ERISA, The Employee Retirement Income Security Act of 1974, is a federal law that regulates employer provided pension and benefit plans. This includes almost all Long Term Disability insurance plans provided by your employer.
ERISA contains a variety of causes of action you can use to enforce your rights under the plan. A cause of action is what authorizes you to file a lawsuit in a court. This article discusses these causes of action.
This is the code that contains the main cause of action disabled workers will use when appealing a denial of benefits under their long term disability policy. The section states:
(a) Persons empowered to bring a civil actionA civil action may be brought—
(1) by a participant or beneficiary—
(B) to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan;
The code only allows you to recover benefits due, or to enforce your existing rights under the terms of the plan or to clarify your future rights.
Notice there is no provision allowing you to recover pain, suffering, inconvenience and other damages. That's what makes this different then suits in state court or personal injury claims.
As said earlier, almost all ERISA LTD lawsuits, where benefits were denied, will be filed under this section.
This section allows a lawsuit:
(3) by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan;
In plain English, you can bring a lawsuit to stop an act or practice that violates terms of the plan or the law, to obtain other "equitable relief," or to enforce any provisions of this section or terms of the plan. The difference between equitable remedies, and what you are probably used to, legal remedies, is the nature of the relief or award you are seeking.
Legal remedies will usually mean money. If I deny you $1,000 in benefits, you are due $1,000, and possibly interest.
If I intend to deny your benefits in the future, or violate some other terms of the plan, you can seek to "enjoin" that action or practice. Enjoin is just legal jargon for "stop" or "prevent."
Except in some unique situations, this cause of action will rarely be used.
This section addresses attorney's fees. It states:
(g) Attorney’s fees and costs; awards in actions involving delinquent contributions
(1) In any action under this subchapter (other than an action described in paragraph (2)) by a participant, beneficiary, or fiduciary, the court in its discretion may allow a reasonable attorney’s fee and costs of action to either party.
Notice the law states the court "in its discretion may allow" the attorney's fees and costs. The code is noticeably silent as to when the court may award the fees, and what factors it should look at when awarding the fees.
The Supreme Court of the United States clarified this somewhat with their decision in Hardt v. Reliance Standard Life Insurance Co. The Supreme Court stated attorney's fees may be awarded to a party as long as the party had achieved "some degree of success on the merits." This means if you filed a lawsuit, and sometime during the suit the court ruled against the insurer on a matter, indicated you were going to win, and the insurer changed their mind and awarded you past benefits, you can still receive attorney's fees from the insurer.
Keep in mind the statute also allows the court to grant attorney's fees to the insurer (which you would have to pay) but that would be rare unless you were found to bring the lawsuit in bad faith. This is because courts will apply the Hummell v. S.E. Rykoff & Co. test in deciding whether to award fees. The five factors are:
None of these factors are decisive, and should be viewed as a balancing test. In addition, the courts should keep in mind ERISA was designed to protect participants in employee benefit plans. Thus, these factors must be construed liberally in furtherance of that objective.
If this sounds complicated, it's because it is. ERISA is a complicated set of statutes, and unfortunately each state, each district, even each Judge will interpret it differently.
Attorneys at the Disability Legal Center are here to sort through this legal mess for you and to lift this burden off of your shoulders. Give us a call now for a no obligation, free case review.