Appealing ERISA Disability Insurance Claims

Your right to sue on a denied-ERISA disability insurance claim is limited. (ERISA, an acronym for Employee Retirement Income Security Act of 1974, is the federal law that governs most employer-provided health plans.) In a nutshell, if your claim for disability has been denied and upheld on appeal, you can file a lawsuit. Failure, however, to pursue the internal administrative appeal process within the insurance company is often fatal to a lawsuit action.

To tackle an ERISA claim, there are two mandated steps to follow:

  1. an initial filing of your claim with the insurance company and a determination by the claims reviewer;
  2. if denied, you have two choices
    1. accept that decision or
    2. appeal for another internal review within the insurance company.

Both involve deadlines which are spelled out in your plan and in a denial letter. If you do nothing, you may lose appeal rights and your right to head for court.

Importance of Appeal Process: Assembling the Administrative Record

The purpose of the ERISA appeal process is two-fold. First, it gives you an opportunity to rebut the decision of the claims reviewer. Second, in most instances, it is the final opportunity for you to include favorable evidence in the administrative record for purposes of a subsequent lawsuit if your appeal is denied. (The “administrative record” is actually the insurer’s file on your case.)

How critical is the appeal process? If you end up in a lawsuit, it is the information existing in the insurance file (the “administrative record”) that will be considered by the court. In other words, what is in your record has a significant impact on your ability to recover. In most cases after the appeal process is done, you are not allowed to add evidence—no matter how pertinent to your claim—and have it heard later. Your administrative file may be your one chance to make your case. It is crucial to get the file right—to carefully assemble as full and credible administrative record as possible.

Information that must be provided to you at the time of the initial denial

If your claim is denied, the claims reviewer must do these things in the coverage denial letter:

  1. advise you of the specific reason(s) for the denial;
  2. reference the specific policy provision on which the determination is made;
  3. describe what additional material or information, if any, is necessary to make the claim valid;
  4. explain what steps need to be taken to have the claim denied reviewed;
  5. advise you of your right to bring a subsequent law suit under ERISA; and
  6. either provide or offer to provide any internal rules, guidelines or criteria that were relied upon in making the claims decision.

If this information is not provided to you at the time of initial denial of your claim, a court may rule that the denial is incomplete and your appeal period has not yet started.

Information that must be considered on appeal

It is extremely important to load the administrative review record with all information that substantiates your disability and your right to benefits. Think creatively on how to prove your case. This includes an accurate job description, an employer’s statement, medical literature in support of your claimed disability, detailed opinion letters from doctors, your employment history, disability experts, functional capacity evaluations or vocational appraisals, video testimony from your family, boss, and co-workers, progress reports, timelines, and so forth.

To maximize the chances of your success on your appeal, request from the insurer copies of all relevant documents including its own medical reviews performed on your records. Since the reasons for denial are laid out in the denial letter, rebut each reason raised with logical, persuasive arguments supported by credible evidence and expose any weakness in the insurance company’s position(s).

List all documents by name and date and number each page in all correspondence to the insurance company and its representatives to create a clear record of what you have provided.

Exhaustion of administrative remedies

This cannot be emphasized enough: If you snooze during the appeal period, you lose. You must pursue all of the appeal procedures offered by your insurance plan as stated in the denial letter before you sue. Your lawsuit will be dismissed if you have not exhausted all administrative remedies.

Full and fair review

The appeals committee or the appeal reviewer – different from the person who made the denial decision—is required to conduct a “full and fair review” of all comments, documents and records submitted by you related to your appeal. The reviewer must not give deference to the initial benefit determination.

Time limit on a decision

You will hear from the appeal reviewer, in writing, within 45 days of filing. There may be extensions under certain circumstances.

For a discussion of the damages on an ERISA lawsuit, click here.

Because the legal and procedural rules applied to ERISA denial claims are complex, it is strongly urged as soon as possible to call a private attorney experienced in insurance cases and bad faith litigation to help assemble a compelling administrative record. Insurance company lawyers are top notch group of attorneys who will be extremely competent and knowledgeable about ERISA disability claims and know the answers real well.