ERISA Denial Claims

Did you submit a claim through your employer’s insurance company only to be denied? Are you wondering what recourse you have to compel the insurance company to provide the benefits you’ve been promised? At the Neumann Law Group, we’ve assembled a dedicated team of ERISA lawyers who are intimately familiar with this complex federal law, including what it takes to overcome ERISA denial claims. We are immediately available to meet with you to discuss your options and how we can help.

The Employee Retirement Income Security Act of 1974 controls many employee benefits, including pension and other retirement benefits, as well as sponsored life, disability, and health insurance disputes. As such, most claims arising out of these areas are now referred to as "ERISA claims" as opposed to traditional insurance claims.

The rules governing ERISA denial claims are complicated. ERISA is a federal law and, therefore, preempts state law claims, including claims for breach of contract. ERISA also substitutes any remedy allowed under common law or statute. This means ERISA preemption applies to state law claims for lack of good faith. Consequently, if an insurance company handles an ERISA claim in bad faith or maliciously, the insured can only recover the amount due under the contract.

Moreover, under ERISA, an insurance company is given broad discretion to decide if it should pay a claim, and a decision to deny a claim is entitled to great deference by a reviewing court. The decision will be affirmed unless the reviewing court determines the insurance company acted in a way that was arbitrary and capricious. Moreover, insurers typically include discretionary clauses in all of their policies, which gives even greater authority to determine whether or not to pay a claim. In essence, the standard of review and inclusion of a discretionary clause allows insurers to interpret the meaning of any particular contractual term on a case-by-case basis.

Insurers routinely rely on contractual interpretations that avoid coverage—and because of the weight given to an insurer’s decision-making, courts defer so long as the insurer's position is at least arguably reasonable. However, it should be noted that Michigan has banned discretionary clauses. In American Council of Life Insurers v. Ross, 558 F.3d 600 (2009), the Sixth Circuit upheld the Michigan rules banning discretionary clauses, meaning that Michigan Courts can review contractual interpretation on a de novo basis.

Another major difference between a typical insurance claim denial proceeding and ERISA denial claims is the lack of discovery. The Federal Rules of Civil Procedure do not apply to ERISA cases. The final judicial decision is made exclusively on the administrative record existing at the time of the claim’s denial. The lack of discovery is justified as a means to limit the facts presented in the ERISA lawsuit to those known to the insurer at the time of the claim. A claimant is not entitled to have a jury or judge receive and weigh facts not introduced during the administrative proceeding upon which the lawsuit arises.

Given these substantial obstacles, many claimants find judicial recourse very difficult. Much of the record of the case is determined prior to a lawsuit being filed. Consequently, obtaining experienced counsel—as early as possible—is critical. ERISA denial claims are difficult, complex, and full of potential pitfalls. As such, having legal guidance at every step along the way will greatly increase your chances of prevailing on a disputed claim.

If you are presently engaged in a dispute regarding employment benefits covered by ERISA, contact the experienced attorneys at Neumann Law Group for a free consultation. At the Neumann Law Group, our attorneys have more than 200 years of combined experience aggressively representing the interests of our clients. We command an unrivaled understanding of ERISA and know what it takes to present your case in a compelling manner to ensure prompt resolution. We also handle all types of employment law claims and business disputes. To learn more, and to schedule a free consultation today, give the Traverse City ERISA lawyers at the Neumann Law Group a call at 800-525-6386. You can also connect with us through our online contact form.