Suppose some unforeseen event leaves you unable to continue working. If you have insurance covering short-term disability, long-term disability, or both, you will be eligible to receive benefits determined by your income prior to becoming disabled. Now you can rest easy, right? Not necessarily. Regardless of the proportion of your pre-disability income that you will be eligible to receive as disability benefits, those benefits can be reduced through offsets. What is an offset? Simply put, it is a mechanism through which your disability insurance company can and will reduce your disability benefits on a dollar-for-dollar basis. If you have a group disability policy (as opposed to an individual disability policy), your policy almost certainly contains a provision allowing the insurer to reduce your benefits by the amount you receive as “Other Income Benefits.” Other Income Benefits can include income from Social Security Disability Income (SSDI) benefits, state disability benefits, worker’s compensation benefits, Veteran’s Administration benefits or other sources.

For example, if your employment income was $10,000 per month and you became totally disabled, and you therefore became eligible for long-term disability benefits of 60% of your pre-disability income, your monthly benefit would be $6,000. However, if you applied for SSDI as required by your policy, and were approved for benefits of $2,000 per month, your insurer will offset your policy benefits by $2,000, and will now only pay you $4,000 per month. While this is a relatively straightforward concept, it can quickly become convoluted and complicated, and can compound the headaches and frustration that often are associated with a disability claim. Therefore, it is important to consider several factors in order to avoid being caught off guard by receiving less than you anticipated in disability benefits.

First, it is important to know the source of any income you receive, and whether the income is subject to offset. Your disability insurance policy, which is often part of an ERISA plan offered by your employer, will discuss sources of income and whether they qualify as “Other Income Benefits” that are subject to offset. But what about income that is not discussed in the policy? If you cash in some of your retirement savings account, will your insurance company consider that “income” and reduce your disability benefits? It depends on the plan language. Rest assured that your insurer will take advantage of any possible offset, so if your policy is unclear as to whether a certain kind of income is subject to offset, you should expect the insurance company to err on the side of offsetting benefits. To avoid your benefits being improperly reduced, you should read your disability plan carefully and understand the source of your other income to decide whether the income is subject to offset. If you believe that your insurer is improperly reducing your benefits via an offset that is not provided for in the plan, an experienced California disability insurance attorney can assist you in determining whether your insurer is properly offsetting your disability income benefits.

Second, the timing of when you receive “other” income can significantly impact the overall picture of your benefits. The Social Security Administration currently takes several months to make claims determinations in many cases, so you may not get an answer to your claim for SSDI benefits until long after you started receiving policy disability benefits. However, if your SSDI benefits are approved, those benefits will likely be initially paid in a lump sum that covers the previous several months, which can be a substantial amount. But if your insurance company has been paying your long-term disability benefits throughout that time, it will apply the offset retroactively and require you to reimburse it for this “overpayment,” which can mean repaying your insurer the amount of your lump-sum payment. For example, suppose you have been receiving $4,000 per month in long-term disability policy benefits for one year ($48,000 total) and you receive one year’s worth of retroactive SSDI benefits of $2,000 per month ($24,000). Your insurance company will expect to be reimbursed that $24,000. It may be easy enough to issue a check to your insurance company for the amount that you received in SSDI benefits; however, it may not. Your insurer may not request reimbursement until later, during which time you may have spent some of this much-needed money; you may have been unaware that you need to reimburse the insurance company in such a scenario. Being in a situation where your insurer is requesting reimbursement for offsets can lead to distress and anxiety.

Third, it is important to be aware of the amount of the offset. An insurance company may try to offset more than it is allowed to offset under the policy. For example, if you receive SSDI benefits, they will periodically increase due to cost-of-living adjustments. But cost-of-living adjustments are not subject to offset under group disability policies. Or consider a recent case that McKennon Law Group handled that involved a Sheriff’s Deputy who became totally disabled due to injuries suffered in a devastating auto accident. Our client received long-term disability benefits according to his policy (after we successfully handled his ERISA appeal); but those benefits did not cover his household expenses, and his wife had to reduce her work time to be able to care for him and their two young children. The Deputy was fortunate enough to have many colleagues in the Sheriff’s Department willing and wanting to help him, and many did so by donating their accrued sick time to him. To facilitate these donations, our client was paid through his employer’s payroll system, and the donations appeared on his pay stubs as “Donated Sick Time.” The policy allowed the insurer to offset income from normal accrued sick time that our client was paid while receiving his disability benefits. The insurer considered all of the sick time pay donated to our client by his colleagues to be subject to offset. Because these donations amounted to just as much as the Deputy’s monthly disability benefits, the net result was that he received the minimum benefit under the policy, or $100 per month.

Obviously, none of the Deputy’s colleagues donated their sick time to him so that the insurer could benefit from those donations; the notion that an insurance company would intercept donations from individuals who are trying to give aid to their Sheriff colleague in need is enough to infuriate any reasonable person. In fact, had his colleagues known their donations would not go to him, but would rather be collected by the insurance company for its sole benefit, they would not have made the donations in that manner. The policy allowed for the insurer to offset any income that the Deputy received from the employer, including undonated “sick time.” However, the policy was silent as to whether “sick time” included donated sick time. The insurer argued that because the money was distributed via the employer’s payroll system, any money labeled “sick time” was subject to offset. McKennon Law Group filed a lawsuit to recover all of the donated sick-time pay that the insurer took as an offset. Because the insurer did not respond to the lawsuit, our client obtained a substantial default judgment in excess of $350,000, indicating a high likelihood that the insurer realized that its position was meritless.

This case serves as a reminder that offsets can significantly impact a claimant’s disability benefits. Insurance companies paying disability benefits will likely claim as many offsets as possible, including offsets to which they are not entitled. Thus, it is important to understand what offsets your insurer is taking, and whether it is entitled to take those offsets. Because you may not know whether your insurer is taking improper offsets, you should consult with an experienced California disability attorney like those at McKennon Law Group. The highly experienced disability insurance lawyers at McKennon Law Group can help you determine whether your insurer is improperly reducing your disability benefits via offsets, and if that is happening, our firm can help you recover the benefits to which you are entitled.

It should not surprise anyone that health insurance companies are motivated and incentivized to deny coverage of costly surgical procedures. Most insurers deny health insurance claims by claiming that a recommended surgery is “not medically necessary” or that the claimant “did not try conservative treatment” prior to undergoing surgery. Does a health insurer abuse its discretion by denying a claim without providing a reviewing doctor with important records that would assist in proving medical necessity? The Fourth Circuit Court of Appeals recently answered this question in the affirmative, ruling that insurers who do not provide important records to their medical reviewers abuse their discretion by denying claims on the grounds that medical procedures are not medically necessary. In Garner v. Central States, __ F.4th __, 2022 WL 1160386 (4th Cir. 2022), the claimant, Dorothy Garner, suffered from back and neck pain that continued to increase despite her taking medication and treating with postural exercise like yoga. Her doctor recommended surgery, based on the results of an MRI. To cover the cost of the surgery, Ms. Garner submitted a claim with Central States as a beneficiary of her husband’s ERISA employee health benefit plan sponsored by United Parcel Service, Inc.

Central States denied Ms. Garner’s claim on the grounds that her $90,000 surgery was not “medically necessary” under the plan provisions. This decision was based on an independent medical review (“IMR”) of Ms. Garner’s claim, conducted by Dr. Francesco Serafini, a physician who is Board-certified in general surgery. But the records that Central States provided to Dr. Serafini for his IMR did not contain either the MRI report that had led her doctor to recommend surgery or his office notes that explained this recommendation. Without access to these missing documents, Dr. Serafini concluded that there was no basis in the provided records to justify Ms. Garner’s surgery, and this conclusion formed the basis for Central States’ denial letter.

Ms. Garner submitted another appeal after having a physician review her file, and Central States conducted another IMR of Garner’s claim, this time by Dr. Brad Ward, a physician who is Board-certified in neurological surgery. Unlike Dr. Serafini, Dr. Ward had full access to Ms. Garner’s medical records, including the MRI report and the office notes. But Dr. Ward also concluded that the surgery was not medically necessary, relying in part on the fact that Ms. Garner had not taken “any conservative measures other than medication.” Central States thus upheld its denial decision.

Ms. Garner filed an ERISA lawsuit against Central States, seeking coverage under the plan for her surgery. The district court, ruling on the parties’ summary judgment motions, found for Ms. Garner because Central States “had not engaged in a ‘reasoned and principled’ decision-making process.” The court’s ruling was based on three points: (1) Central States had not provided Dr. Serafini with the “critically important” MRI records and office visit records, (2) “nothing in the plan required covered individuals to exhaust conservative treatment options before undergoing surgery” and (3) it was undisputed that Garner had unsuccessfully tried postural exercises to relieve her pain.

On Central States’ appeal of the district court’s finding, the Fourth Circuit reviewed Central States’ claim denial to determine whether it had abused its discretion under the plan by denying Ms. Garner’s claim. Even under this abuse-of-discretion standard, which affords deference to Central States in its claims decisions, the Court affirmed that the district court’s decision to deny her claim was an abuse of discretion. The Court provided various substantive items that supported its finding.

First, the court noted that Central States “utterly failed to disclose” Ms. Garner’s pertinent medical records to Dr. Serafini, including her MRI results and her doctor’s notes explaining his surgery recommendation. The court found that these documents “were critical” — the MRI report because it established the underlying medical basis for her surgery, and the office visit notes because they explained why her doctor recommended the surgery. Notably, the reviewing physician had complained of a lack of information during the initial review, and after he completed his report, Central States did not follow up with him or provide him with the MRI or doctor’s notes.

While the Court stopped short of concluding that Central States “acted in bad faith or deliberately withheld documentation,” it emphasized that under ERISA, Central States owed Ms. Garner a “deliberate, principled reasoning process,” but that it had failed to provide such a review. Central States argued that it cured the flaws in its initial review by providing all of Ms. Garner’s relevant records, including the MRI report and the doctor’s notes, to Dr. Ward. However, the Court did not accept this reasoning because Central States had repeatedly indicated that it relied on both doctors’ reports in upholding its decision. Central States’ denial was not “a reasoned determination” because it relied on Dr. Serafini’s report that did not consider the MRI report or the doctor’s notes.

Second, the Court focused on Central States’ basing its denial on Ms. Garner’s not trying conservative treatment before having surgery. The record indicated that Ms. Garner “had tried postural exercises such as yoga without relief.” Also, the reason why she had the MRI done was that her pain had continued “despite her efforts at conservative treatment over the past several months,” including medication. Central States could not require Ms. Garner to receive conservative treatment “as an absolute condition” to finding that her surgery was medically necessary. By not allowing Central States to “add a new term to the plan, a term for which Garner did not bargain, and about which she lacked any notice,” the Court precluded it from using subjective terminology to “move the goal posts” by requiring ever more “conservative” treatment in order to find her surgery to be medically necessary.

Third, the court observed Central States’ persistence in attempting to justify its improper denial of Ms. Garner’s claim through vague terms. The court noted that Central States “repeatedly failed to handle Garner’s claim in a sensitive and fair-minded manner.” After “no fewer than three opportunities to give [Ms.] Garner’s claim the reasoned consideration that it deserved…[i]t would neither encourage the careful and efficient resolution of benefits claims, nor would it be fair to [Ms.] Garner, to permit Central States a fourth opportunity. Three strikes are enough.”

While the court’s reasoning hints that insurers have significant leeway in their claims review processes under the abuse-of-discretion standard of review, insurers must use a fair and reasoned claim review process in deciding claims. When they do not do so, the courts will not condone this conduct.

The claims review process can be daunting for claimants who are simply trying to obtain much-needed care or treatment, and even more so when insurance companies use unfair means to justify denying legitimate health insurance claims. McKennon Law Group PC is highly experienced in handling denied ERISA health insurance claims, especially those based on an alleged lack of medical necessity.

What Happens If My Employee Benefit Claim Was Denied?

At McKennon Law Group, our attorneys work alongside beneficiaries with unions or employer-supplied life insurance policies that involve issues laid out in ERISA, Employee Retirement Income Security Act.

If your appeal is denied, our attorneys are among the best in the nation for bringing a legal action to recover your benefits and enforce your rights. Read on to learn more about ERISA, ERISA claims, and what actions you can take to get the money you deserve.

What is ERISA?

Most of the life, health and disability policies issued through employers in the United States are governed by the Employee Retirement Income Security Act of 1974. The Employee Retirement Income Security Act (ERISA) is defined as “a federal statute which delineates minimum standards for the administration of private industry’s pension plans and establishes the impact that federal income taxes will have on transactions associated with management of such pension plans.”

Additionally, this act also creates causes of action for employee plan participants and their beneficiaries. Under ERISA, employers have financial responsibilities, and employee plan participants can sue the employers in cases of breach of these responsibilities. ERISA provides equity as the remedy for breach of fiduciary duty.

Why Do I Need A Lawyer To Deny ERISA Claims?

If your ERISA claim was denied, you should consider consulting with an insurance litigation attorney and appealing the decision immediately. At McKennon Law Group, we have extensive experience dealing with denied ERISA claims. We have a high success rate of recovering insurance money for those who are entitled to it. We always make sure that, every step of the way, you feel confident and understand the process, and feel assured that your case is always handled professionally.

Our team of attorneys at McKennon Law Group can help those in need with claim denials for many different reasons:

Claims denied because of changed marital status
Claims denied because of exclusions
Claims denied because of a employer’s oversight or mistake
And much more.

Our Newport Beach ERISA attorneys can offer sound legal advice in every stage of your ERISA claim. We will take the time to explain to you in detail how ERISA works. We’ll let you know all the ways in which you can protect your rights to life insurance beneficiary money, as well. ERISA involves mandatory administrative appeals and strict deadlines, so it is imperative that you know your rights and swiftly hire an ERISA attorney.

How Does A Lawyer Help Me With A Denied ERISA Claim?

If your appeal is denied, you can bring a legal action to recover your benefits and enforce your rights. ERISA claims are the most frequently litigated cases in federal court, and our lawyers have decades of experience helping with these claims.

For those who have yet to file an ERISA claim, we can provide guidance and assist with the claim filing process. It’s best to begin the process of filing a claim with the oversight of an attorney so you can be sure to not miss out on any important steps or supplying any important information necessary.

If your ERISA claim is denied, we can help you understand the contents of the denial letter so you can understand why the claim did not process. If the claim was denied wrongfully, and we believe the insurer has been acting in bad faith, we can help you file an appeal.

For those who are experiencing delays in receiving their ERISA claim, our team of attorneys can work to speed up the approval and payout process as best we can, by serving as a point of contact between you and the insurer. Our goal is to make the expediting process as smooth and effective as possible, so we handle all of the legwork on your behalf.

In representing clients with ERISA lawsuits, we demonstrate before a judge, if necessary, that the employer has breached their financial responsibility that is laid out under ERISA, or that the insurance company has breached their responsibility. If your beneficiary designation was challenged in any way by another claimant, we can stand by your side and defend your right to that money as well.

Call McKennon Law Group Today For A Free Consultation Regarding Your ERISA Claim

We understand how frustrating it can be to fight back against a denied or delayed claim. Our attorneys have been litigating ERISA insurance, disability insurance, life insurance, accidental death and dismemberment insurance, health insurance, bad faith and other insurance matters since 1986. We are nationally recognized in insurance litigation and have led numerous seminars and written many articles dealing with insurance claim issues.

Call our team of attorneys today for a free, no-obligation consultation regarding your ERISA claim.

Was your loved one’s life insurance claim wrongfully denied, or has your insurance company delayed too long in processing the claim and getting you your money? When we buy life insurance, we do so to protect the people we love and to prepare for the day when we finally pass away. Life insurance is designed to provide funds to those who need them but, unfortunately, life insurance companies often fail to pay out claims in a timely manner or deny the claim altogether. When this happens, people miss out on the money they need to move forward after losing a loved one, and the money they need to recuperate from the financial loss associated with the death.

Of course, life insurance companies are required to pay the benefits that are laid out in the policy, and to adhere to any terms and conditions that are laid out in the contract that they and the policyholder both signed. But sadly, it’s not always the case, and life insurance companies are notorious for making things difficult for those who hold policies. If you find that your life insurance company has wrongfully denied the payment of a death benefit claim on behalf of your deceased loved one, this can be considered bad faith insurance dealing. Schedule a free consultation with our attorneys for help.

What Is Life Insurance?

Life insurance is defined as “a contract between the insurance company and an insured in which the company promises that at the death of the insured, the company will pay a certain amount of money to a person the insured designates in the contract if that person survives the insured. In return for the promise to pay, the insured will pay the life insurance company a premium.”

Legally speaking, life insurance is considered a third party beneficiary contract because it is made for the benefit of a person who is not a party to the agreement. This type of insurance is denied to provide funds to those who need them after a loved one has passed away. If you find that your life insurance company is operating in bad faith, on top of grieving the loss of a loved one, you shouldn’t have to deal with this added stress. Our lawyers will handle every aspect of solving this situation so you can get back on your feet faster and spend more time with your loved ones.

What Is Bad Faith Insurance?

Insurance companies are required to act in good faith. Bad faith insurance dealing is when an insurer fails to fulfill its obligations to its policyholders. This can mean either failing to pay a policyholder’s valid and legitimate claim, or if they are delayed in processing a legitimate claim within a reasonable time frame.

Additionally, if an insurance company does not disclose exclusions, limitations or exceptions on a policyholder’s coverage before they purchase the coverage or amend it, this is bad faith as well. Insurance companies are required to operate with transparency and integrity at all times, but sadly this isn’t always the case.
Insurance companies are required to uphold what is laid out in their contracts with policyholders. If this contract is ever breached or these duties are not upheld, the insurance company may be found to be operating in bad faith. If you believe your insurance company is acting in bad faith, a lawyer can help.

How Does A Lawyer Help Me If My Life Insurance Claim Was Denied?

Was your loved one’s life insurance claim wrongfully denied? You have the right to push back against a bad faith insurer, but may have difficulty doing so without the help of an attorney. It can be hard to stand up to these companies alone.
Our team of attorneys at McKennon Law Group have extensive experience fighting back against bad faith insurance companies and doing the work necessary to defend you from their wrongdoings. You have the right to have your loved ones life insurance policy paid out in an appropriate time frame, and also uphold the right to anything that is laid out in the contract between both you and your insurance company.

If you or a loved one have been denied a claim and feel that this was the wrong decision, our attorneys can help you file an appeal and push back to get what you need. It can be hard standing up to big insurance companies by yourself, so be sure to contact a lawyer right away to get started on the process. We’ll stop at nothing to secure the best outcomes for you and your team.

The long-term disability coverage that your employer has been providing may not be there when you need it. That is why, even before you file your disability claim, you should seek the advice of a California ERISA disability claims attorney.

The Employee Retirement Income Security Act – also known as ERISA – was enacted by Congress in 1974 to make sure that the insurance benefits provided by private employers will be there when employees need those benefits.

ERISA sets minimum legal requirements for the group insurance plans provided through many employers in the private sector. However, long-term disability claims under ERISA are routinely denied by insurance companies. If you need disability benefits that have been denied, you may also need seek the services of an experienced ERISA disability benefits lawyer.

What Does a Long-Term Disability Policy Cover?

Long-term disability insurance typically provide benefits if you are unable to perform the important duties of your own occupation due to an injury or sickness. Most disability policies cover a variety of serious illnesses and medical conditions, whether they are classified as physical medical conditions or mental-nervous conditions. On-the-job injuries may be covered, but about 95 percent of the long-term disability claims filed under ERISA are not work-related.

Cancer, mental illness such as depression or anxiety conditions, chronic illnesses, neurological disorders, and certain degenerative diseases may also be covered by your ERISA disability policy.

What Does ERISA Require?

ERISA does not require private employers to provide employee benefit plans. The federal law simply establishes minimum standards for insurance plans that employers choose voluntarily to offer.

When an insurance company or an employer takes advantage of ERISA to reject a disability claim and unfairly deny disability benefits, a California ERISA claims lawyer may be able to appeal the denial of that claim and recover the benefits, or if that appeal is denied, file a lawsuit in federal court to recover these denied disability insurance benefits.

Why are disability claims under ERISA so frequently denied? Are there ways to avoid the most common reasons for denials? How can a denial be appealed, what are your rights if your claim is denied, and what steps will you have to take? These questions will be answered below.

Avoid These Mistakes If You File an ERISA Disability Benefits Claim

If you consult an ERISA claims attorney before you file your ERISA disability benefits claim, your attorney can assist you to avoid these common mistakes, and it is even possible that your claim may be approved:

When a doctor determines that you are disabled, do not assume that you will qualify for disability benefits. Insurers frequently deny disability claims even those that are supported by one or more of the insured’s doctors. Have your doctors write up a comprehensive evaluation of your condition and your disability that discusses your medical conditions and how these conditions affect your ability to conduct everyday activities and your job duties.
Provide a comprehensive statement from you and others that discuss in detail why you are disabled. The statement must include the following information: 1) a detailed description of the duties of your occupation as you performed them; 2) a detailed discussion of the history of your condition; 3) a detailed discussion of your symptoms; 4) an explanation for how those symptoms negatively impact your ability to return to work such that you cannot work; 5) how your disability also impacts your overall quality of life; and 6) a discussion of the things you could previously do but can no longer do.
Adhere to your doctor’s recommendations and do not participate in any physical activities against those recommendations. Do not post anything about your claim online or give the insurer anything that could be used to justify the denial of your disability claim.
The easiest mistake to avoid when you make a claim for ERISA benefits is not working with an ERISA claims lawyer from the start. You must have sound advice because ERISA is a complicated law with many exemptions, terms, conditions, and deadlines.

Will Your ERISA Disability Claim Be Denied?

An ERISA disability claim could be denied for almost any reason – if you make a mistake in the paperwork, for example, or if you miss something in your policy’s fine print. Here are the most common reasons offered by disability insurance providers for denying ERISA disability claims:

inadequate medical documentation of a disability
a pre-existing condition
missing details, paperwork mistakes, and overlooked deadlines
policy exclusions
self-reported, undocumented symptoms or unauthorized or inappropriate treatment
evidence compiled through social media or private investigation contradicting your claim

When you’ve paid an insurance company premiums for years, and when a doctor has determined that you are disabled, receiving a letter from your insurance company that denies your disability claim can be devastating.

Too often, legitimate disability claims are denied because some insurance companies look for every possible technicality that will allow them to reject a claim. However, an experienced ERISA disability claims attorney may be able to help you if your claim is rejected.

What Are the Rules for ERISA Disability Claims?

Before 2018, you could sue an ERISA insurance provider for the denial of disability benefits only if you and your lawyer could prove the denial was “arbitrary and capricious.” But since 2018, ERISA insurers must provide a “reasoned explanation” when a disability claim is denied.

An insurance company must clearly explain why it disagrees when one or more doctors have concluded that you’re disabled. The company must also identify which of its procedures and policies authorize and support its denial of your claim.

One rule governing disability claims was not changed in 2018. You may not sue an ERISA disability insurance provider until one or more “administrative” appeals of the denial have been filed and considered by that insurance provider.

When Should You Speak to an ERISA Attorney?

When you file a long-term disability claim under ERISA, your best option is having the guidance and advice of a California ERISA claims attorney from the start – even before you begin to fill out the insurance company’s paperwork.

But if your disability claim under ERISA is denied, and if you are not already working with a lawyer, speak with a claims lawyer at once about filing an appeal. A claims lawyer can handle your appeal and ensure that you’ve complied with ERISA’s numerous guidelines.

Because ERISA is a federal law, U.S. District Courts hear ERISA-related lawsuits. If the insurance company rejects your administrative appeal, your attorney may recommend bringing a lawsuit in a U.S. District Court, where a District Judge will decide the case.

What Else Will You Need to Know?

You will need personalized guidance and advice if you apply for disability benefits under ERISA or if your claim is rejected. Your lawyer should have considerable experience representing disabled clients and appealing the denial of their ERISA disability claims.

ERISA does not apply to public-sector employees or to the employees of religious organizations. It also does not cover privately-purchased, individual insurance policies or any benefit or program that is not provided by a private-sector employer.

Most California attorneys who handle ERISA claims provide an initial legal consultation to prospective clients without any obligation or cost. That consultation is your chance to obtain personalized legal advice and to find out more about your rights and legal options.

If you’re disabled, and if you intend to claim disability benefits under ERISA, or if your claim has already been denied, there’s no reason to wait. Do what it takes to obtain the disability benefits you have paid for and need, and contact a California ERISA claims lawyer at once.

In this several-part blog series titled The Basics of an ERISA Life, Health and Disability Insurance Claim, we discuss the basics of an ERISA life, health, accidental death & dismemberment and disability claim, from navigating a claim to handling a claim denial, through the subsequent appeal and litigation. In Part Seventeen of this series, we discuss when ERISA applies. ERISA governs a wide variety of employee benefits. It is safe to say that most employee benefits are controlled by ERISA. As such, if the employee benefit plan is provided through a private employer, it is likely, but not necessarily certainly, governed by ERISA. However, at times, instead of ERISA, state law or a governmental organization’s own unique laws and procedures apply. If a claimant wins their case, ERISA provides for an award of the denied benefits, attorneys’ fees, interest and costs. State law varies from state to state but may provide for the award of the denied benefits, consequential damages, punitive damages, attorneys’ fees, litigation costs and interest, among other potential remedies. In other words, if state law applies to an employee benefit claim, greater remedies are available to the claimant. The trial procedures for these two types of claims are very different. ERISA claims are decided by a judge, typically based on the administrative record consisting mainly of documents submitted to the claims administrator during the administrative appeals process. Discovery is much more limited. However, for state law claims, the usual litigation procedures are available. These include a full panoply of discovery, use of experts and a jury trial. The procedures for disputing claims for benefits from different governmental agencies vary greatly with each organization often being quite different. Some claims benefit from being governed by ERISA. Other claims benefit from being governed by state law. Given these drastic differences, it is critical to determine which body of law and procedures apply to a claim.

The first broad exception to ERISA’s applicability is that it does not apply to benefits provided by government employers. See 29 U.S.C. § 1003(b)(1). This exception applies to benefits provided by municipal, state and federal governments and thus affects the benefits earned by a wide variety of people. People who work for these different governmental entities may have very different benefits and rights thereto if a claim for benefits is denied. If a claim is denied, some governmental entities may have a simple appeal process resembling ERISA. Others may provide for an entire trial and discovery process. However, this exception may not apply to all government employees. It depends on how one obtains the benefits. For example, if the benefits in question were actually obtained through a union, ERISA may control because the benefits were not provided by the government entity, but rather, they were provided by an employee organization: the union. One has to look at the plan documents and who provides the benefits to determine which area of law applies.

A second major exception to ERISA’s applicability is that it does not govern church plans unless the religious entity specifically elects to be governed by ERISA. See 29 U.S.C. § 1003(b)(2). Religious organizations have the right to either be governed by state law or opt into being governed by ERISA. Religious organizations, such as churches and their affiliated hospitals or schools, provide a wide variety of benefits to their employees. Given that religious organizations have the right to opt into ERISA, it is often difficult to determine whether ERISA applies. Once again, checking the relevant plan documents is often the only way to be certain.

A third common exception to ERISA is for plans that are “maintained solely for the purpose of complying with applicable workmen’s compensation laws or unemployment compensation or disability insurance laws[.]” 29 U.S.C. § (b)(3). This exception is relatively simple. If the plan merely exists to comply with a state’s worker’s compensation laws, then ERISA does not apply.

There are other exceptions to ERISA, but these are the most common ones. In light of the differences between ERISA and state law, many people mistakenly assume that one is better than the other. Even many attorneys make this mistake. Most attorneys make this error because they are more comfortable with one form of litigation than the other. Assuming that one form of litigation is superior is simply incorrect. It depends on the specific details of the claim. For example, for relatively small claims, ERISA is often much more favorable to the claimant. Under ERISA, if a claimant establishes that they are entitled to the benefits in question, it is fairly easy to win an award of reasonable attorneys’ fees. However, under the law of most states, whereas attorneys’ fees and a variety of other damages are available upon successfully establishing bad faith, establishing bad faith may be difficult. Furthermore, it is often difficult to obtain large amounts of damages beyond the contract benefits if the initial amount in dispute is small. As a general rule, a claimant seeking a smaller benefit will fare better if their claim is governed by ERISA, with its limited discovery and simplified procedures.

If, however, there is a significant amount of money in dispute, having the matter be governed by state law may be useful. This is especially true if the party denying the claim behaved in a particularly egregious manner, which may allow an insured to collect punitive damages. This makes the matter prime for a very large award if the case is won at trial. These factors will also influence any settlement negotiations and result in a potentially larger settlement.

Given the differences between the various forms of litigation related to employee benefits, it is important to confer with an expert in this area of the law. Consulting with knowledgeable attorneys, such as those at the McKennon Law Group PC, is critical if you want to receive all of the benefits that you are entitled to under the applicable law.

Beware The Pitfalls and Unforeseen Ways That Your Disability Benefits Can Be Impacted By Offsets