If the insurance company has denied your claim for ERISA disability benefits, you are probably wondering: What do I do now? The short answer is that ERISA provides for a two-part appeals process. First you must go through the insurance company’s internal appeal process. If the insurance company again denies your disability claim, then you can file an appeal with the federal courts. In this post, our ERISA disability appeals lawyer will explain how the federal appeals process works.
ERISA Disability Appeals in Federal Court
What is a Standard of Review?
A federal court’s power to overturn a denial of disability benefits depends on the applicable “standard of review.” Courts have varying levels of power in reviewing cases. A standard of review sets the legal framework for the court’s evaluation of a case. Sometimes, a court has broad powers to review any and all issues in a claim. Other times, the court’s ability to review and evaluate issues is much more limited.
Depending on the language of your ERISA insurance policy, your claim will involve either a de novo standard of review or an “arbitrary and capricious” standard of review. These standards give very different levels of power to the federal courts.
What is the “De Novo” Standard?
Under the de novo standard, the federal court sets aside the insurance company’s decision and makes its own independent decision about disability. All ERISA cases are reviewed “de novo” unless the plan specifically gives its administrator discretion over benefit eligibility.
Disabled workers prefer the de novo standard because it gives federal judges more power to review (and potentially overturn) disability insurance denials.
What is the “Arbitrary and Capricious” Standard?
The arbitrary and capricious standard of review applies only when a disability insurance plan gives its administrator broad discretion over benefit eligibility. If the arbitrary and capricious standard applies in your case, you must show that the insurance company abused its discretion by denying your claim. In other words, the judge must defer to the insurance company’s decision unless there was no reasonable basis for its denial of benefits.
The arbitrary and capricious standard strongly favors insurance companies. Abuse of discretion is difficult to prove. If the insurance company’s decision was reasonable, federal judges will uphold it. For this reason, many insurance companies insert discretionary clauses in their ERISA plans.
Which Standard Applies in My Disability Insurance Claim?
Again, de novo review applies unless your disability insurance plan provides the plan administrator with broad discretion over claims. Before you file a disability insurance claim, request a copy of your disability insurance policy’s summary plan description (SPD). The SPD sets out your insurance plan’s procedures and requirements for disability benefit eligibility.
If your plan contains a discretionary clause, it should be in the SPD. The rules in an SPD can differ greatly from plan to plan, so make sure you have a copy of your current SPD (and not an older version).
If you see a discretionary clause in your disability insurance policy or SPD, you may be stuck with the arbitrary and capricious standard. However, there are times when de novo review applies even when a discretionary clause is present in a policy. Moreover, federal courts may limit the arbitrary and capricious standard when the plan administrator has a conflict of interest. Under ERISA law, the plan administrator is a “fiduciary” and must act in your best interest. If the administrator protects the insurance company’s interests (instead of yours), there is a conflict of interest. This is often the case when the plan administrator is an employee of the insurance company.
The Supreme Court has held that judges should impose a higher level of scrutiny when there is evidence of a conflict of interest. While the arbitrary and capricious standard still applies, it is less deferential. Thus, the judge in your case may be less deferential to the insurance company’s decision if you have evidence showing that the plan administrator:
- Did not follow plan procedures
- “Cherry picked” evidence to deny your claim
- Disregarded a Social Security Disability award, or
- Offered different explanations for the denial without new evidence.
If you have concerns about a conflict of interest, you should contact an experienced ERISA disability appeals lawyer immediately.
What Evidence Will the Federal Court Consider in an ERISA Disability Appeal?
Even with a de novo standard of review, there are limits to what evidence a federal judge can consider in an ERISA disability appeal. Typically, the judge can only consider evidence that was in the insurance company’s file. For this reason, experienced ERISA disability lawyers always “stack” the insurance company file with evidence that supports the initial disability claim.
Will I Testify in my ERISA Disability Appeal?
Probably not. Again, ERISA law strictly limits the evidence a judge can consider. Typically, the judge will review your insurance company file and written arguments. In most cases, witnesses do not testify at a trial.
ERISA disability appeals are complicated. There are strict filing deadlines, and procedures vary from policy to policy. Having an experienced ERISA disability appeals lawyer on your side will greatly increase your chances of success. If your claim has been denied, and you would like to speak with us about your appeal, please call or email to schedule a free consultation.