, it may be quite complex (from a procedural perspective) and is critical to the successful resolution of a benefits claim dispute.
It’s worth noting that resolving the dispute early has a number of advantages. By resolving the dispute during the administrative appeals process, you can avoid the expense, effort and frustration typical of a lawsuit.
Internal review may not necessarily lead to a favorable resolution, however. If the administrative appeals process leads to a result that is wholly or partially adverse to your interests, you are entitled to sue and obtain the benefits you’re owed pursuant to a civil action. Although it is typically at this juncture — pursuing litigation — that first-time claimants may seek the assistance of an attorney with experience handling ERISA disability claim denials in Chicago, we recommend that claimants speak with a qualified lawyer before the administrative appeals process begins.
Developing a Comprehensive Claim File is Critical to Success in an ERISA Benefits Dispute
In the context of ERISA benefits claims, the claim file is the collection of evidence collected and considered by the plan administrator or insurer when determining whether to approve or deny benefits. The claim file may include medical records, nurse or physician file-review reports, work scheduling data, vocational reports, pay stubs and more. It may even include photographs, video, and other documentation relating to the benefits at-issue.
Gathering the necessary evidence for building a comprehensive claim file is critical to obtaining the benefits to which you’re entitled, as — during civil litigation — the court may be limited to examination of the claim file that was compiled during the administrative appeals phase.
The earlier you identify and gather comprehensive documentary evidence to support your claim for benefits, the better. For example, if you are able to put forth evidence that strongly supports your benefits claim early (when you are submitting the benefits claim for the first time), the insurer may be more open to accepting your claim rather than denying it, thus saving you the hassle of having to challenge the denial.
The Abuse of Discretion Standard and the De Novo Standard in Illinois ERISA Litigation
Traditionally, ERISA denial of benefits claims were reviewed by courts pursuant to the “abuse of discretion” standard. The abuse of discretion standard essentially required that courts defer to the decision made by the plan administrator (with regard to the denial of benefits). The court could not stray from this deferential standard unless there was not substantial evidence to support the denial of benefits decision by the plan administrator — the substantial evidence requirement was not strict, however, thus resulting in many cases where the decision of the plan administrator was ultimately confirmed by the court. Policyholders were therefore at an extreme disadvantage when bringing an action for denial of benefits under ERISA.
In recent years, however, ERISA jurisprudence has changed, marking a shift to use of the “de novo” standard because of state laws prohibiting the grant of discretion from the plan administrator to the insurer. The de novo standard is a blank slate of sorts. When reviewing a denial of benefits claim under ERISA, the court is no longer meant to defer to the decision of the plan administrator. Instead, the court must evaluate the denial of benefits on the basis of the administrative record, without considering the decision of the plan administrator as relevant to their own decision.
Use of the de novo standard has given back a great deal of power to the policyholders in ERISA litigation. Now, policyholders can have their claims evaluated more fairly, without the prior decisions relating to the benefits at issue controlling court review. This is particularly important in ERISA litigation, as the administrative appeals process may not always lead to a fair assessment of the benefits claim. Were the decision of the plan administrator given deference, the inherent disadvantage faced by policyholders in the administrative appeals process would carry over to the civil litigation process.
Bad Faith Claims Are Preempted By ERISA
One of the prime disadvantages of ERISA-covered plans is that policyholder-claimants cannot bring a bad faith claim against the defendant insurer or plan administrator. ERISA is a federal regulation, and as such, it preempts Illinois state law. Further, there is no action for bad faith under ERISA.
For example, suppose that you submit a claim for benefits pursuant to your individual disability benefits plan. It is a non-ERISA plan. The insurer denies benefits without cause and does so in order to avoid having to payout benefits, despite the fact that they are aware that you are entitled to such benefits. Under those circumstances, if you purchased the policy in a state with bad faith law, you would have the right to sue and recover damages (and potentially receive bonus punitive damages) for bad faith.
Now, if the plan is ERISA-covered, you would not be entitled to bring a bad faith claim against the insurer. Your rights are much more limited — you would have the right to challenge the denial of benefits in an administrative appeal and then bring an action against the insurer to recover the benefits at issue.
In real-world terms, this shifts much of the power to the insurer. Insurers and plan administrators in ERISA-covered plans have more leeway when it comes to mishandling claims and acting against the interests of the plan participant, despite the fact that ERISA fiduciaries have a duty to act for the benefit of plan participants. This creates an odd sort of conflict — though ERISA was enacted with the intention of providing greater protections to policyholders (and other interested parties), those who are tasked with the decision-making are given more freedom to act in malicious or abusive ways.
Consult a Skilled Chicago ERISA Long Term Disability Lawyer for Assistance
Here at Bryant Legal Group, P.C., our team of attorneys boast decades of experience representing the interests of policyholder-clients in disputes with their insurers (and with plan administrators). We handle both ERISA and non-ERISA insurance claims, and as such, are well-equipped to understand the unique challenges of ERISA litigation. We are committed to results-oriented legal advocacy— throughout our firm’s history, we have found that the key to securing a successful resolution in an ERISA dispute is in developing a personalized case strategy. As such, we work closely with our clients throughout the dispute process to ensure that our goals are aligned and that we have the information we need to effectively navigate such litigation.
We consistently negotiate favorable settlements and secure favorable verdicts (in administrative appeals and at trial) on behalf of our clients. In fact, over the years we have secured millions of dollars of benefits in a range of insurance disputes, including those that involve ERISA-covered benefits plans.
Interested in learning more about your claim, and how best to proceed with resolving your ERISA dispute? Call us today at (312) 561-3010 or submit an online form through our website to connect to an experienced Chicago ERISA long term disability lawyer at Bryant Legal Group, P.C. We look forward to working with you.