If you receive a benefits package from your employer in addition to your salary, there are specific laws that will apply. Those laws may limit the damages you are entitled to receive if your benefits are denied or terminated. Other legal requirements and hurdles will arise as you navigate the appeal process and in court. Your benefits are critical to ensuring your financial security and health. It is crucial you understand the laws that apply to your benefits and the damages available, i.e., the amount of money you may be awarded in a lawsuit, especially as they pertain to ERISA benefits litigation.
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What Laws Apply to Employer-Sponsored Benefits?
If you work for a private-sector employer that offers benefits on top of your salary, your benefits are likely governed by the federal benefits law called the Employee Retirement Income Security Act of 1974 (ERISA). Common examples of ERISA benefits include:
- Health insurance;
- Life insurance;
- Accidental death and dismemberment (AD&D) insurance;
- Long-term care (LTC) insurance;
- Disability insurance, including long-term disability (LTD) and short-term disability (STD) benefits; and
- Retirement benefits, including pension, 401(k), 403(b) plans.
If your benefits are insured, state insurance laws may apply as well.
On the other hand, if you work for a government or church-related entity, your benefits are exempted from ERISA coverage. And if you purchased your own insurance, then your benefits are governed by state bad faith insurance laws.
What Damages Are Available if Benefits Are Denied?
If you submit a claim for benefits under your employer’s plan, but your claim is denied (in whole or part), then you will likely need to submit an internal appeal to the insurance company and/or plan administrator. There are strict timing deadlines that will apply.
If the benefits claim denial is upheld following the submission of your appeal, then you will have the opportunity to file a lawsuit, typically in federal court. In most cases, you will not be allowed to introduce new evidence in court. It is thus imperative that you use the claim appeal process to ensure there is a complete record for the court to review. Otherwise, the insurance company and/or administrator can fill the file with evidence that is biased against you.
Even if you file a lawsuit challenging the denial and/or termination of your benefits, the damages you can recover are limited. Unlike ordinary insurance litigation, extra-contractual and/or bad faith damages are unavailable under ERISA. In addition, there are generally no jury trials, and a judge will most likely decide your case. In fact, most ERISA benefit claim disputes are decided on briefs the attorneys submit to the court.
If you are successful in court, the best-case scenario would be for the judge to overturn the denial of benefits and order the insurance company and/or plan administrator to pay you the benefits due through the present. If it is a monthly benefit claim (such as STD, LTD, and retirement benefits), the judge cannot order the insurer and/or plan administrator to continue paying you benefits indefinitely. The judge can only require that you be placed back on claim and that the benefit payments continue for so long as you remain eligible. On the other hand, the judge may also overturn the denial of benefits but remand your claim back to the administrator to review it again.
Finally, the ERISA statute provides for fee-shifting if either party achieves at least “some success on the merits.” That means that if you are successful in getting the denial of benefits overturned in court, the judge may order the other side to pay your reasonable attorneys’ fees on top of the benefits due.
Who Has the Burden of Proof in Establishing an Entitlement to Benefits?
If you are seeking benefits under one of your employer’s benefit plans, you have the burden of proving that you meet the eligibility requirements for receiving those benefits. For example, if you are applying for disability insurance benefits, you will need to produce sufficient documentation showing how your medical conditions prevent you from working. If you are seeking insurance coverage for a particular medical procedure or treatment, you will need to establish that the treatment is medically necessary and not experimental or otherwise excluded under your plan.
There are some exceptions. For example, the burden of proof shifts to the insurer, employer, and/or plan administrator when it has control and exclusive access to the information that determines the benefit entitlement, such as worked by the employee to determine eligibility or the calculation of benefits due. The burden of proof also shifts to the insurer and/or administrator if/when the insurance company attempts to apply a limitation or exclusion in your plan to your benefit claim.
Do You Need an Attorney to Seek Benefits?
You do not need an attorney to file for benefits. You should be able to request and obtain the claim forms from your employer or insurance company on your own. Nevertheless, it may still be prudent to hire counsel as soon as you begin to consider filing a claim. For one thing, the terms and conditions that apply to your claim will depend on the particular provisions of your plan, which can be complicated. It can be critical that you consult with experienced benefits counsel like DeBofsky Sherman Casciari Reynolds P.C., who can review your plan and advise you of its specific terms and conditions before you even start the application process. On the other hand, if you decide to apply for benefits on your own, but your claim is denied, or your benefits are later terminated, then you should consult with a lawyer as soon as possible.
Hiring an employee benefits lawyer when you are applying for benefits under an employer-sponsored plan can maximize your chances of success and damages. Experienced benefits counsel can advise you through every step of the process, educate you on the specific terms of your plan, and familiarize you with the business practices of large insurance companies. The skilled benefits attorneys at DeBofsky Sherman Casciari Reynolds P.C. are here to help you navigate the complicated process of applying for benefits and represent you if you need to submit an appeal or go to court to protect the benefits you are due. Contact us today!