If you have a group health policy, or group disability or life insurance policy which is governed by ERISA ( The Employees Retirement Income Security Act o 1974 29 U.S.C. §1001 et.seq) , the odds are that the plan contains a “discretionary clause” which allows the insurer the “discretion” to decide if a person’s claims should be paid or not.
To proceed with your claim for benefits under your ERISA covered plan, an insured must (1) file a claim, and (2) must exhaust the plan’s administrative processes (with a few minor exceptions) before they can file lawsuit seeking their benefits. If an insured file’s too early, their case can be dismissed, or if an insured misses the time limit for complying with the plan’s administrative processes (filing the appeals) their claim can be barred forever and all potential benefits will be lost. Unfortunately, the converse is not true, if Plan administrator doesn’t abide by the time limits for responding to your claim, nothing really happens to them, the insured gets accrued interest on their benefits.
Once your lawsuit is pending, and the litigation begins the language of the policy language is controlling and what the court will reply upon in reaching a decision in your case. A policy will have either “de novo” language which allows the court to review the case in it’s entirety on the merits and come to a conclusion based on the preponderance of the evidence the court finds.
However, the more pressing and prevalent problem is that the policy contains “ a discretionary clause” which basically allows an insurer to deny paying benefits if the decision is “based on any reasonable basis.” ( See Horan v Kaiser Steel Retirement Plan (9th Cir. 1991) 947 F.2nd 1412 along with numerous other such cases. In this situation, the court is limited and will only review what is contained within the “claims file” to determine if the decision of the insurer was “arbitrary and capricious.” ( See Firestone Tire & Rubber Co. vs. Bruch (189) 489 U.S. 101 also, Abatie vs. Alta Health & Life Co. (9th Cir. 2006) 458 F. 3rd 955 )
Although the “discretionary standard “ is a difficult one to overcome, it is not the end of your claim. There are numerous ways to show that an insurance company has acted improperly and denied benefits that are rightfully owed to a claimant. Our office specializes in handling ERISA claims and obtaining benefits rightfully owed to the claimant. Considering that most claimants do not have the full and complete claims file it is difficult to know which possible avenues a claimant may have, but a few examples of what constitutes abuse of discretion are:
1) Failure to consider reliable evidence: An ERISA plan administrator “may not arbitrarily refuse to credit a claimaint’s reliable evidence, including the opinions of a treating physician.” (Black & Decker Disability Plan v. Nord (2003) 538 US 822, 834, 123 S.Ct. 1965, 1972; Schexnayder v. Hartford Life & Acc. Ins. Co. (5th Cir. 2010) 600 F3d 465, 471)
2) Failure to conduct meaningful dialogue with claimant: ERISA regulations call for a “meaningful dialogue” between the claims administrator and beneficiary regarding any claim. The administrator must give the claimant a description of any additional material or information “necessary” for him or her to “perfect the claim,” and to do so “in a manner calculated to be understood by the claimant.” (29 CFR § 2560.503–1(g); see Saffon v. Wells Fargo & Co. Long Term Disability Plan (9th Cir. 2008) 522 F3d 863, 870)
3) Failure to explain decision: ERISA plan administrators must make “full and fair” assessment of claims and clearly communicate to claimants the “specific reasons” for benefit denials. (See 29 USC § 1133; 29 CFR § 2560.503–1; Black & Decker Disability Plan v. Nord, supra, 538 US at 825, 123 S.Ct. at 1967; White v. Sun Life Assur. Co. of Canada (4th Cir. 2007) 488 F3d 240, 246 )
4) Erroneous interpretation of plan: Abuse of discretion may also be found where the administrator construes provisions of the plan “in a way that conflicts with the plain language of the plan.” (Taft v. Equitable Life Assur. Soc. (9th Cir. 1993) 9 F3d 1469, 1472)
5) Erroneous factual findings: A plan administrator’s decision is not an abuse of discretion solely because it is contrary to evidence in the record. But an abuse of discretion is shown where the administrator relies on “clearly erroneous findings of fact” in making benefit determinations. (Taft v. Equitable Life Assur. Soc. (9th Cir. 1993) 9 F3d 1469, 1472)
Always remember that it is YOUR burden to prove to the court that the insurer abused their discretion when they denied the benefits owed under the plan. Contact our office to help you obtain the ERISA benefits rightfully owed to you. Our attorneys are ready to help you fight the insurance companies and obtain the benefits which are rightfully yours.
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